Payments Infrastructure Development Fund (PIDF)

Why in news?

• The Reserve Bank of India (RBI) announced operational guidelines for the Payments Infrastructure Development Fund (PIDF) scheme.

About Payments Infrastructure Development Fund (PIDF) scheme

• It is aimed at encouraging deployment of more digital payments infrastructure across tier-3 to tier-6 centres.
• The fund will be used to subsidize banks and non-banks for deploying payment infrastructure, which will be contingent upon specific targets being achieved.
• RBI has constituted an advisory council under the chairmanship of B.P. Kanungo, a deputy governor, to manage the fund.
• The advisory council will devise a “transparent mechanism for allocation of targets to acquiring banks, non-banks in different segments and locations".
• The PIDF will be operational for three years from 1 January 2021 and may be extended for two more years based on progress.
• The fund has a corpus of ?345 crore, of which ?250 crore was contributed by RBI and ?95 crore by authorized card networks operating in India.

Objective

• The primary focus of the fund will be to create payments acceptance infrastructure in tier-3 to tier-6 cities, with a special focus on the northeastern states.
• The primary targets of this scheme will be merchants providing essential services, such as transport and hospitality, government payments, fuel pumps, public distribution system (PDS) shops, healthcare facilities, and kiranas, especially those who do not have a payment acceptance device.
• Multiple payments acceptance devices and infrastructure supporting card payments are covered under this scheme.
• These include physical PoS (point of sale terminals), mobile PoS, general packet radio service (GPRS), public switched telephone network (PSTN), and quick response (QR) code-based payments.
• PIDF shall receive annual contributions from card networks and card-issuing banks. Card networks, such as Visa Mastercard and Rupay, will contribute 0.01 paisa per rupee of transaction.

Prelims Question

Consider the following statements regarding “Payment Infrastructure Development Fund”:
1.It primarily targets small establishments in Tier I  and Tier II cities.
2.The scope of the funding is limited to PoS (point of sale terminals) and quick response (QR) code-based payments
Which of the statements given above is/are correct?
(a)1 only
(b)2 only
(c)Both 1 and 2
(d)Neither 1 nor 2

Answer to prelims question