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What is Payments Infrastructure Development Fund (PIDF)?

Reserve Bank of India (RBI) has created Payments Infrastructure Development Fund (PIDF) to give impetus to acceptance infrastructure across the country.

What is Payments Infrastructure Development Fund (PIDF)?

The Payments Infrastructure Development Fund (PIDF) Scheme, operationalised by Reserve Bank of India (RBI) from January 01, 2021, subsidies and encourage deployment of Points of Sale (PoS) infrastructure (physical and digital modes) in the country.

What is the basis of creating PIDF?

In May 2019, the High-Level Committee on Deepening of Digital Payments (Chairman: Shri Nandan Nilekani, former Chairman, UIDAI) set up by RBI, had recommended setting up of an 'Acceptance Development Fund 'to be used for improving acquiring infrastructure at Tier IV, V and VI areas which will ensure optimum utilisation of millions of cards issued to customers, resulting in increased digitisation in these deficit centres.

What is the validity period of PIDF?

The validity period of PIDF is 3 years from January 01, 2021, extendable by 2 further years, if necessary.

What is the target under PIDF?

The target of PIDF is to increase the payments acceptance infrastructure by adding 30 lakh touch points every year (10 lakh physical and 20 lakh digital payment acceptance devices).

Which devices are included under physical and digital touch points?

  • Physical devices include PoS, mPoS (mobile PoS), GPRS (General Packet Radio Service), PSTN (Public Switched Telephone Network), etc.
  • Digital devices include inter-operable QR code-based payments such as UPI QR, Bharat QR, etc.
What are target geographies under PIDF?
  • The primary focus is to create payment acceptance infrastructure in Tier-3 to Tier-6 centres.
  • In addition to the street vendors in tier-3 to tier-6 centres, the Scheme also includes eligible street vendors covered under PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi Scheme) in Tier-1 and Tier-2 centres as beneficiaries.
  • North-Eastern states of the country and Union Territories of Jammu and Kashmir, and Ladakh (UTs of J & K and Ladakh) are given special focus.
  • While setting parameters for utilisation of funds, the focus is to target those merchants who are yet to be terminalised (merchants who do not have any payment acceptance device). Such merchants may be acquired for one physical and one digital acceptance device each under the Scheme.
  • Merchants providing essential services (transport, hospitality, etc.), government payments, fuel pumps, PDS shops, healthcare, kirana shops, street vendors, etc., may be covered, especially in the targeted geographies.
  • Payment methods that are not inter-operable are not considered under PIDF.
  • The tentative distribution of targets across centers is as follows –
Distribution of Acceptance Devices % Share of Total
Tier-1 to Tier-4 centres 30
Tier-5 and Tier-6 centres 60
North-Eastern States and UTs of J & K and Ladakh 10

What is the governance structure of PIDF?

PIDF is governed by an ex-officio Advisory Council (AC), which is presently chaired by Shri T Rabi Sankar, Deputy Governor, RBI.

Who contributes to the corpus of PIDF?

PIDF was created with an initial contribution of ₹250 crores from RBI, ₹100 crores from the authorised card networks, and contribution from card issuing banks based on the card issuance volume at the rate of ₹1 and ₹3 per debit and credit card issued by them, respectively.

Besides the initial corpus, the PIDF also receives annual contribution as under –

  • Authorised card networks (turnover based) – 1 basis point (bps) i.e., 0.01 paisa per Rupee of transaction.
  • Card issuing banks (turnover based) – 1 bps and 2 bps i.e., 0.01 paisa and 0.02 paisa per Rupee of transaction for debit and credit cards respectively; also at the rate of ₹1 and ₹3 for every new debit and credit card issued by them respectively during the year.
  • RBI contributes to yearly shortfalls, if any.

The contribution is collected by January 31st and July 31st based on card data of December 31st and June 30th respectively.

As per the RBI Press Release dated February 03, 2023, the corpus of PIDF stands at ₹788.20 crore as on December 31, 2022.

Which expenses are covered under PIDF?

  • Subsidy is granted on a quarterly basis.
  • Initially 75% of the subsidy amount is released and the balance 25% is released later after ensuring that performance parameters are achieved, including conditions for ‘active’ status of the acceptance device and ‘minimum usage’ criteria, subject to the status of the acceptance device being active in 3 out of the 4 quarters of the ensuing year.
  • The minimum usage is termed as 50 transactions over a period of 90 days and active status is minimum usage for 10 days over the 90-day period.

How can claims be submitted under PIDF?

  • The scheme is on reimbursement basis; accordingly, the claim is to be submitted only after making payment to the vendor.
  • Maximum cost of physical acceptance device eligible for subsidy – ₹10,000 (including one-time operating cost up to a maximum of ₹500).
  • Maximum cost of digital acceptance device eligible for subsidy – ₹300 (including one-time operating cost up to a maximum of ₹200).
  • Subsidised amount of cost of physical and digital payment acceptance devices based on location of deployment is as under –

Location
Physical payment acceptance device
(% of total cost)
Digital payment acceptance device
(% of total cost)
Tier-1 to Tier-4 centres 60 75
Tier-5 and Tier-6 centres, North-Eastern States and UTs of J & K and Ladakh 75 90

How is implementation of targets monitored under PIDF?

  • Implementation of targets under PIDF is monitored by RBI with assistance from Card networks, Indian Banks’ Association (IBA) and Payments Council of India (PCI).
  • Acquirers need to submit quarterly deployment reports on achievement of targets to RBI.
  • Acquirers, meeting / exceeding their targets well in time and / or ensure greater utilisation of acceptance devices in terms of transactions, are incentivised by scaling up the extent of reimbursement of subsidy as follows –


References

Reserve Bank of India. (2019, May 17). 'Report of the High Level Committee on Deepening of Digital Payments'. Retrieved from https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/CDDP03062019634B0EEF3F7144C3B65360B280E420AC.PDF

Reserve Bank of India. (2019, October 04). 'Statement on Developmental and Regulatory Policies'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=48318

Reserve Bank of India. (2020, June 05). 'RBI announces creation of Payments Infrastructure Development Fund'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=49905

Reserve Bank of India. (2021, January 05). 'Operationalisation of Payments Infrastructure Development Fund (PIDF) Scheme (Updated as on June 09, 2022)'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12009&Mode=0

Reserve Bank of India. (2021, August 26). 'Payments Infrastructure Development Fund – Inclusion of PM SVANidhi Scheme beneficiaries'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=52112#

Reserve Bank of India. (2021, November 16). 'Payments Infrastructure Development Fund (PIDF) – Status Update'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=52571

Reserve Bank of India. (2022, June 09). 'Payments Infrastructure Development Fund (PIDF) – Status Update'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=53843

Reserve Bank of India. (2023, February 03). 'Payments Infrastructure Development Fund (PIDF) – Status Update'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=55153


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