India has been on the path to a cashless society after the wheels of demonetization were set in motion last November last year. The launch of BharatQR today, where all leading card networks viz. Rupay, VISA, Mastercard and American Express have collaborated, is another such strong move in this direction. This move will ease electronic transactions in shops without card swiping machines.
About 14 leading banks are already operationally ready to deploy BharatQR, including Axis Bank, Bank of Baroda, Bank of India, Citi Union Bank, DCB, Karur Vysya Bank, HDFC Bank, ICICI Bank, IDBI Bank, RBL Bank, State Bank of India, Union Bank of India, Vijaya Bank and YES Bank. Many other leading banks are also at various stages of implementation.
There are 688 banks issuing cards of these networks. The team expects 50–60 banks to be operationally ready in the next six months. There will be a new special merchant category (MCC) applicable from April 1, 2017. The MDR for BharatQR will be capped at 0.4% for the special merchants and small merchants (with annual turnover less than 20L). The second phase of BharatQR will be on integrating with UPI. The static QR in the UPI app will be the BharatQR.
Rajeev Rishi, Chairman, IBA and CMD, Central Bank of India stated, “BharatQR is another initiative in the Digital India journey. Using smartphones, it makes payments simple and easy for customers and the merchants across the country from their debit, credit and prepaid cards using a QR code common across all banks and card networks. It does not require a POS machine. It is another step towards (the) digitalization of banking transactions.”
P. Hota, Managing Director & CEO, National Payments Corporation of India (NPCI), said, “With over 330 million debit cards in circulation, RuPay has emerged as one of the most successful homegrown card networks in the world. BharatQR code initiative is yet another transformational step towards building a less-cash economy at an insignificant cost. We believe that integration of Unified Payments Interface (UPI) in this service will boost the adoption rate among merchants as well as customers at large. We are pleased to collaborate with international card network companies for facilitating interoperability and to cater to India’s vast population.”
Porush Singh, Country Corporate Officer, India and Division President, South Asia, Mastercard, said, “Mastercard welcomes and supports the government’s move to introduce BharatQR. With the objective of providing a fast, convenient and secure payment solution for consumers and a reliable and instant acceptance offering for merchants, Mastercard developed the first-of-its-kind ‘Made in India’ global interoperable payment solution at its technology center in Vadodara. We look forward to leveraging our technology backbone and partnering with the government and the industry to create a robust, safe and secure digital payments ecosystem.”
T.R. Ramachandran, Group Country Manager, India & South Asia, Visa, said, “We are proud to have contributed to the development of BharatQR as we believe it has the potential to significantly accelerate the growth of electronic payments acceptance in the country. This is especially true for small merchants, as it is low cost and easy to implement, eliminating the need for traditional POS hardware. The success of mVisa has proven a QR code solution to be scalable, secure and easy to use, with acceptance at more than 60,000 merchants across the country. We look forward to continuing to partner with our clients, merchants and the government to innovate and to expand access to digital payments in India.”
BharatQR’s interoperability, coupled with the low-cost acceptance method, will facilitate rapid adoption by smartphone users who will simply have to “scan to pay.” Described in the industry as “push payments,” such transactions are considered highly secure as they are “customer-initiated,” instead of “merchant-initiated” and no personal information needs to be shared with the merchant.
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 part of this ‘global first capability,’ which will significantly contribute towards (the) growth of Digital India.”
This is not a brand new electronic transaction payment method because this mode of payment has already been tried and tested in China with a lot of success.
Success of QR codes in China
In China, mobile payments serve as the primary means for consumers to pay for goods and services, both offline and online. Two of the biggest tech giants in China are Alibaba’s Alipay and messaging app WeChat which allows its customers to make transactions via QR codes. China has the world’s largest per-capita mobile phone users so it’s obvious people use mobile devices as a payment option on point-of-sales (POS) terminals or pay for goods online. At present, WeChat has 400 million active users with 300 million Chinese have their bank cards linked with WeChat. Alipay has over 300 million users, 800 million Chinese accounts and does 80 million transactions per day with 45 million payments done through Alipay Wallet.
Abhishant Pant (Founder at Cashless Journey | Top 100 FinTech Influencer Asia) has written about how to get started:
- Acquiring bank signs up a merchant (Lite KYC or low-touch acquiring process is yet to be solved for open loop standards).
- Provides merchant with QR decal or sticker to display.
- The consumer downloads the app of one of the participating bank; scans the QR code.
- Money is debited from the underlying store of value (debit/credit/prepaid) and settled in the merchant account.
Some insights that Abhishant shared with us:
- Approximately 1 million new merchants is the target plan for the calendar year. Interestingly, today, Paytm also announced its intention to further build its own merchant network (they also intend to add 1 million merchants a month).
- Nothing stops the issuers and acquirers to extend this service to ATM networks. Wherein, consumers can simply use his bank app and scan a QR code at an ATM to withdraw money from same.
Frequently Asked Questions (FAQS):
What is BharatQR?
- BharatQR is the world’s first standardized Quick Response (QR) code payment solution developed by Mastercard, National Payments Corporation of India (NPCI) and Visa, to expedite India’s transition to a less-cash society.
What are the benefits of BharatQR?
- Consumers will not need to scan different QR codes at the same merchant provided by the different payment networks.
- Merchants will only need to display one QR code at the storefront or through the acquiring bank’s mobile application.
- The underlying specification for BharatQR can be implemented in other countries to deliver a globally interoperable solution.
How is BharatQR different from BHIM?
- BHIM is an aggregator app that interoperably works across the UPI platform services launched by the various banks
- BharatQR is integrated within the bank’s payment or mobile banking app.
- BharatQR simplifies merchant payments from the linked card in the banking app.
- BharatQR provides notifications to merchants on payment receipt.
How is BharatQR different from any wallet?
- BharatQR is not a wallet. BharatQR is a different form factor of the POS machine. For example, a merchant with an HDFC Bank account can accept a payment from an SBI Cardholder be it a Visa card, Mastercard, or Rupay card.
- On the other hand, to use a wallet, both the customer and the merchant to whom the payment is made need to have the same wallet. This is often referred to within the industry as a “closed loop” system. For example, an Ola wallet cannot be used to make a payment to a Paytm or Freecharge wallet.
- Payments made or received using BharatQR are backed by strong operational rules for dispute management provided for by the four networks – Visa, Mastercard, American Express and Rupay.
- Banks follow KYC norms for customer and merchant acquisition, which makes this a secure, safe and robust payment method.
- BharatQR transactions are processed by well-established payment networks that have processed billions of payment transactions.
Will it work for users without a smartphone?
- A deployment option via USSD is being worked on to support non-smartphone users. Discussions are on with the Government of India to allow banks and payment networks to have their own shortcodes like *99 and access will be granted soon hopefully.
- Countries like Kenya, Pakistan, Tanzania, Uganda and Ghana process as many as 7 million to 10 million USSD transactions per day, and have achieved financial inclusion at scale. With about 700 million feature phone users in India and over 750 million debit cardholders this technology together with financial literacy programs could significantly help address the last mile problem, particularly in semi-urban and rural areas.
Does a customer need to register before using BharatQR for payments?
The customer has to opt-in for the service once using their bank app.
Can I use more than one BharatQR bank application on the same mobile?
Yes. The mobile app of multiple banks supporting BharatQR can be used on the customer’s smartphone.
Does the merchant/recipient also need to register for BharatQR?
- The merchants will be onboarded by their acquiring institution after due diligence in accordance with applicable regulations. Many of the acquirers are working on instant merchant onboarding process in order to enable easy signup.
- This is a one-time process after which the merchant begins to receive notifications against transactions performed on the QR Code provided by its acquirer.
What happens if my mobile phone is lost?
- If the mobile device is lost or stolen, account holders can have their payment account immediately deactivated by contacting their financial institution.
- No customer data is retained on the mobile phone.
- All bank payment apps supporting BharatQR have authentication controls in place for identifying users.
Can I map multiple cards/accounts in one app?
- Yes, it is possible to map multiple cards/accounts within the same bank for this service within the bank’s mobile app.
What if my account is debited but the transaction does not go through?
- The customer’s bank will arrange to refund the transaction after due reconciliation of the transaction.
What is the limit of each transaction on BharatQR?
- The transaction limits are defined by the customer’s bank based on the account/card profile.
Will I be able to use BharatQR after I change my mobile or mobile number?
- Yes. The bank may optionally require additional registration on the new device depending on its own policy.
In case another person uses my mobile, is there any security risk?
- For any BharatQR transaction to be successfully completed, there is an authentication-using MPIN. This makes the transaction safe and secure, and is in keeping with the norms prescribed by RBI.
Is BharatQR available across multiple mobile platforms?
- BharatQR is available presently on smartphones that are deployed on Android and iOS operating systems.