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Future of payments: RBI report proposes incentives to popularise QR Code transactions among consumers

Because of the increased penetration of smartphones and high-speed internet connectivity, there has been increased adoption of QR codes for digital payments in India.

A report of the Reserve Bank of India (RBI) today said that the government should provide incentives to popularise usage of QR (Quick Response) code transactions among consumers. QR Codes are two-dimensional machine-readable barcodes. They are being increasingly used to facilitate mobile payments at the point-of-sale. The report noted, “While QR Codes are similar to linear barcodes, they can store a larger amount of information.”

Because of the increased penetration of smartphones and high-speed internet connectivity, there has been increased adoption of QR codes for digital payments in India. The report highlighted that three different types of QR Codes have emerged: Bharat QR, UPI QR and Proprietary QR (closed-loop, non-interoperable).

RBI has recommended to phase out proprietary, closed-loop QR codes in favour of open, interoperable standards. “Proprietary, closed-loop QR codes are a hindrance to an open, interoperable payments ecosystem,” it said.

The RBI report said that multiple interoperable QR codes should drive the acceptance infrastructure in coming years. The report urged RBI to “encourage multiple interoperable QR codes like Bharat QR and UPI QR to enable faster onboarding of all types of merchants for digital payments.”

It further suggested that the regulator may accept an existing bank account as a valid KYC for faster merchant on-boarding.

“For all purposes, the merchant acquiring bank (or any regulated entity as permitted by the regulator for merchant acquiring activity referred hereon as regulated entity) shall be responsible for the KYC of the merchant. The merchant acquiring bank/regulated entity depending on the value and volume presented by the merchant, may strengthen
the KYC of the merchant.”

Calling for incentives to merchants accepting electronic payment, RBI reprot said, ” Government / RBI should allow a controlled interchange instead of zero MDR on QR code / UPI / RuPay Debit card transactions, as well as give tax incentives to merchants who accept payments through electronic mode. Further, the Government should provide incentive schemes to ensure popularity of QR code transactions among consumers in the country.”

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