Hereafter Payment system providers should make QR codes interoperable: RBI

The Reserve Bank of India (RBI) on Thursday released guidelines to make QR codes interoperable to Streamlining QR Code infrastructure. The central bank said payments companies, which use more than one QR code, must shift to one or more interoperable QR codes by 31 March 2022. The above decision was taken by the Central Bank on the basis of recommendations made by f Prof Deepak Phatak committee. The committee had recommended that there should be multiple interoperable QR codes to drive the acceptance infrastructure.

In India, QR Code Payment Systems broadly supports three different types of QR code payments viz. Bharat QR, UPI QR, and Proprietary QR.

Payments firms issue ‘Proprietary QR codes’ to merchants that accept digital payments from specific mobile applications, making them unusable for other customers. To curb this, the central bank said “No new proprietary QR codes shall henceforth be launched by any PSO for any payment transaction”. “PSOs (payment system operators) that use proprietary QR codes shall shift to one or more interoperable QR codes; the process of migration shall be completed by March 31, 2022,” it added.

Both the Unified Payments Interface (UPI) and Bharat QR are only two interoperable QR codes in the market. The UPI QR and Bharat QR shall continue as at present, RBI said.

RBI shall continue a consultative process to standardise and improve interoperable QR codes, to enable beneficial features identified by the Phatak Committee, the notification said.

Nowadays, the QR code-based payments are largely accepted by merchant establishments across the country, they are mostly closed systems.  The e-wallet apps such as Paytm, Freecharge, Phone Pe, Amazone Pe, Google Pe, Mobikwik, etc. have been doing QR code service business in India, but their payment solutions are not built on the interoperable standard. For example, one cannot transfer money from Paytm wallet to Freecharge or MobiKwik.  Thus, the transactions could take place only when both parties have the same app.

The Japanese company, Denso Wave, invented the QR code in the mid-1990s. QR code can store up to 4,296 alphanumeric characters and unlike a barcode, it can be scanned in any direction for facilitating payment. The Bharat QR code developed by NPCI is built on an interoperable standard that will support Visa, Master Card RuPay cards, etc. for uninterrupted acceptance of all cards. The advent of this technology is that it will enable the merchants to accept digital payments without the Point of Sale (POS) machine. The bank customers with their smartphone app can make payments using their debit cards in a secure manner.  The merchant need not invest money in buying POS machine as well as they need not pay transaction fees to the banks.

The Bharat QR code developed by NPCI is built on an interoperable standard that will support Visa, Master Card, RuPay cards, etc. for uninterrupted acceptance of all cards. The advent of this technology is that it will enable the merchants to accept digital payments without the Point of Sale (POS) machine. The bank customers with their smartphone app can make payments using their debit cards in a secure manner.  The merchant need not invest money in buying POS machine as well as they need not pay transaction fees to the banks.