RBI Bars Payments Firms From Issuing Proprietary QR Codes
QR codes for UPI and Paytm transactions are displayed at a roadside food stall in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

RBI Bars Payments Firms From Issuing Proprietary QR Codes

The Reserve Bank of India barred payment firms from issuing proprietary quick-response codes and asked them to switch to at least one interoperable QR code to improve ease of use.

Payment system operators who use QR codes shall shift to one or more interoperable QR codes by March 31, 2022, the regulator said. At present, only two interoperable codes exist: the Unified Payments Interface and Bharat QR.

Payments firms also 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 be launched by any payment system operator.

The banking regulator said it will continue its consultative process to standardise and improve interoperable QR codes. It asked payment system operators to increase awareness about interoperability of QR codes.

“The above measures are expected to reinforce the acceptance infrastructure, provide better user convenience due to interoperability and enhance system efficiency,” the regulator said.

The new norms are based on recommendations by a panel the RBI had set up in December 2019. In June, the banking regulator had released a report prepared by the DB Phatak committee, which had pitched for higher interoperability of QR codes to improve acceptance of digital payments.

“While closed loop systems make the customer experience more convenient, they also require customers to acquire and manage a payment app,” the committee report had said, highlighting the problem with proprietary codes. “So, if a customer wants to use a phone to pay at 10 different retailers—each with its own proprietary system—he or she would need to manage 10 separate apps.”

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