Card networks to make recurring payments to PIDF, support initial corpus

RBI's payment infrastructure development fund to be valid for three years, effective January 1, can be extended by two more years

The Reserve Bank of India’s (RBI) payment infrastructure development fund (PIDF) scheme intended to create three million touch points in the country every year for digital payments with focus on developing payment infrastructure in tier-3 to tier-6 centres, has been operationalised. It will be valid for three years, effective January 1, 2021, but can be extended by two more years, if required.

While RBI will contribute Rs 250 crore towards the scheme initially, the authorised card networks are expected to put in Rs 100 crore. Furthermore, the card issuing banks will also contribute to the scheme based on the card issuance volume at the rate of Rs 1 and Rs 3 per debit and credit card issued by them, respectively. The RBI is expecting to get the collections done by the end of this month.

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

Apart from the initial contribution, the card networks and the card issuing banks based will have to make recurring contribution to PIDF based on their turnover. For example, for card networks, they have to contribute 0.01 paisa per rupee of transaction; banks, on the other hand, 0.01 and 0.02 paisa contribution per rupee of transaction through debit and credit card, respectively. But they have to contribute Re 1 and Rs 3 for every new debit and credit card issued by them respectively during the year. However, if there is any shortfall, the RBI will contribute to fill it up. The contribution will be collected by January 31, based on data till December 31, and by July 31, based on data of June 30.

“The objective of PIDF is to increase the number of acceptance devices multi-fold in the country. The scheme is expected to benefit the acquiring banks / non-banks and merchants by lowering overall acceptance infrastructure cost”, RBI said.

PIDF will be governed by an ex-officio advisory council, which will devise rules for operating the scheme, comprises of deputy governor of RBI BP Kanungo, Sunil Mehta, CEO of India Banks Association, D Nageswara Rao, CGM, NABARD, Dilip Asbe, CEO, NPCI, Vishwas Patel, Chairman, PCI, and other representatives from the card companies as well. Furthermore, the chief general manager, Department of Payment & Settlement Systems, RB I shall function as the Secretariat to the council.

Under the scheme, the north eastern states will be given special focus. Furthermore, merchants who do not have any payment acceptance device will be targeted under the scheme. While tier-3 and tier-4 centers will get 30 per cent of the total acceptance devices, tier-5 and tier-6 will get 60 per cent, and north eastern states will get the rest 10 per cent.

The scheme will be on reimbursement basis hence claims will have to be submitted only after making payment to the vendor. While the maximum cost for a physical acceptance eligible for subsidy is Rs 10,000 (including a one-time cost of Rs 500), while that for digital acceptance will be Rs 300, with the one-time cost.

Mostly merchants providing essential services, government payments, fuel pumps, public distribution scheme (PDS) shops, healthcare, and kirana shops will be the targeted market segment of the scheme.

“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”, the RBI said.

More importantly, the subsidy amounts will vary upon the acceptance devices. A subsidy of 30 per cent to 50 per cent of cost of physical PoS and 50 per cent to 75 per cent subsidy for Digital PoS shall be offered.

The RBI has said, the parameters / rules for claiming the amount of subsidy for the capital expenditure, taking into account the type of device, deployment location etc., shall be framed by the advisory council.

And, the subsidy that will be granted on a half yearly basis only upon ensuring that the performance parameters have achieved, including conditions for ‘active’ status of the acceptance device and ‘minimum usage’ criteria.

“The minimum usage 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”, RBI said.

Furthermore, only 75 per cent of the subsidy claims will be released and the rest 25 per cent amount will be released subject to the acceptance device being active in 3 out of the 4 quarters of the ensuing year.