MasterCard eyes 1 million traders on its BharatQR platform

MasterCard CIO Garry Lyons says BharatQR democratizes the payments process as merchants don’t need to have a PoS device but only a QR code


MasterCard sees a major opportunity from the 50 million Indian merchants who are yet to digitize payments. Photo: Bloomberg
MasterCard sees a major opportunity from the 50 million Indian merchants who are yet to digitize payments. Photo: Bloomberg

New Delhi: Global payments and technology firm MasterCard Inc. has set a target of recruiting 1 million Indian merchants using BharatQR, a quick response (QR) code that can be scanned with a smartphone to make payments, by December 2017, chief innovation officer Garry Lyons said.

“BharatQR democratizes the ability to accept payments in a real simple way, the merchants don’t need to have a (point of sale) terminal, but only a QR code,” Lyons said in an interview on Tuesday.

Launched on 20 February by the National Payments Corp. of India (NPCI), Visa Inc. and MasterCard Inc., BharatQR is an interoperable payments service, where the customers can make payments by scanning the QR (quick response) code, instead of swiping a card.

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This is “democratization, such that a pushcart merchant, or small merchants in India can accept digital payments is the absolute goal,” said Lyons, who is in India this week to meet Indian start-ups, financial institutions and policymakers.

He said he counts India as one of MasterCard’s key markets. “We have always been interested in India but I think we have (a) heightened view in over (the) last 12 months or so,” he added. MasterCard sees a major opportunity from the 50 million Indian merchants who are yet to digitize payments. In India, 97% of transactions are cash-based.

Merchant acquisitions will be done through financial institutions, including banks, that MasterCard counts as its customers. “We call this an asset-light acceptance model, because… it costs next to nothing to acquire the merchant, as opposed to Rs8,000-10,000 investment in a traditional PoS device, which then starts to raise questions about profitability and return on investment,” said Vikas Varma, executive director, south Asia, MasterCard.

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To further tap into the digital opportunity in India, MasterCard is working towards building payments solutions for feature phone users. “Basic single use case will be person to merchant type payments using the feature phone,” said Varma.

Lyons said that while India has the second largest base for smartphones globally, it has “a lot (of) feature phones in the market; we have to create solutions that enable the use of such feature phones for people to transact.”

MasterCard does not see a threat to its debit and credit cards business from the increased adoption of QR code-based payments. “It will be unfair to say that we are only (a) card-based model. We are completely omni-channel and it is part of our business model that we are present at every way the consumer shops—in (an) app or in (a) store,” said Varma.

“So the plastic (card) will exist, but the form will continue to evolve. It could be a virtual card that uses biometric to authenticate the payment or contactless card for a faster checkout in a store, or QR-based when transacting with a small vendor,” he explained.

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The company, which got a boost after demonetisation and from the government’s push towards digital payments, is also looking to roll out chat-based payment features in India.

To be sure, MasterCards’ tie-up with Facebook messenger in the US is yet to see recognizable traction. But the company is betting on such a solution working well in India, based on the peculiarities of Indian consumer behaviour such as high social media and chat-messenger usage. However, it has not announced any timeline for this.

“Users can chat to book a flight or pizza or movie tickets, and payment is one piece of interaction... there is no dynamic in Indian market that would prevent that from happening, because you have (high) Facebook penetration,” said Lyons.

MasterCard, which invested in Indian payments gateway company Razorpay last year, also runs a global accelerator program for start-ups. The company said 14% of its total workforce sits in its India offices in Baroda and Pune. It however declined to share India’s revenue contribution.

On 30 January, PTI had reported that MasterCard identifies India as one of the fastest growing e-commerce nations and will increase its investments in the country where it has already grown by 30% in the last two years.

So far, QR code-based payment has largely been popularized by homegrown mobile wallet company Paytm, owned and operated by One97 Communications Pvt. Ltd.

The day BharatQR was launched, Paytm said it planned to invest Rs600 crore over the next 10 months in its QR based payment network.

Mint reported that Paytm, which currently receives 65% transactions through QR codes, aims to add 10 million merchants enabled with these codes across 650 districts by December.

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