The Reserve Bank of India (RBI) has set up a Rs 500 crore ($65 million) fund to improve the country’s digital payments infrastructure. The Payments Infrastructure Development Fund (PIDF) will help in the deployment of physical and digital points of sale (PoS) infrastructure in tier-3 to tier-6 centres and north-eastern states. The fund will be governed through an advisory council and administered by the RBI.
While RBI will make an initial contribution of Rs 250 crore ($32.5 million) to the corpus, the rest will be sourced from card-issuing banks and card networks operating in the country. The latter will also make recurring contributions to the fund to cover operational expenses. RBI will step in and infuse funds in case of annual shortfalls.
The objective of the fund is to make it easier for small merchants to accept digital payments across the country by subsidising the cost of a PoS device. Currently, margins that payments companies earn in areas of the country with low adoption and usage of digital modes of payments are quite thin and such a fund can help mitigate some of those issues.
As per the press release, the payments ecosystem in the country has evolved over the years with a wide range of options such as bank accounts, mobile phones and cards, and the fund is expected to provide further fillip to digitisation of payment systems and give a much-needed impetus to acceptance infrastructure across the country, especially in underserved areas. According to RBI data, in March there were 5,139,001 PoS systems deployed by public sector and private sector banks across India.