Yet another assault on wallets: NPCI mandates Bharat QR codes for all UPI platforms

Bharat QR

To bring interoperability across the payments platforms, the National Payments Corporation of India (NPCI) has announced to make it mandatory for all UPI enabled payments firms to have an in-app facility of Bharat QR codes on their platform.

The move will enable people to do retail payment at offline stores by scanning the unified QR code irrespective of which wallets and UPI-enabled payment partners they use. It’s likely to eat up e-wallet market share including Paytm.

Since its inception, Bharat QR code has not been gaining ground and wide user base as compared to NPCI run UPI. Being interoperable, the QR code payments facility was rolled out by the government through partnering Mastercard, Visa, and American Express in September 2016.

Presently, if you are transferring money using Paytm or other wallet companies who allowed QR-based payments, the receiver needs to have Paytm or that app installed with a verified account.

NPCI has now mandated that every UPI application should be able to scan Bharat QR codes and respond to merchants’ payment requests. It further said that all banks running UPI applications need to adhere to such guidelines by April 16, failing which ‘transactions might be declined for non-compliance’.

The circular by the umbrella organisation for all retail payment systems in India strictly said that PSP banks must decline such transactions from non-compliant BHIM UPI apps after April 16, 2018, proactively.

Among the mandatory features that need to be brought in, the circular said that all UPI apps should allow fund transfer using any UPI payment address, respond to collect request from other UPI addresses and even generate as well as scan Bharat QR and UPI QR codes.

Among the UPI user PhonePe and BHIM have so far lead the market, however, BHIM has witnessed a constant decline in the past few months and Vijay Shekhar Sharma-led payment firm has claimed the supremacy as far as UPI transactions are concerned.

Recently Paytm was being targeted by PhonePe co-founder Sameer Nigam, saying that the Alibaba-backed firm has presented the wrong figures.

Currently, there are 67 banks live on Unified Payments Interface platform. Besides the aforementioned digital payments firms, global players including PayU and Google’s Tez, among others contribute a major chunk of UPI transactions.

A move to incorporate Bharat QR for UPI payments could push up volumes and bring comfortability to the customers. Merchant apps like Amazon Pay and others have been otherwise kept out of the mandate since they might not want to push UPI for peer-to-peer transactions, the report added.

Can Bharat QR code put more heat on wallets and PoS businesses?

Bharat QR code is a single unified QR code capable of accepting payments from Visa, MasterCard, RuPay Cards for wider acceptance. In addition, merchants accepting the payment through Bharat QR code receives the amount directly in their Bank accounts unlike Paytm, Freecharge, Mobikwik and other apps where the money goes to the digital wallet.

Being an open interface payments system, a user can send or receive money from any bank’s app by only scanning the Bharat QR code.

Of late, digital wallet majors including Paytm and Mobikwik have already been hit by mandatory KYC verification stipulated by RBI. On the other hand, a quick adoption in UPI-based payment method has also been causing sharp fall in wallet based transactions.

Considered as one of the most secure methods of payments, the total cost involved goes down (eg: PoS machines, debit/credit cards etc ) via QR code as no transaction cost is involved.

A long list of banks has been offering Bharat QR code on their platform and many more are showing their deep interest to avail this feature. If NPCI manages to bring traction via Bharat QR code then it would be difficult for PoS machine providers and wallet companies to maintain the marketshare.

The development was reported by ET.

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