Payments Infrastructure Development Fund (PIDF)

Subject: Economy

Context:

The Reserve Bank of India is going to create Rs 500-crore payments infrastructure development fund (PIDF) to encourage acquirers to deploy points of sale (PoS) infrastructure both physical and digital modes in tier-3 to tier-6 centres as also in northeastern states.

Concept:

• Half of the fund will be initially contributed by RBI
• The remaining contribution of the fund will be from card-issuing banks and card networks operating in the country.
• The fund will be governed through an Advisory Council and managed and administered by RBI.
• The fund will also receive recurring contributions to cover operational expenses from card-issuing banks and card networks.
• RBI will also contribute to yearly shortfalls, if necessary.

Need for the fund:

• Due to the high cost of merchant acquisition and installation the majority of POS terminals in the country are concentrated in Tier-1 and 2 cities and towns, leaving other regions behind.
• This fund will make the economics more favourable and will significantly increase the merchant base accepting digital payments