National Payments Corporation of India which owns Rupay and Visa and Mastercard have launched the BharatQR – an app-based ‘scan and pay’ solution for small shops.
This is the first time in the world that four payment networks – India’s Rupay, Mastercard, Visa and American Express have agreed to come together on a common platform to accept payments.
This time, it’s BharatQR a QR (quick response) code-based payment solution that allow merchants to accept digital payments from those who hold a debit card even if they don’t have a card swiping terminal. BharatQR has been jointly developed by Mastercard, Visa and Rupay.
It becomes the second major digital payment option being promoted by the government after the Unified Payments Interface (UPI) based BHIM app. Both are being pitched as an alternative to cash following the November 8 demonetisation decision. While currency availability has now started to normalise, the government is trying to encourage digital payments by making them more convenient and cost effective.
If a customer has the app and wants to make a payment at a merchant who doesn’t have a card swiping machines, he can simply scan the merchant’s BharatQR code and transfer the money directly from the bank account.
BharatQR attempts to overcome this limitation by allowing people to pay without having to choose one payment network over another. This will, however, need a large number of bank apps to support such payments.
Mastercard, Visa and Rupay – the three biggest providers of debit cards think that the regulator has tried to strike a fine balance in proposing a cut in fee as a way to improve the penetration of digital payments.
Last week, the Reserve Bank of India (RBI) released draft regulations proposing a Merchant Discount Rate (MDR) as low as 0.3% of the transaction value for small merchants using digital POS terminals. This is substantially lower than the one percent charged currently. The RBI capped MDR higher at 0.95% for merchants with turnover more than Rs 20 lakhs per annum.
Apart from distinguishing between categories of merchants, the RBI also proposed lower fee for digital payment systems that need lesser physical infrastructure. This includes QR code based based payment systems like BharatQR.
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