The National Payments Corporation of India (NPCI) has recently announced a major upgrade to the BHIM UPI app in a bid to boost digital payments, encourage small merchants to adopt UPI, and promote financial inclusion. This marks the third major update to the platform since its launch in 2016. The BHIM UPI app was originally introduced by the government to encourage digital transactions and move the country towards a cashless economy.
In addition, the government has rolled out a new incentive scheme for UPI payments. Let’s take a closer look at the latest features and how the rewards system will work.
What’s Happening?
NBSL (NPCI BHIM Services Limited) has launched BHIM 3.0, introducing new features such as in-app payments, spending insights, and bill-splitting to improve user convenience and support banks and businesses in adopting digital payments more seamlessly.
BHIM 3.0 will now support over 15 Indian languages and allow transactions even in areas with weak or unstable internet connections.
To further promote digital transactions among small merchants, the government has approved a Rs 1,500 crore incentive scheme for FY2024–25. Under this, users will receive a 0.15% incentive on BHIM-UPI P2M (Person to Merchant) transactions up to Rs 2,000, while maintaining zero MDR (Merchant Discount Rate) for all BHIM-UPI payments. For transactions above Rs 2,000, only zero MDR will be applicable.
For context, MDR is a fee that businesses pay to payment processors when customers use debit or credit cards — typically calculated as a percentage of the transaction amount.
BHIM UPI’s New Features
Split Expenses – Users can now easily divide bills with friends and family, whether it’s dining out, rent, or group purchases, making expense management smoother.
Family Mode – This allows users to add family members, monitor shared expenses, and assign specific payments, encouraging better budgeting and planning.
Spending Insights – BHIM will now provide a detailed overview of monthly expenses made through the app and categorise transactions based on their nature.
Action Reminders – A built-in task manager will notify users of pending bills linked to the BHIM app, helping them stay on track and avoid overdue payments.
BHIM Vega – This is an in-app payment solution for merchants, integrated with online platforms. It allows customers to pay instantly within the app, removing the need to switch to third-party applications.
These features will be rolled out gradually across platforms, with full availability expected by April 2025.
UPI Beyond India: 7 Countries Adopted India’s Digital Payment System
UPI transactions in India have grown exponentially. The total transaction value has surged from Rs 21.3 lakh crore in FY2019–20 to Rs 213.8 lakh crore as of January 2025. Within this, Person to Merchant (P2M) transactions alone accounted for Rs 59.3 lakh crore, reflecting increasing acceptance of digital payments among businesses.
UPI transaction value in India jumped from Rs 21.3 lakh crore in 2019–20 to Rs 213.8 lakh crore in FY24–25 (till Jan 2025).
Beyond India’s borders, the UPI system has been adopted by seven countries — UAE, Singapore, Bhutan, Nepal, Sri Lanka, France, and Mauritius — enabling smoother and quicker cross-border payments.
According to the 2024 ACI Worldwide Report, India accounted for 49% of all global real-time transactions in 2023, underlining its leadership in digital payment innovation.
What’s Next?
This latest move by the government is a step toward expanding and strengthening the BHIM-UPI ecosystem, with a goal to reach Rs 20,000 crore in transaction volume for FY2024–25. It also focuses on building robust and secure digital payment infrastructure with fewer technical glitches and downtime.
A major part of the initiative includes extending UPI services to rural and remote areas, especially beyond tier-2 cities, through tools like UPI 123PAY, UPI Lite, and UPI LiteX. This will not only make BHIM-UPI more accessible for small merchants but also contribute to building a stronger, more inclusive financial infrastructure for the country.
*This article is for informational purposes only. This is not investment advice.
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