Over the past few years, the payments ecosystem in India has evolved with a wide range of options such as bank accounts, mobile phones, cards, etc.
To provide further fillip to the digitization of payment systems, it is necessary to give impetus to acceptance infrastructure across the country.
Therefore, the Reserve Bank of India has been launched the creation of an ₹500 crores Payments Infrastructure Development Fund (PIDF) to encourage the adoption and deployment of Point-of-Sale (PoS) devices, both physical and digital, in Tier-3 to Tier-6 centres and North-eastern states.
The RBI will be fully responsible for operating and managing the Fund (PIDF), while it would be governed by an Advisory Council.
With the help of PIDF, the main object of RBI to provide impetus to acceptance infrastructure across India especially in undeserved areas to stimulate the digitization of payment systems.
It will give a push to digital payments across India and reduce demand for cash over time.
Under the Payments Infrastructure Development Fund (PIDF), an initial contribution of ₹250 crores will be made by the RBI to covering half the fund, and the remaining contribution will be from card-issuing banks and card networks to cover operational expenses in the nationwide. While RBI will also contribute to yearly shortfalls, if necessary.
The setting of PIDF is in line with the measures proposed by the vision document on payment and settlement systems in India 2019 to 2021.
Another side, PIDF is also in line with the Reserve Bank of India’s proposal to set up an Acceptance Development Fund (ADF) which will be used to develop card acceptance infrastructure across small towns and cities.
It is important because mostly Point-of-Sales Devices in the country are concentrated in tier 1 and 2 cities because of the high cost of merchant acquisition.