After China lift off, QR codes are changing the payments game in India

, Internet, Retail, Tarjetas y Pagos Electrónicos, Telecomunicaciones

Once you start seeing it, you can’t not notice them. Everywhere. Drive into New Delhi’s Sarita Vihar from satellite city Noida and it stares at you like a giant eye from a hoarding. It is likely a permanent fixture in your kirana store or neighbourhood deli. You can’t miss it if your commute has the metro as part of it. Flip through Prime Minister Narendra Modi’s new book Exam Warriors and it warmly sits next to the images.

The simple quick response, or QR code, once relegated to the sidelines, is back with a bang. “At one point, even I wasn’t sure. But it’s everywhere now,” says Pratyush Prasanna, head of products at Poynt, a company selling smart point of sale (PoS) devices. QR codes are machine-readable labels that can carry different kinds of information ranging from product information to account details to virtually anything. Think of QR codes as super barcodes – they can be read 10 times faster than barcodes and are rapidly gaining custom in an era of smartphones.
In late 2014, Prasanna had run some experiments with QR codes in Bengaluru for Paytm, when he was a vice president of business and products at the mobile payments platform. It was ahead of its time then and didn’t see a lot of uptake, he says. Fast forward to 2018 and millions of QR codes have sprung up across the country and experts say it is only the beginning.
Textbooks in four states – Tamil Nadu, Andhra Pradesh, Maharashtra and Rajasthan – will soon have these codes. Over five million merchants on Paytm (see disclosure), its nearest competitor MobiKwik’s two million merchants, and over 75,000 sellers on Paytm Mall have QR codes on display. An aggressive MobiKwik wants to touch the 10-million mark, Paytm Mall wants to put QR codes in 3-4 times as many the number of stores, and then there’s the government pushing the use of QR codes using the interoperable payments solution BharatQR (last October, it was halfway to its target of 1.5 million shops by this March). In September 2017, payments provider Visa and BillDesk announced that users will be able to scan QR codes at nearly 50 large service providers potentially reaching 300 million consumers. Besides payments, other large-scale QR deployments include the Aadhaar identity project, ticketing, media ads, brand engagements and product packaging.
QR codes first appeared in Japan in the mid-nineties. It wasn’t until the late Noughties that the technology took off in Japan. Until then, they were primarily used in the automotive industry to keep track of components. These codes are made up of black and white squares arranged on a square grid and a white background. It can store information such as numbers, alphabets, bytes and the Japanese Kanji characters in the form of patterns and is easily readable by cameras. The tech never found many takers because QR code readers weren’t freely available. But then, mobile phones with good cameras became the norm and these codes became useful again.
Recently, it found its killer use case in India: payments. In a post-demonetization India, QR codes have offered customers and merchants the path of least resistance to digital modes of payments. Especially given that it more or less coincided with the rapid growth of Reliance Jio, which has rapidly increased the spread of data use and smartphones in India – some 20 million devices are being added every month to a smartphone population of more than 300 million as of last financial year.
It’s not just in the large cities that QR codes have had an impact. Harsha Halvi, a college goer from Kalaburagi, formerly Gulbarga, some 600 kilometres north of Bengaluru, says he routinely prefers to pay through his mobile phone. “I use mobile payments wherever I can because here in Gulbarga the ATMs run out of cash very often,” says Halvi on phone. Grocers and medical shops have QR codes to accept payments, says the final year BCA student of Gulbarga University. Many of his peers – he’s 21 – use Paytm but he points out it’s yet to be popular among older people in his town.

An ofo bicycle in Shenzhen. To unlock the bicycle, a user scans the QR code using the ofo app and enters the password shown on the screen into the bicycle’s lock. Photo by GEei Ginhee wins| Wikimedia Commons.
India is only tracking the big QR lift-off that first happened in China. According to one estimate, QR code enabled $1.65 trillion worth of mobile payments in China in 2016. Tencent and Alipay, the biggest payments companies in China, are the biggest drivers of QR codes in China. There have been reports of the code being used to tip waiters in restaurants and even give alms to beggars.
As The Economist explains, these codes took off in Asia first and is now ready to spread to America and Europe. An article in the Wall Street Journal goes on to say that the cashless society has already arrived — only, it’s in China. Mobile payments totalled $9 trillion in China the year before, growing nearly four times from 2015 to 2016, whereas people chose to spend $10 trillion in cash in 2016, down about 10% in two years.

Desi response
In India, the revival of QR code is mostly being driven by payment companies and the government. They’re easy to deploy, cost a fraction when compared to setting up a point of sale (PoS) terminal, and is easy for users. Which is why companies like Paytm Mall are betting heavily on it. “Elegance is always in simplicity. QR Code as an interface between the offline and online world is amazing. It just converts the offline traffic online and that’s why there’s a revival,” says Amit Sinha, COO at Paytm Mall.
A QR code-based transaction is simple and takes only five to seven seconds whereas card-based payments take much longer, says Upasana Taku, MobiKwik’s co-founder. Other systems like near-field communications (NFC)-based payments are faster but the feature is available only on expensive smartphones and merchants need to upgrade their PoS devices – and hence may not find mass adoption.
Moreover, PoS device penetration is low in India. “How do you pay using debit cards and PoS machines? There aren’t enough of those,” says Taku. As per January 2018 data from the Reserve Bank of India, India has just 3.06 million PoS devices to process payments made on the nearly 36 million credit cards and some 847 million debit cards issued.
Milk booths, paan shops or kirana stores found in every neighbourhood, can’t afford a PoS device because they sell mostly low ticket items. A QR code is ideal in these places.


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