RBI unveils guidelines for digital payment infra fund2 min read . Updated: 06 Jan 2021, 10:52 AM IST
- PIDF scheme’s key aim is to create payments acceptance infra in tier-3 to tier-6 cities
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 payments infrastructure across tier-3 to tier-6 centres.
The fund will be used to subsidize banks and non-banks for deploying payment infrastructure, which will be contingent upon specific targets being achieved. The central bank said on Tuesday that it 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 three years from 1 January 2021, and may be extended for two more years based on progress. The fund has a corpus of ₹345 crore, of which ₹250 crore was contributed by RBI and ₹95 crore by authorized card networks operating in India.
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The primary focus of the fund will be to create payments acceptance infrastructure in tier-3 to tier-6 cities, with a special focus on the northeastern states.
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, such as transport and hospitality, government payments, fuel pumps, public distribution system (PDS) shops, healthcare facilities, and kiranas, especially those who do not have a payment acceptance device.
Multiple payments acceptance devices and infrastructure supporting card payments are covered under this scheme. These include physical PoS (point of sale terminals), mobile PoS, general packet radio service (GPRS), public switched telephone network (PSTN), and quick response (QR) code-based payments.
“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," RBI said.
Besides the initial corpus, the PIDF shall receive annual contributions from card networks and card-issuing banks. Card networks, such as 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 ₹1 and ₹3 for every new debit and credit card issued, respectively, in the year.
“Implementation of targets under PIDF shall be monitored by RBI, the Mumbai regional office, with assistance from card networks, the Indian Banks’ Association, and Payments Council of India. Acquirers shall submit quarterly deployment reports on target achievements to RBI MRO," RBI said. PIDF, formerly the Acceptance Development Fund, was announced on 4 October 2019. “To increase digitization in these areas, as indicated in Payment System Vision Document 2021 of RBI, it has been decided to create ‘Acceptance Development Fund’ in consultation with stakeholders. The framework will be operationalized by December 2019," an October 2019 RBI note said.