Over 250,000 fertiliser retailers will have to accept Unified Payments Interface (UPI) payments at their distribution points soon.
The Ministry of Chemicals and Fertilizers’ (MoCF) directive comes amid the crucial Kharif cropping season and is aimed at promoting digital payments in the largely cash-dominated agricultural trade markets.
The objective could also be to provide millions of farmers an option to make contactless payments to meet social distancing norms in the backdrop of the Covid-19 pandemic.
“In order to promote digital transactions in DBT (direct benefit transfer) in fertilisers, it has been decided by the Department of Fertilisers (DoF) to implement cashless payment system at all fertiliser retailers for the sale of fertilisers,” the circular dated June 30 to all state coordinators and fertiliser companies, read.
ET has reviewed a copy of the circular.
In the first phase of deployment, all licenced retailers providing subsidised fertilisers to farmers have been asked to facilitate UPI QR stickers at their outlets within the first two weeks of this month.
The state coordinators and fertilizer companies have been asked to submit action reports by July 15 to the DoF.
Separately, the Ministry has also sought details of existing retailers providing UPI options to traders and farmers from coordinators by July 7, according to the circular.
According to the fertiliser ministry data, there are 250,000 registered fertiliser retailers in India, of which about 157,000 are currently active.
Most DBT on fertiliser subsidies is currently handed out through Aadhaar-enabled biometric authentications, except in Jammu and Kashmir and Assam where a One-Time Password (OTP) based sale is done with Kisan Credit Card (KCC).
The circular also lays out details on how to activate UPI services for both retailers and farmers.
Retailers have been asked to obtain UPI QR code from banks, or payment aggregators such as Google Pay, Paytm or PhonePe, and display it at the front-desk of their outlets.
Farmers, meanwhile, have been asked to download any UPI app on their phones and create a virtual payment address (VPA) linked to their RuPay debit card.
The move also comes at a time when the Reserve Bank of India and government authorities have been pushing to increase adoption of digital payments in smaller towns and villages.
The RBI last month also created a Rs 500 crore Acceptance Development Fund to improve payment infrastructure in tier 3-6 towns with a special focus on states in the Northeast.
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