Govt Plans Cashback or Discounts on UPI Payments: Here’s What You Should Know
In a significant move to promote digital payments and benefit users, the Indian government is working on a new plan that could bring cashbacks or discounts on UPI transactions. This initiative aims to encourage more people to use UPI over credit cards, which often come with hidden costs for merchants.
What Is the Government Planning for UPI Users?
According to sources, the Ministry of Consumer Affairs is developing a proposal that will allow customers to receive a ₹2 discount on every ₹100 spent via UPI. The idea is simple — while shopkeepers already enjoy zero Merchant Discount Rate (MDR) on UPI payments, consumers could now benefit too.
Here’s how it would work:
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You buy something worth ₹100
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You pay ₹98 via UPI
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You instantly save ₹2
But if you use a credit card for the same purchase, you’ll still pay the full ₹100, and the shopkeeper pays a cut to the card company.
Why Are Credit Card Payments More Expensive?
Every time a customer uses a credit card, merchants have to pay 2–3% of the transaction amount as a fee (MDR) to the bank or payment processor, such as Visa or MasterCard. That means on a ₹100 transaction, the shopkeeper may receive only ₹97–₹98.
In contrast, UPI payments don’t carry these fees. The entire ₹100 goes directly to the merchant, making UPI a more cost-effective and merchant-friendly option.
How Will This Benefit Consumers?
This proposed scheme could be a game-changer for everyday users. If implemented, it will:
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Encourage more people to use UPI instead of credit cards
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Help consumers save on daily transactions
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Support small and local merchants who rely on low-cost payment methods
It’s a win-win for both consumers and businesses.
When Will the New UPI Discount Scheme Launch?
The government is planning to hold key meetings in June 2025 with major stakeholders, including:
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E-commerce platforms like Amazon and Flipkart
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Banks and card networks
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NPCI (National Payments Corporation of India)
The proposal is still in the early stages. If approved, it could roll out by the end of 2025 or early 2026, depending on how quickly all stakeholders agree on the framework.
UPI’s Growth in India: Why It Matters
UPI is already India’s most popular digital payment platform. Here are some impressive stats:
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Over 185 billion transactions recorded in 2024–25
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Total transaction value exceeded ₹260.56 lakh crore
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26 crore new users joined in the last 3 years
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5.5 crore new merchants adopted UPI
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Total user base now stands at over 45 crore Indians
With numbers like these, the government sees a major opportunity to make UPI even more beneficial to everyday users.
Challenges Ahead
While the idea is promising, there are a few challenges to consider:
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Banks and merchants must be on board with the discount model
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Credit card companies may resist the shift in user preference
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E-commerce platforms will need to integrate this system smoothly
Despite possible resistance, especially from those who benefit from MDR fees, the overall outlook for this initiative is positive.
Final Thoughts
If approved and implemented, this new government scheme could make UPI not just a fast and secure way to pay — but a rewarding one too. It could help millions of Indians save money while pushing the country further into a digital-first economy.
Stay tuned as the policy develops — this could be the next big step in India’s digital payment revolution.
