Bharat QR Code: A Push to Cashless Economy

Introduction

  • India QR code, a flagship product promoted by the NAMO government is launched by the RBI on February 20,2017.
  • The QR (quick response) code is going to be one of the key components by the government to boost digital payments at retail merchant points across the country facilitating electronic transactions in shops without the expensive card swipe machines. 
  • It is a product that is being developed by all four major card payment companies RUPAY card , VISA, MASTERCARD and AMERICAN EXPRESS. 
  • This is going to be the Standard QR code for mobile payments in india. VISA has been a pioneer in QR codes ,having developed and launched m Visa before over a year and a half, next player on the ground to launch this was Paytm which allows payments via QR code but is restricted to its members alone i.e. a closed loop system but India QR code will be interoperable allowing payments through multiple gateways. With the launch, the government hopes to replicate the success of QR code in Japan, china and many other countries , where it is the most popular mode of payment. 
  • Payments companies currently require to do complete KYC of a merchant before on-boarding him for acceptance. 

OBJECTIVE:

The merchant outlets across the country use different QR codes provided by different payment networks. In order to standardize the QR codes across the country BHARAT QR code is introduced. It is convenient for those who would like to use mobile banking app rather than the credit or debit cards. BHARAT QR works with collaboration of the Payment networks- National Payments Corporation of India (RuPay), Visa and Master card. As of now 15 banks are a part of this payment platform and more are to join.

What is a QR code?

A QR Code is a 2D barcode that can store a lot of information, compared to a traditional barcode. These square-shaped barcodes have been around for more than two decades. It is only recently that QR Codes have entered into customer engagement activities. A QR code consists of black squares arranged in a square grid on a white background, which can be read by an imaging device such as a camera. First designed for the automotive industry in Japan. The QR code system was invented in 1994 by Denso Wave. Its purpose was to track vehicles during manufacturing.

How it will work?

  • A merchant will display the QR code ,which can be scanned using a smart phone banking app linked to any of the four payments networks mentioned above and the money will be directly transferred by a buyer to the merchant account thus eliminating use of card swipe machines . QR-code based payment is technologically the most advanced type of contactless payment. 
  • Banks will have to integrate the debit card details of the customer into the mobile application and also board maximum number of merchants to accept such payments.

Benefits for Merchants

  • Merchants need to generate the QR code and place the QR code print at their outlet or cash counter. QR codes are black and white 2-D machine readable codes, which store information about merchant bank account. The customer has to scan the QR code using his respective banks app or the BHIM app. following are the benefit to the merchant for using this BHARAT QR code: 
  • Eliminate the use of PoS machine at the merchant outlet thereby reducing the investments and installation, maintenance cost in PoS machines. 
  • Banks charge transaction fees for using PoS machines which can be eliminated. 
  • Payments are transferred directly into merchants bank account through IMPS mode of transfer. 
  • Less dealing with swiping machine issues such as not able to read the card or server failures. 
  • No worry to lose sales due to improper working of machine. 
  • Linked to all banks (Unified payment). 

Benefits to Customers

  • No worry of Card loss 
  • No worry for Card expiry problems 
  • Less time consumed to make payments 
  • No need to flash the debit card for payment 
  • Easily scanning the QR code through your mobile phone will help you in transferring your money from one source to another. Unlike digital wallets where payments are received from e-wallets, through QR code your payments will directly get received in your bank accounts. 
  • Linked with all banks 

Other payment services with QR codes:

  • There are lot of QR based payments introduced earlier. But each of these offers a unique and separate QR code for the merchants. Therefore the merchant has to maintain more than one QR code for enabling QR based transactions as each network has different QR code. Let us see some of the QR based payments which already existed. 
  • Visa operates with mVisa from a year and half ago. 
  • MasterCard operates by MasterPass QR 
  • DTH operator TataSky had partnered with Visa to allow and accept QR code-based payments from its subscribers 
  • MasterCard in partnership with Ratnakar Bank’s Ongo payment wallet launched ‘Masterpass QR service’ 
  • E-wallet apps such as Paytm, Freecharge and Mobikwik, use QR codes. 

How is it different?

But all these existing QR code based payment gateways are closed systems and inter operable with all banks. Hence, mVisa will only work for Visa card holders, while MasterPass will only work with MasterCard holders. For payments involving Paytm both parties need the app installed. However, with Bharat QR Code, which is a unified payment system all users of Visa, MasterCard, American Express and RuPay can make and accept payments.

 

TAKEAWAYS 

  • RUPAY card (by National Payments Corporation of India (NPCI) Dedicated it to indians on 8 may 2014 headed by M Balachandran, chairman)
  • VISA (American multinational financial services company)-headed by Alfred F. Kelly.
  • MASTERCARD (American multinational financial services company) headed by Ajaypal "Ajay" Singh Banga current president and CEO.
  • AMERICAN EXPRESS (American multinational financial services company)- Kenneth Irvine Chenault 
  • PAYTM- Vijay Shekhar Sharma is the founder of Paytm.
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