Money & Banking

Contributions to PIDF will be mandatory for banks, card networks: RBI

Our Bureau. Mumbai | Updated on January 05, 2021

The Reserve Bank of India (RBI), on Tuesday, said contributions to the Payments Infrastructure Development Fund (PIDF) will be mandatory for banks and card networks.

The central bank had announced the creation of PIDF in June 2020 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.

“Initial corpus of PIDF has to be substantial to initiate pan-India terminalisation and to cover the pay-outs in the first year.

“...The RBI shall contribute ₹250 crore to the corpus; the authorised card networks shall contribute in all ₹100 crore,” said RBI in a circular.

All stakeholders have been requested to co-operate in this endeavour by making their contributions to PIDF within the timelines; and deploying acceptance infrastructure and seeking reimbursement from PIDF.

The central bank said the card-issuing banks should also contribute to the corpus based on the card issuance volume (covering both debit cards and credit cards) at the rate of ₹1 and ₹3 per debit and credit card issued by them, respectively.

As per the circular: “It shall be the endeavour to collect the contributions by January 31, 2021.

“Any new entrant to the card payment eco-system (card issuer and card network) shall contribute an appropriate amount to the PIDF.”

PIDF Scheme will be operational for a period of three years from January 1, 2021, and may be extended for two more years depending upon the progress.

Recurring contribution

Besides the initial corpus, the PIDF will also receive annual contribution from card networks and card-issuing banks.

In the case of card networks, the recurring contribution will be one basis point (bps) – 0.01 paisa per rupee of transaction.

In the case of card-issuing banks, the recurring contribution will be one bps and two bps – 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.

The RBI said it will contribute to yearly shortfalls, if any. PIDF, which presently has a corpus of ₹345 crore (₹250 crore contributed by RBI and ₹95 crore by the major authorised card networks in the country), envisages increasing payments acceptance infrastructure by adding 30 lakh touch points – 10 lakh physical and 20 lakh digital payment acceptance devices every year.

The central bank said the scheme is expected to benefit the acquiring banks / non-banks and merchants by lowering overall acceptance infrastructure cost.


As the cost structure of acceptance devices vary, subsidy amounts shall, accordingly, differ by the type of payment acceptance device deployed, according to the circular.

A subsidy of 30 per cent to 50 per cent of cost of physical PoS (Point of Sale) and 50 per cent to 75 per cent subsidy for Digital PoS shall be offered, it added.

Acquirers meeting / exceeding their targets well in time and / or ensure greater utilisation of acceptance devices in terms of transactions shall be incentivised, while those who do not achieve their targets shall be disincentivised, by scaling up or down the extent of reimbursement of subsidy

As per the tentative distribution of targets across centres, 60 per cent of the acceptance devices may be deployed in Tier-5 and Tier-6 centres; 30 per cent in Tier-3 and Tier-4 centres; and 10 per cent in north-eastern States.

Merchants providing essential services (transport, hospitality), government payments, fuel pumps, PDS shops, healthcare, kirana shops may be targeted, especially in the targeted geographies.

The types of Acceptance Devices covered under PIDF scheme include 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.

Payment methods that are not inter-operable shall not be considered under PIDF. A nine-member Advisory Council (AC), under the Chairmanship of BP Kanungo, Deputy Governor, RBI, has been constituted to manage the PIDF.

Published on January 05, 2021

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