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Payments Infrastructure Development Fund (PIDF)

Reserve Bank of India (RBI) has updated guidelines on Payments Infrastructure Development Fund (PIDF).

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 encourages deployment of acceptance infrastructure 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. Accordingly, RBI had created PIDF on January 01, 2021 for a period of 3 years.

What is the validity period of PIDF?

The validity period of PIDF is 5 years from January 01, 2021.

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.

Which devices are included under touch points?

  • Physical devices supporting underlying card payments, such as physical PoS, mPoS (mobile PoS), GPRS (General Packet Radio Service), PSTN (Public Switched Telephone Network), etc.
  • Digital devices, such as QR code-based acceptance infrastructure.
  • Other contemporary devices with hybrid or alternative mode of acceptance, such as –
    • Soundbox devices - providing instant audio payment confirmation, along with payment acceptance by “scan & pay” and Near Field Communication (NFC).
    • Aadhaar-enabled biometric devices - certified biometric scanner devices facilitating Aadhaar authentication for acceptance of payment by merchant through BHIM Aadhaar Pay.

What are the conditions for acquisition of and subsidy on touch points?

  • An eligible merchant may be acquired for one physical device and either of one digital or one other contemporary device under the Scheme. 
  • In special focus areas, an eligible merchant may be acquired for one physical, one digital and one other contemporary device each, under the Scheme.
  • Payment methods that are not inter-operable shall not be considered under PIDF.

What are target geographies under PIDF?

  • The primary focus shall be to create payment acceptance infrastructure in Tier-3 to Tier-6 centres.
  • The Scheme shall include eligible beneficiaries covered under PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi Scheme) and PM Vishwakarma Scheme in Tier-1 and Tier-2 centres.
  • North Eastern States of the country and Union Territories of Jammu and Kashmir, and Ladakh (UTs of J & K and Ladakh) shall be given special focus.

Which market segments and merchant categories are covered under PIDF?

  • Merchants providing essential services (transport, hospitality, etc.), government payments, fuel pumps, PDS shops, healthcare, kirana shops, street vendors, craftsmen, artisans, etc., may be covered, especially in the targeted geographies.
  • While setting parameters for utilisation of funds, the focus shall be to target those merchants who are yet to be terminalised (merchants who do not have any payment acceptance device).

What is the governance structure of PIDF?

PIDF shall be 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 shall also receive annual contribution as under –

  • 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 shall contribute to yearly shortfalls, if any.

The contribution shall be 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 December 29, 2023, the corpus of PIDF stands at ₹1026.37 crore as on November 30, 2023.

Which expenses are covered under PIDF?

  • Subsidy shall be granted on a quarterly basis.
  • Initially 75% of the subsidy amount shall be released and the balance 25% shall be released later after ensuring that performance parameters are achieved, including conditions for ‘active’ status of the device and ‘minimum usage’ criteria, subject to the status of the device being active in 3 out of the 4 quarters of the ensuing year.
  • The minimum usage shall be termed as 50 transactions over a period of 90 days and active status shall be 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 shall be submitted only after making payment to the vendor.
  • Maximum cost of physical device eligible for subsidy – ₹10,000 (including one-time operating cost up to a maximum of ₹500).
  • Maximum cost of digital device eligible for subsidy – ₹300 (including one-time operating cost up to a maximum of ₹200).
  • Maximum cost of other contemporary device eligible for subsidy – ₹2000 (including one-time operating cost up to a maximum of ₹300).
  • Subsidised amount of cost of physical and digital devices based on location of deployment shall be as under –

Location
Physical device
(% of total cost)
Digital device
(% of total cost)
Other Contemporary device
(% of total cost)
Tier-1 to Tier-4 centres 60 75 75
Tier-5 and Tier-6 centres 75 90 90
Special focus areas (North Eastern States and UTs of J & K and Ladakh) 90 90 90


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. (2023, December 29). 'Payments Infrastructure Development Fund – Extension of Scheme and Enhancements'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12584&Mode=0

Reserve Bank of India. (2023, December 29). 'Payments Infrastructure Development Fund (PIDF) – Extension of Scheme, Enhancements and Status Update'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=57021


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