The Reserve Bank of India (RBI) has created a Payments Infrastructure Development Fund (PIDF) with a Rs 250-crore investment to subsidise setting up of card and e-payment infrastructure in small towns and Northeast India. The RBI stated that the fund is aimed at encouraging acquirers to deploy point-of-sale (PoS) infrastructure, both physical and digital, in tier-3 to tier 6 centres and northeastern states.
Parv Sharma’s key takeaways:
- I remain sceptical whether this moves the needle for these regions. There are so many adoption hurdles as we move away from the more developed and better connected metros.
- To name a few – high cost of capital for POS-based solutions ($66m is a drop in the bucket, considering); low debit card usage, sparse and undependable telecoms infra, high merchant acquisition costs and lack of incentive for merchants to accept card payments.
Ritesh Bendre’s key takeaways:
- A key ‘problem’ with implementing a P2P payments solution is the transparency, as merchants have to pay GST and other taxes. This would remove the ability to offer cash discounts, which has always been an important sales tool.
- For bigger ticket items, transaction fees also become an issue, and we see many sales reverting to cash even in more developed regions.