QR Codes – The New Age Tech Shaping India’s Digital Payments Landscape

By Mr. Vishal Anand Kanvaty, SVP – Innovation & Product, NPCI

About a decade ago in India nobody had imagined the potential of Quick Response Code or QR code which is in the process of making payments simpler.

Developed in Japan in the mid-nineties, QR code can store up to 4,296 alphanumeric characters and unlike a barcode, it can be scanned in any direction for facilitating payment. Denso Wave had developed QR code and it was used in the manufacturing process for tracking vehicles.

QR codes are gaining popularity in modern payment apps and devices. A typical POS machine costs around Rs 12,000 and an mPOS machine costs around Rs 5,000. Compare that with the cost of a QR printout and you will understand why it is poised to be an acquiring game changer.   

A merchant does not need to install a PoS machine at their store. This reduces an entry barrier to acquiring merchants at a low cost. Besides that consumers of modern era are becoming more and more impatient where they want a solution that is readily available in their hand and QR code offers that. QR reduces the need to input any transaction related data, which is appealing to today’s young generation and reduces transaction related errors.

QR is also gradually changing the way the country is paying their bills. Imagine a scenario where you receive your light bill with a QR on the envelope. Without opening that bill you can scan the QR and pay instantly. Paying your bills without even opening the bill, who would have thought of that?

When it comes to India, QR based payments is rapidly picking up pace, especially after demonetisation phase. One can simply scan a QR code to pay utility bills, fuel, grocery, food, travel and several other categories.  A successful example of QR code is the launch of Bharat QR which happened earlier this year with a view to enable people to buy goods and services without the need to swipe plastic cards. The platform works with card schemes namely RuPay, MasterCard and Visa. Apart from this Bharat QR offers flexibility to the user to pay card or UPI, thereby increasing the probability of transaction completion for a merchant. Data loss and security breach is minimized since the user only scans the QR.

Recent product innovations like Unified Payments Interface are equipped to facilitate QR code payments. Initiatives are also taken to make Bharat QR and UPI QR interoperable so that customer can pay as per their will, regardless of the app they are using. These developments are amplifing number of acceptance points to millions of new customers that can make digital payments. In some cases, the payments ecosystem have leapfrogged from withdrawing cash from ATMs to using mobile based payments thereby skipping the need of deploying POS terminals.        

However, despite the scope and the advantages offered by this technology, the biggest challenge lies in its adoption by the masses.  When it comes to mobile payments, China has taken the lead. China’s mobile payments market had hit $ 5.5 trillion in 2016 which is 50 times the size of the US’s $ 112 billion market, said iResearch which is a leading provider of online audience measurement and consumer insights in China.

Data in our country shows that digital transactions are on the rise, but the pace is slow and steady. Financial literacy has a long way to go and there is a need for the youth of India to take the lead in educating the population about innovations like QR code. India is a young nation and we are witnessing a tipping point for technology adoption especially in the case of financial inclusion. While the Government is pushing digital transactions to the critical masses on one side technology will be the multiplier effect. The biggest challenge would be the awareness and how we can make it simple for mass adoption.