Context: India’s central bank has created a ₹500 cr. fund to boost payment infrastructure in small towns.

About ‘Payments Infrastructure Development Fund (PIDF)

Set up by



To encourage acquirers to deploy Points of Sale (PoS) infrastructure in both physical and digital modes in tier-3 to tier-6 centres and northeastern states.

Finance side

  • RBI will make an initial contribution of ₹250 crore to the PIDF, covering half of the fund.
  • The remaining contribution of the fund will be from card-issuing banks and card networks operating in the country.
  • The fund will also receive recurring contributions to cover operational expenses from card-issuing banks and card networks. 
  • RBI will also contribute to yearly shortfalls, if necessary.


  • The fund will be governed through an Advisory Council and managed and administered by RBI.

The rationale for the creation of a new fund

  • Over the years, the payments ecosystem in India has evolved with a wide range of options such as bank accounts, mobile phones, cards, etc. 
    • And to provide further impetus to the digitisation of payment systems, it is necessary to give a fillip to acceptance infrastructure across the country, especially in under-served areas.
  • Also, Considering the high cost of merchant acquisition and merchant terminalisation, most of the POS terminals in the country are concentrated in tier 1 and 2 cities and towns and other regions have been left out.
    • A point of sale terminal (POS terminal) is an electronic device used to process card payments at retail locations.
  • This move is expected to make the economics more favourable and will significantly increase the merchant base accepting digital payments.
  • The creation of the new fund in line with the measures proposed by RBI called ‘The vision document on payment and settlement systems in India 2019-2021’.

The vision document had envisaged that the usage of debit cards at PoS transactions will be around 44 per cent of total debit card transactions by 2021.

Image Source: Deccan Herald