RBI Creates $66mn Fund to Boost E-Payments Infrastructure

Source: Regulation Asia Editors, Regulation Asia 2020-06-08

The RBI will initially contribute half of the funding; the rest will come from card-issuing banks and card networks, who will also cover operational expenses.

The RBI (Reserve Bank of India) has announced the creation of a Payments Infrastructure Development Fund, which will be used to encourage the deployment of PoS (Points of Sale) infrastructure at more retailers and merchants in India.

Under the plan, the PoS machines will be deployed in tier-3 to tier-6 towns and northeastern states, allowing businesses to accept electronic payments. Currently, most PoS terminals are concentrated in tier-1 and tier-2 citites and towns.

The plan is in line with the measures proposed in India’s 2019-2021 vision document for payment and settlement systems. The document had envisaged around 5 million active PoS by 2021, saying they would account for 44 percent of total debit card transactions by 2021.

“Over the years, payments ecosystem in the country has evolved with a wide range of options such as bank accounts, mobile phones, cards, etc,” the RBI said. “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 will make an initial contribution of INR 2.5 billion (USD 33 million), accounting for half of the Fund. The other half will be contributed by card-issuing banks and card networks, who will also cover operational expenses.

The Fund will be governed through an advisory council and managed and administered by the RBI, which will make up any annual funding shortfalls.

Last Thursday (4 June), the RBI has started publishing daily data on the volume and value of transactions undertaken in India’s payments systems, as part of a drive to encourage innovation in payments services.

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RBI Creates $66mn Fund to Boost E-Payments Infrastructure

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