NPCI's UPI Vyapaar Saksham scheme: ₹300 per QR code, ₹750 per soundbox

The National Payments Corporation of India (NPCI) has launched the UPI Vyapaar Saksham Scheme, which will pay banks ₹300 for every physical QR code and ₹750 for every soundbox they deploy at an eligible new small merchant. NPCI announced it in a circular dated 11 November, Inc42 reported. The aim is to widen UPI acceptance among small shopkeepers, especially in smaller cities and towns.

The money will not come from a separate government grant. It will be pooled from the merchant discount rate (MDR) earned on UPI: each issuing bank, acquiring bank, payer payment service provider and UPI app provider will put in 5% of its MDR share, Inc42 reported. The scheme will run for three years from the date UPI MDR is implemented, which has not yet been notified.

Small merchants are defined as businesses with an annual turnover of up to ₹40 lakh in the previous financial year. The scheme focuses on merchants in Tier III to Tier VI cities, the northeastern states, Jammu and Kashmir and Ladakh, along with those covered under central schemes such as PM SVANidhi and PM Vishwakarma.

The incentive is split into three parts. The first, 30% of the fund, is the per-device payment above. To qualify, a merchant must record at least 25 eligible transactions in any two months of a quarter, worth at least ₹5,000 a month. Eligible payments are settled UPI payments of up to ₹2,000; reversed, refunded or split payments do not count. The second, 50% of the fund, rewards banks for at least 5% quarter-on-quarter growth in eligible volumes, at 0.03% of the value of eligible transactions, with 50% extra in the targeted regions. The remaining 20% pays 0.2% of the incremental value of eligible transactions in those regions.

NPCI expects the scheme to bring 6 lakh to 1 crore new physical QR codes and 5 lakh to 10 lakh new soundboxes every year, and to lift transaction volumes at existing small merchants by 30% to 50% annually, Inc42 reported. NPCI will run the fund and validate bank claims, and banks will file claims every quarter.

The scheme arrives as the Centre prepares to bring back MDR on some high-value UPI payments after nearly six years. Under the framework NPCI has introduced, person-to-merchant payments above ₹2,000 would attract a 0.4% MDR, capped at ₹300 for payments of ₹75,000 and above, while payments up to ₹2,000 and person-to-person transfers stay outside it. NPCI has not yet announced a date for MDR to start, Inc42 reported.