Payment Infrastructure Development Fund (PIDF) | UPSC

Payment Infrastructure Development Fund (PIDF) | UPSC


Payment Infrastructure Development Fund (PIDF)

      WHY IN NEWS:

The Reserve Bank of India (RBI) announced the operationalisation of the payment infrastructure development fund (PIDF) scheme.



Payments Infrastructure Development Fund (PIDF) is to encourage acquirers to deploy Points of Sale (PoS) infrastructure (both physical and digital modes) in tier-3 to tier-6 centres and north eastern states.



  • Over the years, 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 underserved areas

  • The Reserve Bank will make an initial contribution of ₹250 crores to the PIDF covering half the fund and remaining contribution will be from card issuing banks and card networks operating in the country.
  • The PIDF will also receive recurring contributions to cover operational expenses from card issuing banks and card networks.
  • The Reserve Bank will also contribute to yearly shortfalls, if necessary.
  • The PIDF will be governed through an Advisory Council and managed and administered by Reserve Bank.
Payment Infrastructure Development Fund (PIDF) | UPSC
Payment Infrastructure Development Fund (PIDF) | UPSC


  • An advisory council (AC) under the chairmanship of RBI deputy governor BP Kanungo has been constituted for managing the PIDF.
  • The fund will be operational for three years effective from January 1, 2021 and may be extended for two more years.
  • The implementation of targets shall be monitored by the RBI with assistance from card networks, the Indian Banks’ Association (IBA) and the Payments Council of India (PCI).


  • The authorised card networks shall contribute in all Rs 100 crore.
  • The card issuing banks shall also contribute to the corpus based on the card issuance volume — covering both debit and credit cards — at the rate of `1 and `3 per debit and credit card issued by them, respectively.

Besides, the PIDF shall also receive annual contributions from card networks and card issuing banks

  • Card networks will have to chip in with one basis point (bps), or 0.01 paisa per rupee of transaction.
  • Card issuing banks will have to contribute one bps and two bps —0.01 paisa and 0.02 paisa — per rupee of transaction for debit and credit cards respectively.
  • They must also contribute Rs 1 and Rs 3 for every new debit and credit card issued by them during the year.
  • The RBI shall contribute to yearly shortfalls, if any.


  • The focus shall be to target those merchants who are yet to be terminalised (merchants who do not have any payment acceptance device).
  • The AC shall devise a transparent mechanism for allocation of targets to acquiring banks and non-banks in different segments and locations.
  • Tentatively, tier-3 and tier-4 centres will be allocated 30% of the acceptance devices, tier-5 and tier-6 centres will get 60% and the north eastern states will be given 10%.
  • Merchants engaged in services such as  fuel pumps, public distribution system (PDS) shops, healthcare and kirana shops may be included, especially in the targeted geographies.

Multiple payment acceptance devices and infrastructure such as physical PoS, mPoS, GPRS , public switched telephone network (PSTN) and QR code-based payments will be funded under the scheme

  • A subsidy of 30% to 50% of cost of physical PoS and 50% to 75% subsidy for Digital PoS shall be offered.
  • Payment methods that are not interoperable shall not be considered under the PIDF.

      IASbhai WINDUP: 


  • The subsidy shall not be claimed by applicants from other sources like the National Bank for Agriculture and Rural Development (NABARD), etc.
  • In case other mechanisms exist for providing subsidy or reimbursing cost of deployment of acceptance infrastructure, no reimbursement shall be claimed from PIDF.
  • The subsidy shall be granted on a half-yearly basis, after ensuring that performance parameters are achieved.
  • 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.
     SOURCES:  PIB   | Payment Infrastructure Development Fund (PIDF) | UPSC



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