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Government wants interoperability in QR code payments

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Following the demonetization of Rs 500 and Rs 1000 notes, many  payment companies have been looking at QR Codes as an alternative to POS machines at merchants. The government has been quick on trying to capitalise on this and has asked the three major card networks – MasterCard, Visa and RuPay – to build an interoperable QR Code solution, as indicated by this Economic Times report.

Note that Paytm’s QR code system does not figure in this system as it is a digital wallet and is a closed system and works only between Paytm users (it’s another matter that customers can send money from Paytm’s wallet to their bank account).

However, the government’s interoperable QR code-based solution will allow payments through multiple gateways, the report added. The publication added a merchant will display a common QR code which can be scanned through a smartphone app linked to the card networks and money will be directly transferred to a merchant’s account.

How QR code interoperability works right now

We had mentioned earlier that QR code payments through card networks is quite convoluted at the moment in India which requires the creation of multiple virtual prepaid cards.

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Currently, MasterCard and Visa two solutions called Masterpass and mVisa respectively to enable QR code payments. RuPay still hasn’t developed a QR code payment system yet. Essentially both the applications link a customer’s credit, debit and virtual prepaid card.

Consider this scenario: A customer has a debit card on MasterCard from HDFC Bank. He can use HDFC Bank’s PayZapp to make payments via QR codes. The payments are processed through mVisa. That requires PayZapp to create a Visa virtual prepaid and load money on it. Note the prepaid card can be loaded through net banking, Visa, MasterCard or RuPay.

The customer then scans the code to process the payment and money is deducted from the prepaid card. 

Similarly on Masterpass, customers who have Visa or Rupay cards have to create a virtual prepaid card (made by MasterCard) and load money. Once a QR code is scanned, the payment is pulled from the virtual prepaid card and processed over MasterCard’s payment network.

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