RBI’s Deputy Governor R Gandhi on Monday launched BharatQR code in Mumbai, an interoperable and low cost payment acceptance solution, developed by National Payments Corporation of India (NPCI), MasterCard, and Visa. QR code or Quick Response code is a two-dimensional machine-readable code made up of an array of black and white squares, used for storing URLs or other information for reading by the camera on a smartphone.
The launch of BharatQR will be a step forward in digital payments at retail outlets. It will make payments seamless for the buyer, making them possible without card swiping machines. It will also enable the buyer to make payments to retailers without using the merchant’s ID or number.
This means, payments can be made on the platform through MasterCard, Visa, AmEx, or Rupay. Commenting on the development, Manoj Adlakha, CEO American Express Banking Corporation said, “BharatQR is a path breaking initiative to bring quick, easy and affordable payments to both merchants and consumers. American Express is proud to be a part of this ‘global first capability’, which will significantly contribute towards growth of Digital India.”
— Mastercard India (@mastercardindia) February 20, 2017
A look at current QR Code-based payments
The QR code-based payments are accepted by most merchants across India, but they are largely closed systems. Visa is a pioneer in QR Code payments and it has already launched mVisa in India a year-and-a-half ago. Last year, DTH operator TataSky had partnered with Visa to allow and accept QR code-based payments from its subscribers. In fact, mVisa is the widely accepted payment option across the globe.
In November 2016, MasterCard launched its ‘Masterpass QR service’ in partnership with Ratnakar Bank’s Ongo payment wallet. RuPay was also expected to come up with its QR code-based solution, but there is no word as yet. Since demonetization, e-wallet apps such as Paytm, Freecharge and Mobikwik, among others have also seen a surge in usage. While these wallet apps also allow QR code-based payments, both parties need to have the app.
For instance, if you are transferring money using Paytm, the recipient needs to have Paytm account and app installed in their smartphone. However, there is no unified solution for the same. Meaning, I won’t be able to transfer money from Paytm wallet to a recipient using Freecharge or MobiKwik. This is where Bharat QR Code will greatly help.
What is Bharat QR Code and what are its benefits?
Bharat QR Code is a common QR code built for ease of payments. It is a standard that will support Visa, MasterCard and Rupay cards for wider acceptance. Currently, if you want to make a cashless payment at most stores, you need a credit and debit card to swipe and enter the PIN code for authentication.
However, Bharat QR code will enable the merchants to accept digital payments without the Point of Sale (PoS) swiping machine. It will allow customers of any bank to use their smartphone app to make payment using their debit card. In terms of benefits, merchants will no longer need to invest in buying the PoS machine. With no PoS machine, merchants will also be able to do away with the transaction fees charged by the banks for using the PoS terminal.
How to make payments to merchants using Bharat QR Code
Currently, Bharat QR is integrated into ICICI Bank’s Pockets app and HDFC Bank’s PayZApp, with more banks expected to update their apps with support for the same. I tried making payment using ICICI Bank’s Pocket app and it worked like a charm. To test the feature, we generated a QR code using BHIM app. Next, I used Pocket’s app to scan the QR code and the payment successfully went through via UPI.
In short, you will need your bank app or BHIM app installed in your phone. At the merchant’s store, open the app, tap on Scan QR Code or Scan & Pay (option will differ from one bank to the other) and scan the Bharat QR Code. Once the code is scanned, you will have to enter the amount that you want to pay, add a remark and enter your four-digit passcode. Once authentication is complete, the money will be transferred to the merchant’s bank account.
How will merchants benefit from Bharat QR Code?
Merchants will simply need to generate the Bharat QR Code, take a print out and stick itat their payment desk. The payment will take place via (Immediate Payment Service) IMPS and the money will be instantly creditedinto their bank account. Unlike Paytm,Freecharge and Mobikwik, merchants will no longer have limits on the amount of money that they can accept every month. Also, the hassle of transferring money from wallet to bank account will be eliminated — further making it easier accept digital money.
Security benefits of Bharat QR Code
Currently, when you give your credit / debit card to swipe, there is negligible possibilities of someone capturing crucial details such as card number, expiry date and CVV. While OTP option is enabled for two-step-verification before authenticating transaction, the risk of exposing your card details still remains. In case of Bharat QR code, the transaction is completed with enhanced security, and card details remain in customer’s control, which is a big advantage.
Replicating the China model
In China, the use of QR codes is quite prevalent, as people prefer scanning QR codes to manually entering a web address, even for making digital transactions. Chat apps such as WeChat and wallets such as Alibaba’s Alipay have made payment using QR codes much more mainstream. It is apparently the most popular payment method in China. QR codes are used in China for multiple reasons such as social campaigns, shopping, offline engagement and more.
India right now has many ways to enable digital transactions – mobile wallets, UPI, USSSD, Aadhaar Pay, card transactions, mobile banking and so on. IndiaQR is yet another flower in that bouquet. But to see a China-like adoption, there has to be quick on-boarding of merchants by the respective banks. Considering merchants don’t have to invest in a heavy infrastructure to get this rolling should certainly help.