The Reserve Bank of India (RBI) on Tuesday issued the implementation guidelines for its much awaited scheme on Payments Infrastructure Development Fund (PIDF). According to the Payments Council of India (PCI) the scheme will boost the digital payments’ ecosystem in the Tier-3 to Tier-6 cities in the country.
PCI has said that this forthcoming initiative of the RBI aims at taking digitisation of payments into the hinterlands of the country. In a move to expand digital payments in these geographies, RBI has created a PIDF fund to cater to the monetary needs of the industry to penetrate the targeted areas. The scheme aims to cover multiple payment acceptance devices/infrastructure supporting underlying card payments, such as physical PoS, mPoS (mobile PoS), GPRS (General Packet Radio Service), PSTN (Public Switched Telephone Network), QR code-based payments, etc.
RBI has proposed varying subsidies for each of the types of devices basis the varying cost of deployment for these devices. In its guidelines, RBI has elaborated on the Governance structure with the names of the members of the ex-officio Advisory Council, target geographies, types of devices covered, allocation of targets and reimbursement structure for the scheme.
For the initial corpus, the RBI has mandated the banks and the card networks to contribute to the fund. RBI shall contribute a total of INR 250 crores to the corpus, with additional INR 100 crores to be contributed by the authorised card networks in all. The scheme is aimed at creating an acceptance infrastructure for digital payments in the Tier3 to Tier-6 cities. PCI said that it will provide the industry with an initial monetary support to reach the target geographies and hence provide for financial inclusion within these targeted areas.
For strict monitoring of the scheme, RBI has sought monitoring assistance from the Card networks, Payments Council of India (PCI) and the Indian Banks’ Association (IBA) to the RBI’s Mumbai Regional Office (MRO). According to PCI, this will ensure that the targets are met and the desired outcomes are achieved.
Mr. Vishwas Patel, Chairman, Payments Council of India and Director, Infibeam Avenues Limited appreciated RBI’s move to support the penetration of digital payments in the hinterland of the country. He said: “PIDF scheme will boost the acceptance of digital payment in the yet to be completely tapped regions by the industry. This support from the RBI will motivate the industry to set targets for itself and unveil the potential of the targeted geographies in a great way.”
Mr. Patel, who is also a member of the ex-officio Advisory Council for the scheme added: “The move will certainly help the RBI and industry to work closely in achieving its vision of Financial inclusion and digital transformation.”
Mr. Dilip Asbe, Managing Director and CEO of National Payments Corporation of India (NPCI) said, “We welcome RBI’s initiative of creating this first-of-its-kind Payments Infrastructure Development Fund (PIDF), with overall industry stakeholders as participants in the fund. We are confident that this significant move will provide a fillip to the last mile penetration of digital payments and acceptance infrastructure – thereby driving digital financial inclusion in the hinterland. Special focus on NE is well deserved, and will accelerate digitization. This well timed RBI’s initiative of PIDF creation, along with the recently announced increased limit of contactless payments from INR 2000 to INR 5000, will promote significant adoption of digital transactions”.
T R Ramachandran, Group Country Manager, India and South Asia, Visa said, “We are delighted that the RBI has now operationalized the Payment Infrastructure Development Fund (PIDF). The fund, created in June last year, will play a pivotal role in accelerating digital payments acceptance and benefit merchants and consumers in hitherto underpenetrated regions of the country. Visa will continue to work with the RBI and the ecosystem to augment payment acceptance infrastructure in Tier 3 cities and beyond, as well as the North East.”
Mr. Manish Patel, Founder & CEO, Mwsipe Technologies said “The PIDF guidelines unveiled by RBI is a landmark move for the payment industry. This move removes the shackles that have been holding the merchant services back in tier 3+ towns and villages. We are highly appreciative of the collaborative approach of the RBI in building the right framework that will usher in the next big wave of digital payment acceptance in the country.”
“The implementation of PIDF will set off an exciting phase of acceleration of digital payments adoption across India. Small merchants, especially in tier-3 locations and beyond will be the biggest beneficiaries as cost of deployment of PoS devices and servicing constraints have been the biggest barriers in adoption. PIDF will ensure banks and fintech companies get the required support to prioritise these locations. Prevailing macro factors were already pushing the consumer and merchant demand for payments and in-store digitisation solutions. Now the focus needs to be to deliver world-class, India-first products to these small merchants in a cost-effective manner and therefore all entities need to collaborate now more than ever before.” said Nitish Asthana, President and COO, Pine Labs.