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Paying with your mobile wallet to get simpler with interoperable QR codes

RBI has prohibited Paytm, Google Pay and other payment firms from using proprietary QR codes. With interoperable QR codes, you can now use one QR code to make payments across merchants

October 28, 2020 / 10:31 AM IST

Starting March 2022, Paytm, PhonePe, Amazon Pay, Google Pay, MobiKwik and other payment apps have to shift to interoperable Quick Response (QR) codes, as per a recent directive from the Reserve Bank of India (RBI).

The RBI has also barred Payment System Operators (PSOs) from rolling out any new proprietary QR codes for payment transactions. These payment firms issue their own QR codes to merchants that accept digital payments. If you do not have the same payment app on your phone, you cannot make your payment. For instance, if Amazon Pay issues its own QR code to a merchant, then the customer too must have an Amazon Pay app on her smart phone. She cannot scan any other payment app’s QR code to make that payment.

Now, interoperable QR codes will remove the hassle of having to download multiple payment apps for enabling digital transactions. The two interoperable QR codes—Unified Payments Interface (UPI) QR and BharatPe QR—would continue to operate.

What is a QR code and how can I make my payment with it?

Typically, after shopping, we either pay our bills at the checkout counter by using our credit or debit cards, or by cash. But increasingly, many of us use mobile wallets and payments apps. But instead of typing out details such as the merchant’s UPI ID and other details, a QR code’s technology is in-built in mobile apps.

A QR code consists of black squares arranged in a square grid on a white background, which can be read by an imaging device such as a mobile camera. All you need to do is to scan a QR code at the checkout counter of a shop with your mobile phone camera and the bank account details of your shop get automatically captured.

The QR code at the merchant store contains information about the account linked with payment app. Once you open your payment app (assuming the shop also uses the same payment app to receive payments from customers), and point it towards the QR code at the shop’s checkout counter, the UPI ID and the shop’s registered BharatPe QR identity (or account holder name) appears on your mobile screen. Once you confirm, just enter the amount payable after verifying the merchant details and complete the payment transaction.

Once the payment transaction is completed, you and the merchant will receive notifications on linked mobile numbers.

How will interoperable QR code make things easier for me? What are the benefits?

Now, you do not need to have the same payment app that your store uses. An interoperable QR code makes it easier for you to make the payments, regardless of the app you are using. You will not need to have multiple payment apps installed on the mobile to make the payment transaction using the QR code. For instance, if you use Paytm’s app and the merchant has an account on Google Pay, scanning the interoperable QR code of Google Pay at the store, you can complete the payment transaction through your Paytm app.

How is the interoperable BharatPe QR code different from others in the market?

So, you can make payments using your QR codes in two different ways.

One way is to use your mobile payments wallet or through your bank account that you have linked to this wallet. The QR code that you use to make payments through this channel is the Bharat Interface for Money (BHIM) QR code, which is UPI-based and the transaction is done using virtual payment address. Google Pay, PhonePe, etc. are other UPI based apps.

The other way is to pay through your bank’s own app. Here, you use BharatPe QR from National Payments Corporation of India (NPCI). Here, you can pay through your debit or credit card from any of RuPay, Visa, MasterCard and Amex offered by your own bank.

A committee, headed by Prof Deepak Phatak, had suggested measures to move towards interoperable QR codes in the report submitted to the RBI. It said, only two interoperable QR codes should continue to operate in the country: BharatPe and UPI.

Does interoperable QR code announcement from RBI really matter right now to payment apps?

This RBI announcement of interoperable QR code will not have any major impact on the operations of payment apps. This is because Paytm and PhonePe had already launched an interoperable QR code even before RBI’s order. It means a Paytm user can easily pay from her own PayTM wallet to a shop that uses, say, only PhonePe’s or BharatPe’s QR code.

PhonePe started the facility of interoperable QR code in September 2019, while Paytm did so in January this year. Even Google Pay has already stopped issuing proprietary QR codes. “Hence, we don’t think that this order of the RBI will make much difference, as established payment firms have already started operating interoperable QR codes,” says a founder of a payment app firm seeking anonymity.

Hiral Thanawala
first published: Oct 28, 2020 10:31 am