RBI Committee Recommends More Interoperable QR Codes
Quick respond (QR) codes for Bharat Interface for Money (BHIM), developed by NPCI and PayTM online payment are displayed at a roadside food stall in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

RBI Committee Recommends More Interoperable QR Codes

A committee set up by the Reserve Bank of India to review QR code-based payments has recommended that more payments system providers should make these codes interoperable.

As part of its recommendations, the committee said that a closed loop QR codes, which only work within the ecosystem of one payment provider, will hold back the adoption of this means of payment.

Currently, there are three types of QR codes operating. Bharat QR, Unified Payments Interface QR and proprietary QR codes. The committee recommended that the RBI must encourage use of interoperable QR codes such as the Bharat QR and UPI QR.

“While closed loop systems make the customer experience more convenient, they also require customers to acquire and manage a payment app. 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,” the committee report said.

A potential example of an interoperable QR code system could be Bharat Bill Payments System. BBPS currently caters to all utility billers like electricity, telecom, gas, water and DTH, wherein the billers are offered a standardised platform for third party bill payments.

“A separate interoperable BBPS QR will augur well for billers to ensure faster onboarding using existing systems established with BBPS. It will offer an additional payment channel for the biller as well as the customer,” the report said.

Other key recommendations include:

  • All bank and non-bank applications must go through a process of standardisation to offer seamless experience to customers.
  • Simplify onboarding of merchants onto QR code infrastructure by using know your customer documents from their existing bank accounts.
  • Merchants or other recipients may be allowed more than one UPI ID to help complete transaction during down time.
  • Small value merchants may be allowed to access the Bharat QR ecosystem to allow them more payments acceptance options.
  • Non-banks and fintechs could be allowed to participate in the Bharat QR ecosystem to increase penetration.
  • The government and RBI should allow a controlled interchange instead of zero MDR on QR code, UPI, RuPay Debit card transactions, as well as give tax incentives to merchants who accept payments through electronic mode.
  • The government should offer incentive schemes to ensure popularity of QR code transactions among consumers in the country.

The committee formed under Professor DB Phatak in December 2019, submitted its analysis and recommendations on Wednesday. The RBI has sought comments and suggestions on the report by August 10.

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