The Reserve Bank of India (RBI) said that it will be setting up an Acceptance Development Fund (ADF) to boost electronic payments and expand card acceptance network in India. The ADF will be operated by the Indian Banks Association (IBA) and will set the rules for contribution and utilisation of funds. Guidelines for the ADF framework will be issued by December 31, 2016. The RBI had issued a consultation paper for improving the card acceptance infrastructure in March. It proposed setting up an ADF which will be funded by card issuers to build a corpus by diverting a percentage of their transaction revenue into the fund which is then invested in structured initiatives to expand acceptance infrastructure. The RBI report also noted that growth in electronic payments is not uniform across all segments nor is it visible at all locations across the country. Particularly, in the context of cards, while the card base is increasing rapidly, activation or usage rates are quite low, especially for purchase of goods and services. Card usage at ATMs, on the other hand, is quite high. An Ernst and Young report points out that the country has the lowest POS terminal penetration in the world. The report further adds that there are only 693 machines per million of India’s population, compared to similar emerging countries such as Brazil, which has 32,995 terminals per million people and China and Russia, each of which has around 4000 terminals per million people. ECBs for startups Startups will now be permitted to raise $3 million…
