UPI Vyapaar Saksham Scheme: Merchant Benefits and Eligibility

Introduction of UPI Vyapaar Saksham Scheme: A Brief Insight

Small shops in towns and villages often depend on cash because shopkeepers may not have access to digital payment facilities or may hesitate to install QR codes and soundboxes. The UPI Vyapaar Saksham Scheme aims to address this gap by encouraging banks to bring more small merchants onto the UPI platform. It provides incentives to banks for onboarding eligible merchants, installing QR codes and soundboxes, and increasing their digital payment transactions.

The scheme has not started yet. It will remain active for three years from the date on which the Merchant Discount Rate (MDR) on UPI is implemented. However, the implementation date has not been notified. The details explained in this article are based on NPCI’s scheme circular and will apply once the scheme becomes operational.

The National Payments Corporation of India (NPCI) introduced the scheme through a circular dated 11 November 2026. NPCI will administer the scheme and manage its implementation. It is an NPCI initiative, not a Central Government scheme approved by the Union Cabinet.

The Department of Financial Services (DFS), Ministry of Finance, had already outlined the concept of a dedicated fund for small merchants through the Merchant Discount Rate on UPI. The UPI Vyapaar Saksham Scheme follows this approach, with NPCI setting its operational guidelines in consultation with the Reserve Bank of India.

The main objective is to expand digital payment facilities among small merchants, particularly in areas where UPI acceptance remains limited. The scheme focuses on installing more QR codes and soundboxes, onboarding new small merchants and increasing the volume of their UPI transactions.

NPCI has divided the scheme fund into three components. It will allocate 30% of the fund to onboard new small merchants, 50% to increase eligible UPI payments and the remaining 20% to support additional transaction growth in focus locations. Issuing banks, acquiring banks, payer payment providers and UPI app providers will contribute 5% of their respective Merchant Discount Rate shares to this dedicated fund every month.

The scheme provides incentives to the acquiring bank, not directly to the merchant or customer. For onboarding a new eligible merchant, the bank can receive ₹300 for a physical QR code and ₹750 for a soundbox. It can also earn 0.03% of the value of eligible UPI transactions, with an additional 50% incentive for transactions in focus locations. A further incentive of 0.20% applies to the additional eligible transaction value generated in focus locations compared with the previous quarter.

Small merchants with an annual turnover of up to ₹40 lakh in the previous financial year can qualify, subject to the location conditions. The scheme primarily covers Tier 3 to Tier 6 towns and cities, North Eastern States, Jammu and Kashmir, and Ladakh. Merchants in Tier 1 and Tier 2 cities can qualify only if a notified Central Government scheme covers them. Only successfully settled UPI transactions of ₹2,000 or less count towards the scheme incentives.

Merchants do not need to submit an application directly to NPCI. They should contact their acquiring bank or payment service provider, which will check their eligibility, complete onboarding and claim the applicable incentives from NPCI every quarter. Therefore, merchants should first ask their bank whether it will participate in the scheme and provide eligible QR codes or soundboxes.

For assistance, merchants can contact their bank branch manager or reach out to NPCI through its official email address, phone number or office address. You can find these details in the contact section below.

Street vendors who need working capital support can also explore the PM SVANidhi Scheme. Similarly, artisans and craftspeople can check the PM Vishwakarma Yojana. The UPI Vyapaar Saksham Scheme specifically refers to these government schemes while covering eligible merchants in Tier 1 and Tier 2 cities.

Small business owners who need financial assistance to expand their units can explore the Pradhan Mantri Mudra Yojana. Those planning to establish a new business with government subsidy support can also read about the Prime Minister’s Employment Generation Programme (PMEGP).

Women, Scheduled Caste and Scheduled Tribe entrepreneurs can explore the Stand Up India Scheme. Small businesses looking to improve product quality, productivity and manufacturing standards can also learn about the MSME Champions Scheme.

Shopkeepers, street vendors, artisans, small traders and MSME owners can explore more financial assistance, digital payment and business development programmes through our Central Government Popular and Welfare Schemes List page.

Latest Update on UPI Vyapaar Saksham Scheme

The UPI Vyapaar Saksham Scheme is linked to the implementation of the Merchant Discount Rate (MDR) on UPI transactions. NPCI issued the scheme circular on 11 November 2026, but the scheme has not started yet because the MDR implementation date is still awaited. The following timeline highlights the key developments and the current status.

Current Status and Important Things to Know

• Scheme Has Not Started: The scheme will run for three years from the date of MDR implementation on UPI. Since the revised implementation date has not been notified, the scheme has not started yet.
• Detailed Fund Framework: On 15 September 2026, the Department of Financial Services stated that it would finalise the detailed fund framework in consultation with the Reserve Bank of India within three months. This places the expected timeline around mid-December 2026.
• Six-Monthly Review: NPCI will review the scheme every six months. It may revise the guidelines or extend the scheme to additional regions and merchant categories, as required.
• Detailed Operational Rules: The NPCI circular contains provisions relating to merchant declarations, claim timelines, fraud prevention and grievance handling. Merchants and participating banks should refer to the official circular for the applicable instructions.
• Upcoming Updates: The MDR implementation date, further NPCI notifications and the list of participating banks are the key developments to watch.
• Prepare Your Business Details: Small merchants can keep their mobile number, business details, annual turnover information and UPI transaction records ready. They should also contact their acquiring bank to check its participation and onboarding process.

Benefits Provided to Eligible Beneficiaries

Many small shops in towns and villages still depend mainly on cash because payment devices cost money and shopkeepers may not be sure whether digital payments will benefit their businesses. The UPI Vyapaar Saksham Scheme aims to encourage more small merchants to accept UPI payments. NPCI has created a dedicated fund using contributions linked to the Merchant Discount Rate on UPI. The fund provides incentives to acquiring banks that onboard small merchants, provide them with QR codes or soundboxes, and help increase their UPI transactions.

The incentive goes to the acquiring bank, not directly to the merchant. However, merchants can benefit through better access to UPI payment devices and greater support from their banks. The following benefits and incentive rates are based on the NPCI circular, information from the Department of Financial Services under the Ministry of Finance, and the Government’s earlier incentive scheme for low-value BHIM-UPI transactions.

Benefits for Small Merchants

• Your bank gets an incentive to onboard your shop and provide a physical QR code or soundbox to accept UPI payments through different apps.
• A soundbox announces successful payments, helping you confirm transactions without checking your mobile phone every time.
• Your bank has an incentive to help increase your UPI transactions because the scheme rewards growth in payments made by small merchants.
• The scheme focuses on Tier 3 to Tier 6 towns, the North Eastern States, Jammu and Kashmir, and Ladakh, giving small merchants in these areas greater attention.
• The Government states that UPI payments of ₹2,000 or less do not attract MDR. It also provides for zero MDR on all payments received by eligible small vendors through a UPI QR code under the P2PM framework, subject to the applicable monthly receipt limit of ₹1 lakh.
• You do not need to replace your existing QR code or soundbox merely because of the MDR provisions.
• The scheme does not provide direct cash assistance to merchants or customers. NPCI pays the eligible incentive to the acquiring bank.

Benefits for Acquiring Banks

• The bank receives ₹300 for each eligible physical QR code and ₹750 for each eligible soundbox provided to a new small merchant who meets the scheme conditions.
• The bank receives an incentive of 0.03% of the value of eligible UPI transactions. Transactions from merchants in focus locations attract an additional 50% over the base rate.
• Under Component C, the bank receives an additional incentive of 0.20% on the increase in eligible transaction value generated by small merchants in focus locations compared with the previous quarter.
• NPCI settles eligible incentive claims every quarter, generally within 30 days of receiving a valid claim.

The Fund at a Glance

Incentive Rates Under the Scheme

A Simple Example of the Incentive Calculation

Suppose a bank provides 1,000 physical QR codes and 100 soundboxes to new small merchants, and all these merchants meet the required conditions. Under Component A, the bank receives ₹3 lakh for the QR codes and ₹75,000 for the soundboxes. The total incentive comes to ₹3.75 lakh.

Now suppose the eligible UPI transactions of the bank’s small merchants are worth ₹1 crore in a quarter. Under Component B, the bank receives 0.03% of this amount, which equals ₹30,000. If the applicable transactions come from merchants in focus locations, the additional 50% increases the incentive rate to 0.045%, taking the total incentive to ₹45,000.

Suppose the eligible transaction value in focus locations increases by ₹20 lakh compared with the previous quarter. Under Component C, the bank receives 0.20% of this additional value, which equals ₹4,000. These examples explain how the incentive rates work. However, if claims under a component exceed its available fund allocation, NPCI distributes the available amount proportionately among eligible banks. Therefore, the actual incentive may be lower.

Targets and Expected Outcomes

• Onboard 6 million to 10 million new physical QR codes every year.
• Deploy 0.5 million to 1 million new soundboxes every year.
• Achieve annual growth of 30% to 50% in transactions made by existing small merchants.
• Publish monthly progress reports, quarterly statements on fund utilisation, and an annual performance report.

Difference Between the UPI Vyapaar Saksham Scheme and the Earlier UPI Incentive Scheme

Growth of UPI Payments in India

• According to Government figures, UPI processed 2,451 crore transactions worth ₹29.9 lakh crore in August 2026.
• The Government has stated that transactions of ₹2,000 or less account for more than 95% of merchant payments made through UPI.

How the Scheme Can Help Your Business

• You can start accepting digital payments through a QR code or soundbox provided by your bank, subject to its onboarding arrangements.
• Digital payment records can help you maintain a better record of business transactions and may support a future loan application, including under the Pradhan Mantri Mudra Yojana.
• You can serve customers who prefer digital payments or do not carry cash.
• Accepting digital payments can reduce the need to handle large amounts of cash and the risks associated with cash storage and fake currency.

Important Points to Remember

• The acquiring bank receives the scheme incentive. Merchants and customers do not receive direct cash assistance under this scheme.
• The scheme will start only after the implementation of MDR on UPI. NPCI has not yet notified the implementation date.
• Transactions above ₹2,000 do not qualify for the scheme incentive. Splitting a larger payment into smaller transactions to meet the limit is also not allowed.
• NPCI reviews the scheme every six months and may revise its rules or coverage.
• Do not pay any agent or middleman for scheme registration. Contact your bank for information about merchant onboarding and eligible payment devices.

Eligibility Conditions Required to be Fulfilled

The UPI Vyapaar Saksham Scheme has two levels of eligibility. The first covers small merchants whose UPI transactions qualify for incentives. The second covers acquiring banks that onboard merchants and claim incentives from NPCI. Merchants do not apply directly to NPCI. The following conditions are based on the NPCI circular and its annexure on scheme definitions.

Who Is a Small Merchant?

• A merchant whose annual turnover was up to ₹40 lakh in the previous financial year.
• A new merchant is one onboarded by a bank during the scheme period.
• An existing merchant is one onboarded before the scheme begins.
• Both new and existing small merchants can generate eligible UPI transactions, although certain incentives apply only to newly onboarded merchants.

Where Must the Merchant Operate?

• Tier 3 to Tier 6 towns and cities, as classified under the Census.
• The North Eastern States of India.
• The Union Territories of Jammu and Kashmir and Ladakh.
• Tier 1 and Tier 2 cities, but only if a notified Central Government scheme covers the merchant, such as PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) or PM Vishwakarma.
• The bank determines the location category using the relevant Census codes. Merchants cannot choose their own city tier.

Which UPI Payments Qualify?

• Successfully settled UPI transactions of ₹2,000 or less made to eligible small merchants.
• Eligible Person-to-Merchant (P2PM) transactions also count.
• Reversed, refunded or cancelled transactions do not qualify.
• Artificial transactions and payments created by splitting a single payment into smaller amounts to stay below ₹2,000 do not qualify.

Conditions for New Merchants, Component A

Component A accounts for 30% of the scheme fund. It provides an incentive to acquiring banks for onboarding new small merchants with eligible UPI payment devices.

• The bank must onboard the merchant during the scheme period.
• The merchant must operate in an eligible location or qualify through a notified Central Government scheme.
• The merchant must receive at least 25 eligible UPI payments in any two months of a quarter.
• The merchant must receive at least ₹5,000 per month through eligible transactions.
• The merchant or device must not have received an incentive under this scheme or another subsidy scheme for the same device.
• The bank receives an incentive of ₹300 for each eligible physical QR code and ₹750 for each eligible soundbox.

Conditions for Growth in Payments, Component B

Component B accounts for 50% of the scheme fund. It rewards acquiring banks for increasing eligible UPI transactions made by both new and existing small merchants.

• The bank must achieve at least 5% quarter-on-quarter growth in the volume of eligible transactions made by its small merchants.
• The incentive rate is 0.03% of the total value of eligible transactions.
• Transactions from merchants in the scheme’s focus locations attract an additional 50% incentive over the base rate.

Conditions for Additional Growth, Component C

Component C accounts for 20% of the scheme fund and provides an additional incentive for transaction growth in the focus locations.

• Transactions must come from new or existing small merchants operating in eligible focus locations.
• The value of eligible transactions must exceed the previous quarter’s value.
• The incentive is 0.20% of the additional transaction value, over and above the applicable Component B incentive.

Conditions That Acquiring Banks Must Fulfil

• Provide payment devices, such as physical QR codes and soundboxes, that support UPI payments across different apps.
• Generate a unique merchant identifier using the small merchant’s mobile number.
• Record the merchant’s correct business location and classify the merchant as small or large and online or offline.
• Include the required merchant details in transaction records so that eligible payments can be identified.
• Submit quarterly incentive claims in the format prescribed by NPCI, along with the required internal and external auditor certificates.
• Ensure that claims are accurate and do not include duplicate merchants or devices already covered under another subsidy scheme.

Who Is Not Eligible?

• Merchants whose annual turnover exceeded ₹40 lakh in the previous financial year.
• Merchants operating in Tier 1 or Tier 2 cities who are not covered under a notified Central Government scheme.
• Transactions above ₹2,000 or transactions that are reversed, refunded, cancelled or identified as artificial.
• QR codes or soundboxes for which a subsidy or incentive has already been claimed under another scheme.
• Duplicate claims for the same merchant or payment device.
• Transactions that do not carry the required merchant identification, classification or location details.

Scheme Duration and Fund Distribution Rules

• The scheme will run for three years from the date of implementation of the Merchant Discount Rate on UPI.
• NPCI will review the scheme every six months and may extend its coverage to additional regions or merchant categories.
• The funds allocated to Components A, B and C cannot be transferred between components.
• If claims under a component exceed its available allocation, NPCI distributes the available amount proportionately among eligible banks. Unused funds carry forward to the next year under the same component.
• Banks contribute 5% of their share of the Merchant Discount Rate every month. NPCI settles eligible incentive claims quarterly, within 30 days of receiving a claim.

Check Your Eligibility Before Contacting the Bank

• Ensure that your annual turnover in the previous financial year was up to ₹40 lakh.
• Check whether your shop is located in an eligible Tier 3 to Tier 6 town or city, the North Eastern States, Jammu and Kashmir, or Ladakh. If your shop is in a Tier 1 or Tier 2 city, check whether a notified Central Government scheme covers you.
• Accept genuine UPI payments of ₹2,000 or less. Do not split larger payments to meet the transaction limit.
• Ask your bank whether it will participate in the scheme and provide eligible QR codes or soundboxes once the scheme starts.
• Do not pay any agent or middleman for registration. You do not need to submit a separate application to NPCI.

Documents Required to be Attached

The UPI Vyapaar Saksham Scheme is administered by the National Payments Corporation of India (NPCI) through a dedicated fund created from the Merchant Discount Rate on UPI. Its objective is to increase UPI adoption among small merchants in smaller towns, the North Eastern States, Jammu and Kashmir, and Ladakh.

Identity and Contact Details

• Merchant or business name as registered or used for the shop.
• Mobile number used by the merchant, as the bank uses it to create a unique merchant identifier.
• Email address for communication and merchant records.
• Identity documents requested by the bank, such as the owner’s Aadhaar card and PAN card.
• Bank account details used to receive UPI payments.

Business Details

• Type of business, so the bank can assign the appropriate Merchant Category Code (MCC).
• Annual turnover details for the previous financial year. A small merchant must have an annual turnover of up to ₹40 lakh.
• Self-declaration in the format prescribed by NPCI, covering turnover and other required business details.
• Turnover proof, such as GST or income tax returns, if available and requested by the bank.

Note: The scheme document does not specifically make GST registration a mandatory condition.

Location Details of Your Shop

• Complete business address, including the state, district, sub-district and town or village.
• Location details to establish that the shop falls within the areas covered by the scheme, such as Tier 3 to Tier 6 towns and cities, the North Eastern States, Jammu and Kashmir, or Ladakh.
• Geographical coordinates (geocode) of the shop, which help identify its exact location on a map.

Proof for Merchants in Big Cities

• Merchants operating in Tier 1 or Tier 2 cities can qualify only if they are covered under a notified Central Government scheme, such as PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) or PM Vishwakarma.
• Keep the relevant scheme certificate, sanction letter, identity card or other proof to establish your eligibility.

Documents Related to the Payment Device

• Physical UPI QR code or soundbox provided by the bank. The device must support UPI payments across different apps.
• Device details, such as its type, serial number or identification code, as recorded by the bank.
• Self-declaration confirming that you have not received a subsidy or grant for the same device under another scheme, including any applicable NABARD-supported scheme.
• UPI payment records showing the number and details of transactions received through the device.

If a Payment Aggregator Is Involved

• If a payment aggregator helps you receive UPI payments, keep its name, merchant ID, contact number and email address.
• Provide the details of the first payment aggregator in the transaction chain that onboarded your business, as required by the bank.

What You Do Not Need to Submit

• Separate application to NPCI: The acquiring bank submits the incentive claim directly to NPCI.
• Payment to NPCI: The scheme does not require merchants to pay any enrolment fee to NPCI.
• Artificially split transactions: Do not divide a single payment into smaller transactions to keep each transaction below ₹2,000. Such splitting does not qualify for an incentive and may affect the bank’s claim.

Documents and Details Submitted by the Bank to NPCI

The acquiring bank handles the following compliance and claim-related work. Merchants do not need to submit these documents directly to NPCI.

• Quarterly incentive claim: The bank submits claims in the format prescribed by NPCI, along with details of newly onboarded merchants, QR codes, soundboxes and eligible transactions.
• Merchant information: The bank reports details such as the merchant’s name, mobile number, email address, merchant ID, category code, business type, address and location codes.
• Transaction-level information: Each payment must carry the required merchant identifier, merchant type (small or large) and merchant genre (online or offline). Transactions missing the prescribed information may not qualify for the incentive.
• Auditor certificates: The bank submits certificates from its internal and external auditors along with the claim.
• Declarations and supporting records: The bank provides the self-declarations prescribed by NPCI and any additional documents required for claim verification.

How Beneficiaries Can Apply to Avail the Benefit of this Scheme

You do not need to submit an application directly to NPCI to get the benefit of the UPI Vyapaar Saksham Scheme. Your acquiring bank, which is the bank that helps your shop accept UPI payments, will onboard you and claim the incentive from NPCI. In simple words, the bank receives the incentive for bringing your shop onto UPI, while you get the facility to accept digital payments through a QR code or soundbox. Your main task is to contact a participating bank, provide the required details, get the payment device and use it for genuine UPI transactions. Follow the steps below to understand the process.

Before You Start

Before visiting a bank, check these basic conditions to avoid unnecessary delays.

Step 1: Check your business turnover. Your shop must have an annual turnover of up to ₹40 lakh in the previous financial year to qualify as a small merchant.

Step 2: Check your shop’s location. The scheme focuses on Tier 3 to Tier 6 towns and cities, the North Eastern States, Jammu and Kashmir, and Ladakh.

Step 3: If your shop is in a Tier 1 or Tier 2 city, check whether you are covered under a notified Central Government scheme, such as PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) or PM Vishwakarma. Merchants in these cities can qualify only through such a scheme.

Step 4: Keep your mobile number, Aadhaar card, PAN card, bank account details and business information ready. Your bank may ask for these details during merchant onboarding.

Step 5: Understand the payment limit. Only successfully settled UPI payments of ₹2,000 or less qualify for the scheme incentive. You must not divide a larger payment into smaller transactions just to meet this limit.

Step 6: Read the FAQs on Merchant Discount Rate (MDR) issued by the Department of Financial Services to understand the applicable MDR rules for UPI merchant payments.

Find Out If Your Bank Takes Part

Not every bank may participate in the scheme. Therefore, first contact the bank or payment service provider through which your shop currently receives UPI payments.

Step 1: Identify the bank that provides your merchant QR code or collects your UPI payments. This bank may be your acquiring bank under the scheme.

Step 2: Visit your bank branch and speak to the branch manager, or contact the bank’s customer care service.

Step 3: Ask the bank, “Will you participate in the UPI Vyapaar Saksham Scheme once it starts? Can you provide me with an eligible QR code or soundbox?”

Step 4: Ask the bank whether it has received any instructions about the scheme’s starting date and merchant onboarding process.

Step 5: Before accepting a device, ask whether the bank will provide it free of cost or charge any installation, rental or other fee. Request clear information about the charges.

Method 1: Apply Through a Bank Branch

Visiting a bank branch is one of the simplest ways to request merchant onboarding. You can approach the bank where you maintain your business account or another participating bank that provides merchant UPI services.

Step 1: Visit the bank branch and tell the staff that you run a small business and want to accept UPI payments through a physical QR code or soundbox.

Step 2: Ask whether the bank has started onboarding merchants under the UPI Vyapaar Saksham Scheme. Since the scheme has not started yet, the bank may ask you to wait for further instructions.

Step 3: Once onboarding begins, fill out the merchant registration form provided by the bank and submit the required identity, bank account and business details.

Step 4: Provide your active mobile number. The bank uses it to create your unique merchant identifier, which helps identify your shop in the scheme’s records.

Step 5: Submit a self-declaration of your annual turnover if the bank asks for it. You may also need to provide supporting business or financial records.

Step 6: After completing the bank’s verification process, collect your QR code or soundbox. Ask the bank staff to explain how to use the device and check whether it is working properly.

Method 2: Join Through a Payment Aggregator or UPI Business App

If you already accept digital payments through a payment aggregator or a UPI business app, you can ask the service provider whether it supports merchant onboarding under this scheme.

Step 1: Contact the customer care team of your payment aggregator or business app. A payment aggregator is a company that helps businesses accept payments through digital payment methods.

Step 2: Ask whether the service provider works with an acquiring bank that will participate in the UPI Vyapaar Saksham Scheme.

Step 3: Check whether it can provide an eligible physical QR code or soundbox and complete your merchant onboarding.

Step 4: Provide the required details and documents. Also, keep the name of the payment aggregator and your merchant ID for future reference.

Step 5: Confirm that your merchant details will reach the acquiring bank correctly. The bank must report the required information to NPCI to claim the applicable incentive.

Method 3: If Your Shop Is in a Small Town, the North East, Jammu and Kashmir or Ladakh

The scheme gives special attention to small merchants operating in these locations. Your bank must record your shop’s correct location to identify whether it falls within the scheme’s focus areas.

Step 1: Tell the bank your shop’s complete address, including the village or town, district and state.

Step 2: Ask the bank to record the correct location and geocode of your shop. A geocode is the location information used to identify the exact geographical position of your business.

Step 3: Ask the bank to verify the Census location category of your town or city. The bank uses the relevant location codes to report your details to NPCI.

Step 4: Keep your address and location details consistent across the documents you submit. Correct location information helps the bank identify transactions eligible for the additional incentives available in focus areas.

Method 4: If You Run a Business in a Big City Under PM SVANidhi or PM Vishwakarma

Small merchants in Tier 1 and Tier 2 cities generally do not qualify under the location rules. However, they may qualify if a notified Central Government scheme covers their business, such as PM SVANidhi or PM Vishwakarma.

Step 1: Keep your PM SVANidhi or PM Vishwakarma documents ready. These may include your sanction letter, scheme certificate or beneficiary identity card.

Step 2: Submit the relevant proof to the participating bank and explain that you are covered under a notified Central Government scheme.

Step 3: Ask the bank to verify your eligibility under the UPI Vyapaar Saksham Scheme before completing merchant onboarding.

Step 4: If you also need financial support to start or expand your business, you can read our guide to the Pradhan Mantri Mudra Yojana.

Method 5: If You Are a New Merchant Who Needs a QR Code or Soundbox

Component A of the scheme provides an incentive to banks for onboarding new small merchants and providing eligible payment devices. However, the bank receives this incentive only when the merchant meets the prescribed transaction conditions.

Step 1: Tell the bank that you are a new merchant and want to start accepting UPI payments through your shop.

Step 2: Confirm that the QR code or soundbox provided to you has not already received a subsidy or incentive under another scheme.

Step 3: Once you receive the device, display the QR code at a place where customers can easily scan it. If you receive a soundbox, check that it announces successful payments correctly.

Step 4: To help your bank qualify for the Component A incentive, your shop must receive at least 25 eligible payments in any two months of a quarter, with a minimum transaction value of ₹5,000 in each of those months.

Step 5: Accept genuine payments from customers. Do not create artificial transactions or divide a large payment into smaller amounts to meet the scheme’s conditions.

Method 6: If You Already Accept UPI Payments and Want to Grow Your Transactions

Existing small merchants can also contribute to transaction growth under the scheme. Your bank may receive incentives when eligible payments from its small merchants increase.

Step 1: Contact your acquiring bank and confirm that it has recorded your business as an existing small merchant.

Step 2: Ask whether the bank can provide a soundbox, an eligible QR code or any other support to make UPI payments easier for your customers.

Step 3: Display your QR code clearly at your shop and inform customers that they can pay through UPI.

Step 4: Accept genuine customer payments and maintain proper transaction records. Keep each payment at its actual amount instead of splitting it into smaller transactions.

What Happens at the Bank?

After you submit your details, the bank checks your information and completes its merchant onboarding process.

Step 1: The bank verifies your annual turnover, business location, identity details and other required documents.

Step 2: The bank records you as a small merchant and classifies you as new or existing, depending on when it onboarded your business.

Step 3: The bank provides an eligible QR code or soundbox, or explains how you can collect and activate the device.

Step 4: Keep copies of the documents and forms you submit. Also, ask the bank for an acknowledgement or confirmation of your merchant registration.

What Does the Bank Do With NPCI?

You do not need to complete this part yourself. The acquiring bank handles the reporting and incentive claim process with NPCI. However, understanding these steps will help you know how the scheme works.

Step 1: The bank sends NPCI the required merchant details, including the merchant’s name, mobile number, unique merchant identifier, business category and location.

Step 2: The bank reports the merchant’s classification as small or large and the business type as online or offline along with the required transaction information.

Step 3: The bank prepares and submits its incentive claim every quarter in the format prescribed by NPCI. It also provides the required certificates from its internal and external auditors.

Step 4: NPCI checks the claim and processes the eligible incentive. The circular provides for quarterly settlement within 30 days of receiving a valid claim.

What Should You Do After Joining the Scheme?

After receiving your QR code or soundbox, use it properly and keep your merchant information up to date.

Step 1: Place your QR code where customers can easily see and scan it. Keep it clean and readable.

Step 2: If you change your shop’s address, inform your bank so that it can update your merchant location details.

Step 3: Use the payment device only for your registered business. Do not share it with another shop because each merchant has a separate identity in the bank’s records.

Step 4: Check your UPI transaction history regularly. You can also ask your bank for a transaction statement to keep track of your digital payments.

Step 5: Contact your bank if your QR code or soundbox stops working or if you notice an incorrect merchant detail.

What If the Bank Refuses to Onboard You?

If a bank does not accept your request, first understand the reason. You can then check whether another participating bank or payment aggregator offers merchant onboarding.

Step 1: Ask the bank why it has refused your request. Check whether the reason relates to your turnover, location, documents or the bank’s participation in the scheme.

Step 2: If you meet the eligibility conditions, contact another bank or payment aggregator that provides merchant UPI services.

Step 3: Check your business details and documents again. Incorrect turnover or location information may affect your eligibility.

Step 4: Do not pay any agent or unknown person who promises to get you enrolled or arrange a QR code under the scheme.

Where Can You Get Help?

If you have questions about merchant onboarding, payment devices or the scheme’s conditions, contact your acquiring bank first. You can also refer to the official information published by NPCI and the Department of Financial Services.

Step 1: Contact your bank branch manager or customer care team and ask about merchant onboarding under the UPI Vyapaar Saksham Scheme.

Step 2: Read the Official NPCI circular on the UPI Vyapaar Saksham Scheme for its conditions and incentive structure.

Step 3: Visit the Official NPCI Website to check for further circulars and announcements.

Step 4: Read the Government’s earlier announcement on incentives for low-value UPI payments to understand its previous support for digital payments among small merchants.

Important: You cannot apply directly to NPCI for the UPI Vyapaar Saksham Scheme. The acquiring bank handles merchant onboarding and claims the incentive. Since the scheme has not started yet, contact your bank for the latest information about its launch and participation. Do not pay any agent or middleman for registration.

UPI Merchant Discount Rate: What It Means for a Small Shopkeeper

The UPI Vyapaar Saksham Scheme uses a dedicated fund linked to the Merchant Discount Rate (MDR) on UPI. Therefore, small shopkeepers should understand what MDR means, when it applies and whether they need to pay it. The following details are based on the MDR FAQs issued by the Department of Financial Services, Ministry of Finance.

How Much Is the Merchant Discount Rate?

According to the DFS FAQs, the applicable MDR for specified UPI merchant transactions above ₹2,000 is 0.4%, subject to a maximum charge of ₹300.

Where Does a Different or Nil Rate Apply?

• For specified categories such as railways, telecom, insurance, fuel and public utility bills, the MDR on payments above ₹2,000 is a flat ₹5.
• For mutual funds, securities and broker-related payments, the rate is 0.02%, subject to a maximum of ₹300.
• Recurring payments set up by customers, such as monthly bills and subscriptions, carry no MDR.
• UPI payments made through linked credit cards or credit lines follow the applicable rules for those credit products.

When Does a Small Vendor Pay No MDR?

• A small vendor receiving up to ₹1 lakh per month through a UPI QR code directly into a bank account pays no MDR, including on payments above ₹2,000.
• If monthly receipts exceed ₹1 lakh for three consecutive months, the bank moves the vendor to the applicable merchant category, and MDR applies to transactions above ₹2,000.
• GST registration is not required to claim this relief. The exemption depends on the vendor’s monthly UPI receipts and account conditions.
• Customers do not pay MDR on UPI transactions. Merchants also cannot add this charge to the customer’s bill or pass it on separately.

How Does the Dedicated Fund Support Small Merchants?

• The Department of Financial Services has proposed a dedicated fund from MDR collections to encourage banks and payment service providers to expand UPI acceptance among small merchants.
• The fund focuses on Tier 3 to Tier 6 centres, North Eastern States, Jammu and Kashmir, and Ladakh. It also covers eligible merchants in larger cities under notified Central Government schemes.
• The DFS FAQs state that the detailed framework would be finalised in consultation with the Reserve Bank of India. NPCI subsequently issued the UPI Vyapaar Saksham Scheme circular on 11 November 2026.

Important Links Available of the Scheme

• UPI Vyapaar Saksham Scheme Guidelines, NPCI Circular dated 11 November 2026 (PDF)
• FAQs on Merchant Discount Rate (MDR) for Select UPI Person-to-Merchant Transactions, Department of Financial Services (PDF)
• Earlier Incentive Scheme for Low-Value BHIM-UPI Transactions, Press Information Bureau
• National Payments Corporation of India (NPCI), Official Website
• Department of Financial Services, Ministry of Finance, Official Website

Contact Details in Case of Help Needed

• Office Address: National Payments Corporation of India (NPCI), 1001A, The Capital, B Wing, 10th Floor, Bandra Kurla Complex, Bandra East, Mumbai, Maharashtra – 400051.
• Phone Number: +91 22 40009100
• Email Address: contact@npci.org.in
• Bank Assistance: Contact the branch manager where you maintain your business account or the customer care team of your acquiring bank or payment service provider. Your bank handles merchant onboarding, provides eligible payment devices and submits incentive claims to NPCI.

Frequently Asked Questions (FAQs)

Tabassum

Tabassum is a government schemes researcher and writer with 5 years of experience tracking Central and State welfare scheme programmes across India. She has covered 500+ schemes spanning agriculture, women welfare, education, and housing, helping lakhs of beneficiaries understand their entitlements in simple language.