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MUMBAI : The Reserve Bank of India (RBI) on Tuesday announced operational guidelines for the Payments Infrastructure Development Fund (PIDF) Scheme, aimed at encouraging deployment of more digital payment infrastructure in tier-3 to tier-6 centres.

The fund will be used to subsidise bank and non-banks for payment infrastructure deployment and would be contingent upon achieving specific targets.

The central bank has constituted an advisory council under the chairmanship of B P Kanungo, a deputy governor, to manage the fund. The PIDF will be operational for a period of three years from 1 January 2021 and may be extended for two more years depending upon the progress. At present, the fund has a corpus of 345 crore, of which 250 crore was contributed by RBI and 95 crore by the major authorised card networks in the country.

The primary focus shall be to create payment acceptance infrastructure in tier-3 to tier-6 cities, with special focus on the north-eastern states. RBI said that while setting parameters for utilisation of funds, the focus shall be to target those merchants who do not have any payment acceptance device.

The advisory council will devise a “transparent mechanism for allocation of targets to acquiring banks, non-banks in different segments and locations". The primary targets of this scheme will be merchants providing essential services (transport, hospitality and others), government payments, fuel pumps, public distribution system (PDS) shops, healthcare and kirana shops.

Multiple payment acceptance devices and infrastructure supporting underlying card payments are covered under this scheme. These include physical PoS, mPoS (mobile PoS), GPRS (General Packet Radio Service), PSTN (Public Switched Telephone Network), QR code-based payments, among others.

“As the cost structure of acceptance devices vary, subsidy amounts shall accordingly differ by the type of payment acceptance device deployed. A subsidy of 30% to 50% of cost of physical PoS and 50% to 75% subsidy for Digital PoS shall be offered," it said.

Besides the initial corpus, the PIDF shall also receive annual contribution from card networks and card issuing banks. Card networks like Visa Mastercard and Rupay will contribute 0.01 paisa per rupee of transaction. Card issuing banks will give 0.01 paisa and 0.02 paisa per rupee of transaction for debit and credit cards, respectively; and at the rate of Re 1 and 3 for every new debit and credit card issued, respectively, during the year.

“Implementation of targets under PIDF shall be monitored by RBI, Mumbai regional office (MRO) with assistance from card networks, Indian Banks’ Association (IBA) and Payments Council of India (PCI). Acquirers shall submit quarterly deployment reports on achievement of targets to RBI, MRO," RBI said.

Initially called the Acceptance Development Fund (ADF), the initiative was announced on 4 October 2019.

“In order to increase digitisation in these areas, as indicated in the Payment System Vision Document 2021 of RBI and also recommended by the Committee on Deepening of Digital Payments, it has been decided to create an 'Acceptance Development Fund' (ADF) in consultation with the stakeholders. The framework will be operationalised by December 2019," it had said in October 2019.

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