Payment Infrastructure Development Fund (PIDF)

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 PIDF:

• 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 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.
• The whole premise of this fund is to make it easier for small merchants to accept digital payments across the country. This fund will subsidize the cost of a PoS device.

Payment and Settlement Systems in India: Vision 2019 – 2021

• Aiming at a ‘cash lite society, the Reserve Bank of India (RBI) released a vision document for ensuring a safe, secure, convenient, quick, and affordable e-payment system in 219.
• The ‘Payment and Settlement Systems in India: Vision 2019 – 2021’, with its core theme of ‘Empowering Exceptional (E) payment Experience’, envisages achieving “a highly digital and cash-lite society” through the goalposts of competition, cost-effectiveness, convenience, and confidence (4Cs).