In a surprising move, the government has withdrawn incentive scheme of up to Rs 1,000 for accepting payments using the Unified Payments Interface (UPI) for shopkeepers eight months before its maturity.
It has also replaced cashback offer, which was of up to Rs 500, with Rs 150 for its Bhim app users.
The move has come at a time when UPI transactions started to gather momentum last month after registering slow down for last couple months.
In June, according to NPCI, the transaction volume climbed to 246.37 million, while transaction value recorded about Rs 40,834.03 crore with 22 per cent growth as compared to the previous month.
The volume of the transaction recorded by UPI for May was 189.48 million, while April witnessed 190.08 million transactions.
Earlier in April, the government had extended cashback scheme till March 2019. The scheme offered a reward of Rs 25 per transaction for each of 20 transfers in a month with a minimum value of Rs 100.
Meanwhile, NPCI, which is planning to launch UPI 2.0 this week, changed the scheme with effect from July 1.
It restricted the rewards to users of Bhim app and stopped incentives to other bank apps.
Despite this, BHIM has recorded average growth figure. In May, BHIM recorded a 12 per cent growth in volume, while June saw a 15 per cent increase in the volume of transaction. During the same month, BHIM grew by 9 per cent (approx) with Rs 6261.25 crore transaction in value.
The government-owned app has been criticised by third-party payments service provider for its unfair play on cashback offers and incentives.
Last month, Mobikwik CEO Bipin Preet Singh has alleged that BHIM UPI is biased and giving cashback offers only if you use BHIM app.
Besides, payment service providers like Paytm, Google Tez, and PhonePe have witnessed a surge in UPI transactions. While Paytm and PhonePe own 53 market share in UPI transactions, Google Tez in nine months has claimed to grab 22 per cent of market share, registering 54 million transactions.
The UPI number is expected to go up with an entry of Whatsapp, which has over 200 million users in the country, in the segment.
The development was reported by ET.