Friday, Jan 23: Shares of One 97 Communications (Paytm) crashed nearly 5% in Friday’s session, with the stock trading at Rs 1,198.80, down 4.89%, as of 11:52 AM (IST). The decline came after the RBI ended the PIDF (Payments Infrastructure Development Fund) scheme, which had incentivised deployment of digital payment infrastructure and ended in December 2025 without an extension, as per the details shared. For Paytm, this was flagged as a key negative as PIDF contributed 20% of operating profit.
What is RBI’s PIDF scheme?
The RBI’s PIDF scheme, launched in 2021, aims to boost digital payment adoption in underserved areas by subsidising the cost of payment acceptance devices. The focus areas include Tier-3 to Tier-6 cities, the North-East, and Jammu & Kashmir/Ladakh, with later inclusion of PM SVANidhi beneficiaries in Tier 1 and Tier 2. The scheme’s objective is to reduce financial barriers for merchants and expand financial inclusion, and it was extended until December 31, 2025.
Key objectives of PIDF
The scheme is designed to increase acceptance points by significantly growing physical and digital payment touchpoints in underbanked regions, bridge the digital divide by lowering the operational cost of deploying payments infrastructure in challenging areas, and promote financial inclusion by encouraging adoption of digital transactions across India.
Key features of PIDF
PIDF targets specific regions such as Tier-3 to Tier-6 cities, North-Eastern states, and J&K/Ladakh. It provides subsidies for deploying devices such as PoS machines, mPoS, and QR codes, and covers eligible devices including traditional PoS, mPoS, QR codes (UPI, Bharat QR), and newer devices such as Soundbox/biometric devices, which were included from October 2023. The scheme also offered higher subsidy of 90% for special focus areas like North-Eastern states, J&K, and Ladakh, and was extended for two years to run until December 31, 2025.
How the scheme works
The RBI operationalised PIDF with contributions from the central bank and card networks. These funds were used to support banks and non-banks in setting up payment acceptance infrastructure, lowering the cost for merchants to accept digital payments and thereby boosting adoption.
How it impacts Paytm’s business
With the scheme now ended and not extended, Paytm faces a near-term profitability headwind linked to deployment economics. As shared, PIDF contributed 20% of operating profit for Paytm, which is why its end is being viewed as a meaningful negative.
For Paytm’s 2026 outlook, the key concern is increased deployment costs. Paytm continues to expand its merchant base and has reached over 13 million subscriptions by mid-2025. Without PIDF subsidies, the cost of manufacturing and distributing millions of devices such as Soundboxes is expected to fall entirely on the company. To counter this headwind, Paytm has already begun focusing on device refurbishment, which involves recycling older Soundboxes to reduce capital expenditure as it prepares for a post-subsidy operating environment.
The end of such schemes is also being seen as a factor that can add valuation pressure, as investors may reassess expectations around “sustainable” profitability. That recalibration can lead to stock volatility as the market adjusts to a potentially lower-margin setup.
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