RISING SUN
SENIOR MEMBER
- Joined
- Jun 1, 2012
- Messages
- 4,015
- Reaction score
- 0
- Country
- Location
One nation, under code: How India leads the way in the interoperability of QR code for payments
Santosh does his grocery shopping from a mini supermarket. At the time of billing, the shopkeeper scans the barcode on each item in his basket for automatic billing and collects payment by cash or card. This is a picture of urban India’s many mom-and-pop stores. Barcode technology has made billing simpler. A couple of years ago, nobody would have imagined this kind of technical capability of scanning technology in payments applications.
QR code — or, quick response code — is 10 times faster in readability than a simple bar. Thanks to Paytm, the use of QR code as a form of mobile payment made an entry and has begun to impact. The black-and-white sign is sported by kirana stores, vegetable carts and tea stalls all over the country. In the aftermath of demonetisation, Paytm made it ubiquitous in their attempt to sign up merchants for acceptance of Paytm wallet.
With all the card payment networks and the Unified Payments Interface (UPI) adopting scan and pay mode of payments, its usage is growing. QR code now stands high on the government’s policy agenda for digital payments – not only for expanding the digital acceptance points, but also for making it simple for consumers. Imagine that all the utility bills that you receive every month, either in physical form or electronically, bear a QR code.
To make payment, all that you have to do is scan the code and enter the passcode. Making payments has got easier.
Expanding the Digital Footprint
Since India has a smartphone base of 300 million with nearly 20 million customers getting added each month, QR code-based payments would be the most cost-effective way of expanding the digital footprint. Though its adoption has not become common place as yet, usage is growing rapidly as it happened in China during the last three years.
QR code-based proximity or remote payment through Alipay and Tenpay has become so popular in China that, as per a rough estimate, two out of three people are now using it.
In India, too, similar adoption is likely in two-three years.
The only difference could be that India may opt for bank-led payment systems and the QR code could get standardised across institutions and all forms of payments — card-based, account-based or wallet-based. Though Paytm is still running — that too successfully — a proprietary QR, it is only a matter of time that the whole country will converge into a single form of QR.
Realising the potential of QR code-based payments, Reserve Bank of India had directed card companies in October 2016 — a month before demonetisation — to work together and evolve a standard. During demonetisation, it was speeded up and the common standard called Bharat QR was launched in December 2016.
QR code is a two-dimensional barcode in black and white, with rich capacity for storing data in codified format. It can be decoded after scanning the vertical and horizontal components of the image. It follows a global standard of codification. When this is customised for payment applications, the information codified is captured as input and further processing is done.
Using this simple technology, Paytm built the application for making payment to the vendor from the wallet account.
The QR code displayed by the vendor contains the details of the vendor. The customer has to just add the amount and authorise the transaction. In the same way, VISA implemented mVISA whereby merchant details are available on QR code and transaction is routed through card payment network for clearing and settlement.
Mastercard and American Express also have their version of QR code-based payments. During the period of demonetisation when RuPay was attempting to create its version of QR code payment, RBI and Government of India intervened and asked for an industry standard for all card networks.
For a large country like India, bringing all the merchants on a digital platform through traditional point of sale (POS) machines would not be easy. With sustained pressure from the government, banks have increased their POS points from 1.5 million in October 2016 to about 3 million in August 2017.
To take this to at least 10 million merchants (out of 35 million potential merchants), the most costeffective method could be to provide a merchant ID to a kirana store and asking them to display the QR code the way Paytm did. The owner of the kirana store can also include his/her bank account details or Aadhaar number if need be in the QR code.
The consumer with smartphone would just have to scan the code, enter the amount and the passcode to make the payment. Since QR code based payment would be pre-authorised credit push, beneficiary would receive funds in the bank/prepaid account immediately.
When UPI was launched in August 2016, the facility for scan and pay was also inbuilt. To make it frictionless, UPI used a dynamic QR code with the amount field already a part of the code. But with the launch of Bharat QR, it is pointless to ask merchants to display three separate codes — one for card-based payments, the other for Paytm and the third for UPI.
At the instance of the government, the convergence exercise is on and the new version of BHIM- a UPI application of the National Payments Corporation of India (NPCI) — will have the capability to read both the dynamic QR as well as the Bharat QR with amount. It would be transparent to the user and the vendor does not have to change the static Bharat QR.
If the vendor has the ability to include amount field dynamically on the QR code, payment processing will be simple. Online merchants can display static Bharat QR or dynamic UPI QR as per the option by the customer. For instance, for bill payments through aggregators , if one chooses UPI, the sub-option appears as to whether to pay by virtual payment address (VPA) or by QR code.
If one chooses QR code, manual data entry is avoided. The QR code displayed already includes the amount. The customer has to just scan the QR and authenticate for payment.
National Standard
The experience so far has been very satisfactory. As per data compiled by the Ministry of Electronics & Information Technology (MeitY), nearly 7 lakh shops are Bharat QR-enabled and efforts are on to reach the target of 1.5 million by March 2018. A good part of UPI transactions are through scan and pay. About 10 banks are already offering card payments based on scan and pay.
Considering that QR code system is asset-light, the merchant discount rate (MDR) as well as interchange for QR code-based payments are also 10 basis points lower than transactions on traditional POS channel.
India is the first country to have brought such an interoperability in the use of QR code in payments domain. Taking cue from India, a few countries in South East Asia are now working on national standard for QR code payments. India is yet to catch up with China in terms of adoption of QR, but ahead of China in inter-operability. There is no doubt that as UPI membership grows (banks and hopefully prepaid issuers when regulator permits), popularity of QR code would also grow.
(The writer is former MD & CEO, NPCI)
http://economictimes.indiatimes.com...aywrap&ncode=75903408e0b98cc62ba08fe4f10059f3
Santosh does his grocery shopping from a mini supermarket. At the time of billing, the shopkeeper scans the barcode on each item in his basket for automatic billing and collects payment by cash or card. This is a picture of urban India’s many mom-and-pop stores. Barcode technology has made billing simpler. A couple of years ago, nobody would have imagined this kind of technical capability of scanning technology in payments applications.
QR code — or, quick response code — is 10 times faster in readability than a simple bar. Thanks to Paytm, the use of QR code as a form of mobile payment made an entry and has begun to impact. The black-and-white sign is sported by kirana stores, vegetable carts and tea stalls all over the country. In the aftermath of demonetisation, Paytm made it ubiquitous in their attempt to sign up merchants for acceptance of Paytm wallet.
With all the card payment networks and the Unified Payments Interface (UPI) adopting scan and pay mode of payments, its usage is growing. QR code now stands high on the government’s policy agenda for digital payments – not only for expanding the digital acceptance points, but also for making it simple for consumers. Imagine that all the utility bills that you receive every month, either in physical form or electronically, bear a QR code.
To make payment, all that you have to do is scan the code and enter the passcode. Making payments has got easier.
Expanding the Digital Footprint
Since India has a smartphone base of 300 million with nearly 20 million customers getting added each month, QR code-based payments would be the most cost-effective way of expanding the digital footprint. Though its adoption has not become common place as yet, usage is growing rapidly as it happened in China during the last three years.
QR code-based proximity or remote payment through Alipay and Tenpay has become so popular in China that, as per a rough estimate, two out of three people are now using it.
In India, too, similar adoption is likely in two-three years.
The only difference could be that India may opt for bank-led payment systems and the QR code could get standardised across institutions and all forms of payments — card-based, account-based or wallet-based. Though Paytm is still running — that too successfully — a proprietary QR, it is only a matter of time that the whole country will converge into a single form of QR.
Realising the potential of QR code-based payments, Reserve Bank of India had directed card companies in October 2016 — a month before demonetisation — to work together and evolve a standard. During demonetisation, it was speeded up and the common standard called Bharat QR was launched in December 2016.
QR code is a two-dimensional barcode in black and white, with rich capacity for storing data in codified format. It can be decoded after scanning the vertical and horizontal components of the image. It follows a global standard of codification. When this is customised for payment applications, the information codified is captured as input and further processing is done.
Using this simple technology, Paytm built the application for making payment to the vendor from the wallet account.
The QR code displayed by the vendor contains the details of the vendor. The customer has to just add the amount and authorise the transaction. In the same way, VISA implemented mVISA whereby merchant details are available on QR code and transaction is routed through card payment network for clearing and settlement.
Mastercard and American Express also have their version of QR code-based payments. During the period of demonetisation when RuPay was attempting to create its version of QR code payment, RBI and Government of India intervened and asked for an industry standard for all card networks.
For a large country like India, bringing all the merchants on a digital platform through traditional point of sale (POS) machines would not be easy. With sustained pressure from the government, banks have increased their POS points from 1.5 million in October 2016 to about 3 million in August 2017.
To take this to at least 10 million merchants (out of 35 million potential merchants), the most costeffective method could be to provide a merchant ID to a kirana store and asking them to display the QR code the way Paytm did. The owner of the kirana store can also include his/her bank account details or Aadhaar number if need be in the QR code.
The consumer with smartphone would just have to scan the code, enter the amount and the passcode to make the payment. Since QR code based payment would be pre-authorised credit push, beneficiary would receive funds in the bank/prepaid account immediately.
When UPI was launched in August 2016, the facility for scan and pay was also inbuilt. To make it frictionless, UPI used a dynamic QR code with the amount field already a part of the code. But with the launch of Bharat QR, it is pointless to ask merchants to display three separate codes — one for card-based payments, the other for Paytm and the third for UPI.
At the instance of the government, the convergence exercise is on and the new version of BHIM- a UPI application of the National Payments Corporation of India (NPCI) — will have the capability to read both the dynamic QR as well as the Bharat QR with amount. It would be transparent to the user and the vendor does not have to change the static Bharat QR.
If the vendor has the ability to include amount field dynamically on the QR code, payment processing will be simple. Online merchants can display static Bharat QR or dynamic UPI QR as per the option by the customer. For instance, for bill payments through aggregators , if one chooses UPI, the sub-option appears as to whether to pay by virtual payment address (VPA) or by QR code.
If one chooses QR code, manual data entry is avoided. The QR code displayed already includes the amount. The customer has to just scan the QR and authenticate for payment.
National Standard
The experience so far has been very satisfactory. As per data compiled by the Ministry of Electronics & Information Technology (MeitY), nearly 7 lakh shops are Bharat QR-enabled and efforts are on to reach the target of 1.5 million by March 2018. A good part of UPI transactions are through scan and pay. About 10 banks are already offering card payments based on scan and pay.
Considering that QR code system is asset-light, the merchant discount rate (MDR) as well as interchange for QR code-based payments are also 10 basis points lower than transactions on traditional POS channel.
India is the first country to have brought such an interoperability in the use of QR code in payments domain. Taking cue from India, a few countries in South East Asia are now working on national standard for QR code payments. India is yet to catch up with China in terms of adoption of QR, but ahead of China in inter-operability. There is no doubt that as UPI membership grows (banks and hopefully prepaid issuers when regulator permits), popularity of QR code would also grow.
(The writer is former MD & CEO, NPCI)
http://economictimes.indiatimes.com...aywrap&ncode=75903408e0b98cc62ba08fe4f10059f3
Can't discuss on topic, and comes with dickmeasuring contest. "We have big army" war who gives a flying fcuk about it in this thread.
