How Scan and Pay is facilitating digital payments
Digital payment option ‘Scan and Pay’ has been around for two years now, but it has gathered momentum only in the last few months after the demonetisation of high-value currencies. With the growing push towards a less-cash economy, the evolution of this mode of payment has managed to carve a niche for itself in the cashless payments domain.
What is Scan and Pay?
It is a mobile-based payment facility that enables fund transfer by scanning a quick response (QR) code using an app which supports this feature. It can be used for making payments at merchant outlets, e-commerce websites and grocery stores, among others.
How does it work?
Customers simply need to scan the QR code and enter the transaction amount. The amount gets transferred directly from the bank account without the need of a swiping machine. It eliminates the need of entering the merchant’s ID or phone number to make payments.
For those using mobile banking apps for scan and pay, the app acts like a virtual debit card that can be used online or offline.
How did it evolve?
Around two years ago Visa introduced mVisa, a QR code-based payment facility for Visa cardholders only.
In November 2016, MasterCard launched an interoperable Masterpass QR which could be used with other networks. RBL Bank was the only bank to have integrated Masterpass QR in its app to facilitate face-to-face payments.
E-wallets like Paytm, Mobikwik and FreeCharge also enable transactions through QR code, but both the receiver and the sender of money needs to have these mobile wallet apps.
However, QR code-based acceptance systems in the country were largely closed until the launch of Bharat QR, a common QR code jointly developed by four major card payment companies—National Payments Corp. of India that runs RuPay cards, MasterCard, Visa and American Express—under instructions from the Reserve Bank of India (RBI) on 20 February.
It was a revolutionary step because of interoperability. The merchants could be identified by one QR code whether the payment is through MasterCard, Visa or RuPay. Bharat QR payments can also be made through account number with IFSC code, UPI (Unified Payments Interface) payment address or Aadhaar number.
The launch of BHIM (Bharat Interface for Money) app on 30 December by Prime Minister Narendra Modi also supports the ‘scan and pay’ feature which has further boosted its adoption across the country.
How do you use it?
As a customer, to use BharatQR, code you need to have a smartphone and must download the BHIM app or a bank app that is compatible with BharatQR code.
While most banks have multiple apps, BharatQR code has been implemented only on select apps. For example, ICICI Bank has integrated BharatQR in its Pockets and iMobile apps. HDFC Bank has chosen its PayZapp app to add the BharatQr code feature. All other supported banks will also integrate BharatQR in at least one of their apps soon.
As a retailer or a shopkeeper, you can link the bank account with BHIM app or a bank app and generate a unique BharatQR Code (static QR or dynamic QR). In case of static QR, the QR code generated can be printed and stuck on the counter for use and in case of dynamic QR; a new QR code will be generated for every transaction. You as a customer will not have to enter the amount and can just scan and enter the PIN and the payment will go through.
In case of QR code-based transactions of e-wallets, the sender and receiver need to have an account. For example, if you are using Paytm and you want to send money to someone or pay for something, the receiver needs to have a Paytm account and a Paytm code (QR code) for the transaction to take place. A Paytm user cannot send money to a Mobikwik or FreeCharge user or any other wallet user.
Are card companies or e-wallet providers providing incentives to scale up adoption?
Yes, there are a plethora of offers or incentives on scan and pay transactions by both card companies and e-wallet providers.
For instance, for a specified period, Paytm customers were eligible for cash back once on five successful scan and pay/OTP (one-time password) transactions of Rs50 or more; the cashback varied from Rs5 to Rs50.
In an attempt to popularize the use of QR-based payments, IRCTC and Visa have introduced a special offer for customers using mVisa (Scan & Pay) option on the IRCTC payment page which entails a discount of up to Rs50 for payments made between 5 May and 4 September.
“There is still a lot to be done in education of both merchants and users when it comes to adoption of QR codes. Most of them don’t even know which app can be used to make payments by scanning,” said Dewang Neralla, chief executive officer, Atom Technologies Ltd, a payment service provider.
The need to create acceptance infrastructure across the country is essential and it can be only achieved if the banks also actively start promoting ‘scan and pay’ option of payments, added Neralla.
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