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A Month After Launch, Most Banks Still To Launch BharatQR Based Applications

BharatQR, which has a target of 10 lakh merchants by the end of the year, is facing some hurdles. 

 A customer prepares to scan a Quick Response Code reader to access a Bitcoin automated teller machine (Photographer: Chris Ratcliffe/Bloomberg)
A customer prepares to scan a Quick Response Code reader to access a Bitcoin automated teller machine (Photographer: Chris Ratcliffe/Bloomberg)

A month after the grand launch of BharatQR, most banks are still not ready with applications that support the mode of payment.

BharatQR is an interoperable QR-code based payment option which is jointly supported by all the large card networks such as Mastercard, Visa and National Payments Council of India (NPCI). The idea was to offer customers and merchants an option beyond debit cards, which require the installation of costly point of sale (PoS) machines.

Since then, however, only seven of the 14 banks that claimed to have gone live on the day of the launch have actually rolled out BharatQR based applications, AP Hota, chief executive officer of NPCI told BloombergQuint. The application was flagged off in Mumbai on February 20 with a target of bringing 10 lakh merchant on board by the end of the year.

Banks need more time for development and adapting to new models. We need to give them some time before judging them.
AP Hota, CEO, NPCI

Hota added that the NPCI has asked card networks and banks to submit reports on the progress of BharatQR.

One of the challenges being faced by banks is that they need to make considerable software adjustments to integrate BharatQR with their applications. Also customers need to carry internet enabled smartphones to be able to pay using a QR-code based mechanism.

“QR-code is a new world order and banks still have their legacy systems running which will now need to be changed completely. We have to sometimes convince, cajole and even tell banks that someone else will take that current account if you don’t provide this service,” said Madhusudanan, co-founder and chief executive officer of Chennai- based firm Yap which is rolling out BharatQR based solutions for banks.

Madhusudanan told BloombergQuint that expectations of a quick take-off of the payment mode have not materialized.

The thing that is missing is that banks are not saying that this is a new way to do it. What is not happening is large scale deployment of QR-code which we expected to happen quickly. This is likely to take some more time, it seems.
Madhusudanan, Co-Founder And CEO, Yap

There is a second complexity in the deployment of QR-code based payment solutions.

BharatQR requires merchants to sign up with Mastercard, Visa and NPCI separately to get their unique merchant identification numbers which go into an application that allows them to collect payments in real time from a customer who scans the code through their smartphone.

Some in the industry say that this is proving to be a cumbersome process and slowing down acquisition of merchants. Merchants are unlikely to do all the paperwork just to get another payment option, said an executive at a company which provides point-of-sale machines. Nobody wants to step in and help the merchants as the merchant discount rate (MDR) is so low, the executive who spoke on the condition of anonymity added. In February, the Reserve Bank of India proposed a steep cut in MDR so as to make digital payments a viable alternative to cash. The flip side of this is that digital service providers earn less and have little incentive to expand their network.

Another senior industry executive, who also spoke on the condition of anonymity, said that BharatQR is unable to scale-up because the market is already too crowded. The lack of demand for QR-code based payment options is because there is no incentive for merchants or customers to use it, he said.

Meanwhile, Madhusudanan points to an entirely different issue. Since BharatQR has been jointly launched, who is taking ownership of the payment system? The NPCI website lists all payment solutions under its purview but does not mention BharatQR. None of the card networks are actively taking ownership either, which is leading to confusion among developers about the standards, he said.

“There is actually nobody who is owning it as of now. Nobody really wants this as a property,” said Madhusudanan.

Hota from NPCI said that the payments body will consider putting up some documentation on BharatQR on its website but added that specifications for the same are confidential, unlike UPI which is an open specification platform that allows people to build solutions on top of it.

“We will think about putting some information out but how much we can reveal, we don’t know yet,” he said.

Mastercard and Visa declined to comment on this story.