On the birth anniversary of Bhimrao Ambedkar on April 14 this year, the government had rolled out a slew of cashback incentives for consumers and merchants to popularise its marque United Payments Interface (UPI)- based app BHIM.
The scheme was, however, rolled back within months. Some media reports said that was because people were gaming the system to earn cashback by just transferring money among themselves. It turns out that the real reason was different. The ministry of electronics and IT had no money to keep giving out the cashback, a top government official said.
When it announced the scheme, the ministry had approval of Rs 500 crore for it, but it was only on paper, the official told ET on the condition of anonymity. “The ministry managed around Rs 100 crore to give out incentive which was already promised by adjusting the money through the merchant discount rate incentive scheme.”
Incentives offered in the scheme included Rs 51 cashback on a minimum transaction value of just Rs 1 for first-time users, and Rs 25 cashback per transaction for 20 unique transactions in a month, for consumers, while merchants could receive cashback of up to 10% of a transaction and up to Rs 1,000 per month.
The ministry is now working on a revised scheme, which would be targeted at merchants, the official said. “It’s not that the first scheme did not meet its purpose; it did introduce many new people to the BHIM UPI even though some of them may be doing it only for the cashback. But this time the incentives will be more focused on merchants.”
The government feels that incentives through the merchants could drive the usage higher rather than just peer-to-peer payments, the official said.
The government is still working on the details of the merchant cashback scheme. Having learnt its lesson, it plans to first seek funding of Rs 130-140 crore and then roll out the scheme over the next few weeks, the official said.
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