Payment Infrastructure Development Fund Scheme

PIDF scheme UPSC: Relevance

• GS 3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

PIDF scheme: Context

• Recently, RBI has proposed enhancing subsidy amount and simplifying claim process under the Payments Infrastructure Development Fund (PIDF) scheme.

Payment Infrastructure Development Fund Scheme: Key points

• Objective: To further accelerate and augment the deployment of payment acceptance infrastructure in targeted geographies.
• As of end-April 2022, more than 1 crore new touch points have been deployed under the scheme.
• Experts said that the modification proposed will lead to more players setting up payment infrastructure.
• Enhancing the subsidy amount and simplifying the subsidy claim process will encourage more players to set up merchant acquiring services like POS and QR.

What is PIDF scheme?

• The Payment Infrastructure Development Fund (PIDF) Scheme was operationalised by the central bank in January 2021 to incentivise deployment of Point-of-Sale machines (PoS), mPoS (mobile PoS), Quick Response (QR) codes in tier-3 to tier-6 centres and North Eastern States.
• From August 2021, beneficiaries of PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi Scheme) in tier-1 and tier-2 centres were also covered.
• A subsidy of 30% to 50% of cost of physical PoS and 50% to 75% subsidy for Digital PoS is offered under the scheme.
• The initial target of the scheme was 90 lakh PoS terminals and Quick Response (QR) codes to be deployed over three years, or 2023 end.
• The target was achieved before deadline and as on April end, over 1 crore new touch points have been deployed under the Scheme.
• The PIDF corpus currently stands at ₹811.4 crore, with an initial authorised capital of 250 crore by the RBI.
• An advisory council under the chairmanship of RBI deputy governor BP Kanungo had 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.

Payment Infrastructure Development Fund  corpus: PIDF subsidy

• The minimum usage, to be eligible for subsidy, 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.
• The subsidy claims shall be processed on a half-yearly basis and 75% of the subsidy amount shall be released.
• The balance 25% shall be released later subject to the status of the device being active in three out of the four quarters of the ensuing year.
• The maximum cost of physical acceptance devices eligible for the subsidy will be Rs 10,000, including one-time operating costs up to Rs 500.
• The maximum cost of digital acceptance devices eligible for subsidy will be Rs 300, including a one-time operating cost up to Rs 200.