This fund has been created to encourage acquirers to deploy Point of Sale (PoS) infrastructure, both physical and digital, in tier-3 to tier-6 centres and north eastern states. This is in line with the measures proposed by the vision document on payment and settlement systems in India 2019-2021.
The dedicated fund for deepening digital payments
infrastructure will receive recurring contributions to cover operational expenses from card issuing banks
and card networks and the central bank will also contribute to yearly shortfalls, if necessary.
The fund will be governed through an advisory council but it will be managed and administered by the RBI.
“Over the years, payments ecosystem in the country has evolved with a wide range of options such as bank accounts, mobile phones, cards, etc. To provide further fillip to digitisation of payment systems, it is necessary to give impetus to acceptance infrastructure across the country, more so in underserved areas”, the RBI said.
“With infrastructure deployment, merchant onboarding and training always being a key challenge for enhancing the reach of digital payments
in smaller town and cities, the special emphasis on tier-3 to tier-6 centers and north eastern states by the RBI would provide much needed impetus in expanding the reach and strengthening of the network”, said Kush Mehra, Chief Business Officer, Pine Labs, an Indian merchant platform company.
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. Increased deployment of card acceptance infrastructure across the country including at smaller centres with a substantial portion of the infrastructure taking care of processing contactless card payments, the vision document said.
The enhanced ability of PoS infrastructure will is supposed to reduce demand of cash over time. The vision document had estimated that by 2021, there will be around 5 million active PoS by 2021.
Last year, the RBI had also proposed to set up an Acceptance Development Fund which will be used to develop card acceptance infrastructure across small towns and cities.