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Payment Infrastructure Development Fund (PIDF)

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  • Published
    9th Jun, 2020

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.


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.


  • 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 centres and north eastern states.
    • Given the high cost of merchant acquisition and merchant terminalisation, 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 crore 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.

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 to achieve "a highly digital and cash-lite society" through the goal posts of competition, cost effectiveness, convenience and confidence (4Cs).
  • Administration & management: The fund will be governed through an advisory council but it will be managed and administered by the
  • The whole premise of this fund is to make it easier for small merchants to accept digital payments across the country. This fund will subsidise the cost of a PoS device.

What was the need of such scheme?

  • Over the years, the payments ecosystem in the country has evolved with a wide range of options such as bank accounts, mobile phones, cards, etc.
  • To provide further fillip to digitisation of payment systems, it is necessary to give impetus to acceptance infrastructure across the country, more so in under-served areas.
  • This move will make the economics more favourable and will significantly increase the merchant base accepting digital payments.

How this idea originated?

  • The idea of a PIDF or an Acceptance Development Fund was first proposed in March 2016, when the RBI published a concept paper aimed at expanding the card acceptance infrastructure in the country.
  • The main objective of the ADF program is to subsidise the cost of acceptance infrastructure such that it enables banks to speed up their merchant acquiring activities and increase penetration in both existing market segments as well as new markets.
  • Such a fund would help address the thin margins that payments companies earn in certain areas of the country where the adoption and usage of digital modes of payments is weak.
  • An ADF also helps in reducing the payback period of investment for acquirers.
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