BharatQR Targets One Million Merchants By Year End
A customer prepares to scan a Quick Response Code reader to access a Bitcoin automated teller machine (Photographer: Chris Ratcliffe/Bloomberg)

BharatQR Targets One Million Merchants By Year End

BharatQR, the latest digital payment offering in the market, was launched on Monday with fourteen banks coming on board to kick-off the service. A target of getting one million merchants to adopt the payment system has been set by the National Payments Corporation of India (NPCI), which has developed BharatQR jointly with Visa, Mastercard and American Express.

By bringing all major card providers on board (NPCI operates the Rupay card network), the platform will allow for interoperability of payments as long as banks give their customers the option to pay using BharatQR as part of their banking apps.

The platform was devised on the direction of the Reserve Bank of India (RBI) in September 2016, said a release by NPCI. R Gandhi, Deputy Governor of the RBI who launched the service noted that interoperable solutions like BharatQR are essential to move towards a less-cash society.

Innovative interoperable solutions, like BharatQR, that are easy to scale, provide a seamless customer experience, and above all are safe and secure, are essential to accelerating India’s transition to a less cash society.
R Gandhi, Deputy Governor, Reserve Bank of India

In its release, NPCI, which has also developed the Unified Payment Interface being used for the government-promoted BHIM payment app, said that BharatQR has a number of advantages over other payment methods.

First, a customer will not need to scan individual QR codes of different payment providers. For instance, at present private providers like Paytm offer QR code based payments through their apps. With BharatQR, a customer can scan the interoperable QR code and transfer money to a merchant directly from the bank account. For merchants, this means that they don’t need much equipment and can display a single BharatQR code and accept payments via this. The need for point of sale (PoS) machines will also go down as the QR code based payment mechanism gathers steam.

BharatQR can also be implemented in other countries to make this a globally interoperable solution, said the NPCI press release.

Banks that are already operationally ready to launch BharatQR include Axis Bank, Bank of Baroda, Bank of India and HDFC Bank among others.

BharatQR is the answer to Paytm. Hopefully banks will now be able to expand infrastructure at the rate with which Paytm did during demonetisation.
AP Hota, CEO, NPCI

Commenting on the launch, senior executives from all major card network providers such as Mastercard and Visa told BloombergQuint that BharatQR will bring down the cost of infrastructure for a merchant as all they require now is a cardboard with their unique QR code on it.

This shifts the physical point-of-sale terminal mode of payment to a digital solution whereby a customer uses their smartphone to pay.

“We have 57.7 million merchants but there are only 1.5 million digital payment acceptance locations. If you want to drive electronic transactions, the biggest need is infrastructure,” said Porush Singh, division president for South Asia at Mastercard. “The QR solution essentially removes the requirement for capital and operational expenditure completely.”

While speaking to BloombergQuint, Singh also said that MDR on QR code is lower and has been kept at an “optimal level” by the RBI.

While payments through BharatQR will largely be a replica of payments made through debit cards, the QR code medium is expected to carry a smaller merchant discount rate (or fee), as envisaged by the RBI in its draft circular released last week.

RBI proposed capping MDR at 10 basis points lower for digital PoS systems as compared to the physical ones in its draft. While the policy is yet to be finalised, card networks are hoping that this provides further incentive for merchants to go digital.

While BharatQR is only available for smartphone owners for now but that is soon likely to change, T.R. Ramachandran, group country manager for India and South Asia at Visa told BloombergQuint.

“Networks are also speaking to each other on a USSD based solution. It is early days yet but before the calendar year ends, we should also be able to figure out how we can integrate an interoperable USSD product,” Ramachandran said.

BharatQR Targets One Million Merchants By Year End

Paytm Brings Out Its War Chest

Preparing to take on BharatQR, Paytm in a press release on Monday said that it would invest Rs 600 crore to expand its QR code based payment network. The company is investing in scaling up manpower, technology, and merchant education, said the company.

Paytm currently has the largest QR code based payment network but a rapid expansion of BharatQR could prove to be a threat. Paytm QR is used by 5 million merchants, according to the company’s statement. It added that Paytm is acquiring almost a million merchants a month and aiming for over 10 million merchants in 650 districts of the country.

We are on a mission to democratize digital payments. Our zero percent merchant transaction fee coupled with an aggressive merchant acquisition rate, will help us take QR Code based payments to every nook and corner of this country. We will invest Rs 600 crore this calendar year, which will be used for scaling up merchant acquisition teams, marketing and cash-backs. We will have over ten million merchants on our platform before December 2017, which also puts us on the right path to build one of the largest payment networks in the world.
Kiran Vasireddy, Senior Vice President, Paytm 
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