QR codes are a type of code that contain various forms of data, like payment information, website links, which when scanned, allow transactions to be completed. Companies such as Paytm, PhonePe, Google Pay and Bharat QR have enabled retail merchants to deploy QR codes that customers could scan with their corresponding payment wallets.
These codes have gained popularity during the pandemic as they are contactless in nature.
In October 2020, India’s banking regulator RBI ushered in certain measures which have the potential to alter the payments landscape in India considerably. It said that payment companies that have deployed proprietary Quick Response (QR) codes across their merchant networks must shift to the UPI or the Bharat QR codes by March 31, 2022. Here’s what the West can learn from India;
No to proprietary QR codes
RBI has directed that payment companies cannot issue their own proprietary QR codes anymore. So, why has the government issued this notification? The main reason was compatibility interoperability between QR codes of different platforms. B. With the advent of the Unified Payments Interface (UPI) and its growing user base, the proprietary nature of these QR codes restricted interoperability.
With interoperable QR codes (such as Bharat QR), customers of one payment company can scan and pay for goods via UPI on a different payment network. Before this mandate by RBI, this was not possible.
Embed QR Code on cards
BOB Financial and Mastercard have jointly launched small business-focussed QR code embedded credit cards that will not only enable the cardholders to make payments but receive them as well. Small businesses can use QR to make payments, while also enjoying the ability to receive payments with cost-efficient acceptance enablement costs and a simpler onboarding process. The card will have a Bharat QR code on the card face, converting the payment instrument into an acceptance point as well, by affixing a QR Code that carries the small businesses’ details.
Almost no privacy issues
While receiving payments, the cardholders will not be required to give out personally identifiable information. This, in effect, addresses the privacy issue. However, while the software used to generate QR codes does not collect personal information, the location, time of the scan, the number of times a code is scanned and the operating system of the device that performed the scan are all available to the code’s creators.
QR Codes beyond payments
Businesses can use interoperable QR Codes beyond payments. For instance, when ordering food in physical restaurants, QR codes can help in browsing the menu, thereby delivering a contactless experience. As an example, a Paytm interoperable QR Code, while allowing Google Pay and PhonePe users to pay using UPI, can also allow users with the Paytm App to unlock a lot more payment options than just UPI. This is the reason for companies to aggressively acquire merchants, so as to unlock such custom experiences for their users
This also opens up avenues for options such as using QR codes for getting more information on certain products or services being sold on an e-commerce website. Now QR codes can be used for anti-forgery measures, traceability, brand protection, amongst other features as they become increasingly more common across industries.