Co-Founder & CTO, Ezetap Mobile Solutions Pvt. Ltd.
A newly minted form of payments will be launched this month on 20th Feb, named BharatQR. What is QR? How will this help us in our transformation to a digital economy?
QR stands for Quick Response; QR code is a matrix, two-dimensional bar code. Information stored in a typical QR code is about 10 to 20 times more than a normal bar code but here is the main reason why QR codes are better – they are easily readable in varied ambient light conditions and almost at any angle. The secret is in those three large squares in the corners. The imaging and processing system (like your smartphone) determines the positions of the three reference squares (also called fiducials) and compensates for the distortions in between. Further the data is encoded by using Reed-Solomon error correcting codes (the same used in CDs and DVDs) which facilitates readability with a higher probability of success. All these features make the QR code readable almost instantly and reliably even with poor optics and light.
With the advent of connected smartphones, QR code based payments is a smart solution for easy deployment of digital payments infrastructure. Merchant displays a static QR code in his place of business, at the point-of-sale. The consumer scans it using his bank app, punches in the amount to be paid and completes the transaction. Merchant gets a notification and releases the goods/services to the consumer. The consumers also get a confirmation on their app along with all the transaction details. In a more sophisticated approach, the merchant generates a “dynamic” QR code on this smartphone or another similar device which includes merchant identification, amount and other details of the transaction. The consumer can now scan the QR code and complete the transaction. The transaction is richer because of the meta-data that goes with the transaction.
Like with most consumer facing systems, every large company had its own standard of payment QR codes. This led to friction and poor uptake. Because of the DeMo effect and gentle nudging by the regulatory authorities; Visa, MasterCard and Rupay came together and standardized a common QR code and named it BharatQR! This should help uptake of this payment system in a big way.
Scalability in deployment is the single largest advantage of QR code based payment schemes. New user experience paradigms are also possible – imagine someone delivers a package to your house, you scan the QR code on the packet, complete the payment and take hold of the package. This involves no additional infrastructure other than connected smart phones on both sides which is a common thing nowadays.
Success of a new payment system will always depend on deployment, user experience and consumer education and incentives to the eco-system players. First thing is roll out, there has to be a massive rollout across the country so that consumers get hooked on, if not interest levels will peter out. We are now dependent on TWO connected smartphones, which is a tall order in the current ecosystem of the smartphone and data penetration. Illiterate and old folks might find it hard to use the system. Users have to be educated and initially incentivized to use the system. The current Bharat QR specification is not compatible with UPI which is a bummer.
Another note which came via RBI in its circular on 17th Feb. ‘17, was a need to differentiate MDR between acquiring infrastructure involving physical terminals, including mPOS and models like QR Code, considering the need for encouraging asset-light digital infrastructure such as QR-code.
QR code is a big bet for the future, with greater number of connected, educated, smartphone users, this is the way to go! It certainly adds another payment method with good scalability. Providing the consumer and merchant with various choices is always a good thing.