Context:

The Reserve Bank of India (RBI) is setting up a Payment Infrastructure Development Fund (PIDF) with a corpus of Rs 500 crore, with an aim to give a push to digital payments nationwide.

About:

• The Payment Infrastructure Development Fund (PIDF) has been created to encourage acquirers to deploy Point of Sale (PoS) infrastructure, both physical and digital, in tier-3 to tier-6 centers and northeastern states.
  • Given the high cost of merchant acquisition and merchant criminalization, most of the POS terminals in the country are concentrated in tier 1 and 2 cities, and towns and other regions have been left out.
• The dedicated fund for deepening digital payments infrastructure will receive recurring contributions to cover operational expenses from card-issuing banks and card networks and the central bank will also contribute to yearly shortfalls, if necessary.
• RBI will make an initial contribution of Rs.250 crores to the PIDF, covering half of the fund, while the remaining contribution will be from card-issuing banks and card networks operating in the country.
• This is in line with the measures proposed by the vision document on Payment and Settlement Systems in India 2019-2021.
• Administration & Management: The fund will be governed through an advisory council but it will be managed and administered by the RBI.
  • This fund will subsidize the cost of a PoS device.