Home / Industry / Banking /  BharatQR code unveiled: An explainer

New Delhi/Mumbai: Retail electronic payments will become more seamless with the launch of BharatQR code—a quick response (QR) code mandated by the government to enable digital payments without card swiping machines—on Monday.

The launch will change the way retail payments are conducted digitally, according to industry experts.

Mint decodes the QR code.

What is a QR code?

It is a two-dimensional (black squares arranged in a square grid on a white background), machine-readable optical label that contains information about the item to which it is attached.

Why is it important to have a QR code?

It eliminates the need of entering the merchant’s ID or phone number to make payments. The customers can simply make payments by scanning the QR code and entering the transaction amount. The amount gets transferred directly from the bank account without the need of a swiping machine.

What is the practice at present?

Currently, the QR code-based acceptance systems in the country are largely closed systems. Most of the banks allow payment through mVisa, a QR code-based payment facility for Visa cardholders only. MasterCard had launched an interoperable Masterpass QR in November 2016 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 also enable transactions through QR code, but both parties need to have a Paytm account to use it.

Who is on board?

Right now only 15 banks have come on board and are in the process of deploying Bharat QR code. The 15 banks are Axis Bank, Bank of Baroda, Bank of India, Citi Union Bank, DCB Bank Ltd, Karur Vysya Bank, HDFC Bank Ltd, ICICI Bank Ltd, IDBI Bank Ltd, Punjab National Bank, RBL Bank Ltd, State Bank of India, Union Bank of India, Vijaya Bank and Yes Bank Ltd.

While Visa, MasterCard and Rupay card holders have been integrated, American Express is in the final stage. “Right now we are in the final stages of integration. I will not give the timeframe whether it will happen in 6-8 weeks. We are on board and work is on. We are working on the integration," said Manoj Adlakha, CEO India, American Express Banking Corp.

How is BharatQR code different?

BharatQR is a common QR code jointly developed by all the 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).

“It is a major revolutionary step because of interoperability. The merchants will be identified by one QR code whether the payment is through MasterCard, Visa or RuPay and this will result in deepening of acceptance infrastructure," said Dewang Neralla, chief executive officer, Atom Technologies Ltd, a payment service provider.

Besides working as a common interface for the Visa/MasterCard/RuPay platform, BharatQR will also facilitate acceptance using Aadhaar-enabled payments and Unified Payments Interface (UPI).

“Anyone who has a QR scanning/reading app, whether it’s a UPI-based or Aadhaar-based app, the payment can be done. It is a better alternative to physical point-of-sale (PoS) infrastructure which involves capital costs," added Neralla.

Why is the government promoting BharatQR?

The government expects BharatQR to turn out as the next big digital payment solution after the initial success of Bharat Interface for Money, or BHIM, an app developed to further its cashless push.

“This will be very convenient for those people who are into mobile banking and do not want to use debit or credit cards for small value payments. It is oriented to enable small and medium size merchants to acquire more customers," said Naveen Surya, managing director, ItzCash, and chairman, Payments Council of India.

Both methods are considered as an alternative to cash after the government’s demonetisation announcement on 8 November.

Even as the currency has now started to normalize, the Narendra Modi-led government is trying to encourage digital payments in the country by making them cost-effective.

Who can use it?

As a customer, to use BharatQR code you need to have a smartphone and must download the bank app that is compatible with BharatQR code.

While most banks have multiple apps, BharatQR code has been implemented only on select apps. “Every bank has chosen one or two apps. For instance, ICICI Bank Ltd has chosen Pockets and ICICI Mobile Banking app. HDFC Bank has launched it with PayZapp," said T.R. Ramachandran, group country manager, India and South Asia, Visa.

Currently, BharatQR code works on Android and iOS platform and not on Windows. However, a deployment option via USSD is being worked out to support non smartphone users.

Right now only credit, debit and prepaid card holders with the member bank can use this service and the service is not currently available on Unified Payment Interface.

How to use it?

BharatQR code is of two types—static and dynamic.

The static QR code requires you to first scan the code and enter the amount on your smartphone and authorize with a PIN, after which the money will get debited. In case of dynamic QR code, the merchant will generate a new QR code for every transaction. Here you don’t have to enter the amount. You can just scan and enter the PIN and the payment will go through.

“Static QR just identifies the merchant. When you scan it, you will get the name of the store where you scan. Then you have to enter the amount on your phone. When you enter the details the network will recognize the amount, run a query to a bank where you hold the account and check if you have enough money. Once you give your authorization and amount will be debited from your account and credited the merchant account," said Ramachandran.

On dynamic QR the code is generated real time where you will have the store name and the amount. Here you don’t have to enter the amount on your phone.

“We anticipate that small stores will use static which is a cardboard with the QR. Small merchants don’t have the infrastructure to do dynamic," said Ramachandran.

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