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Update: BharatQR to be launched today with only card networks

Update: Card network American Express is also part of BharatQR. The card networks also sent an FAQ about the payments on this system:

–  For any BharatQR transaction to be successfully completed there is authentication usingMPIN. This is in keeping with the norms prescribed by RBI.

– The following banks are operationally ready to deploy BharatQR: Axis Bank, Bank of Baroda, Bank of India, Citi Union Bank, DCB, Karur Vysya Bank, HDFC Bank, ICICI Bank, IDBI Bank, RBL Bank, State Bank of India, Union Bank of India, Vijaya Bank and Yes Bank.

– BharatQR will have three additional fields. Bank account IFSC Code, UPI virtual address and Aadhaar number. However, some twitter users have pointed out that BharatQR also puts out a 16-digit card number. This is a violation of PCI-DSS norms. We have written to the card networks will update once we hear from them.

Earlier: BharatQR, an inter-operable QR code network for payments, built by card networks will be launched today. The system will include Visa, MasterCard and the National Payments Corporation of India’s (NPCI) RuPay. The idea for an inter-operable QR code network was floated in December 2016 following demonetization of Rs 500 and Rs 1,000 notes.

Note that wallets’ QR code systems, such as Paytm, MobiKwik, FreeCharge and Jio Money etc, do not figure in BharatQR yet. These QR code systems are a closed systems and work only between the wallet users.

Sharad Sharma, co-founder of Indian Software Product Industry Round Table (iSPIRT), said that though BharatQR is among card networks, it is is still a government-mandated project. oOher payment systems such as UPI and wallets will be included later, as this YourStory report indicates.

Last week, the Reserve Bank of India (RBI) proposed new slabs for debit card merchant discount rate (MDR) banks will be allowed to charge merchants. It proposed differentiated MDR between acquiring infrastructure involving physical terminals (POS machines, mPOS etc) and digital acceptance infrastructure models (such as QR codes). QR codes payment through cards would attract a fee of 0.3% to 0.85% for merchants. MDR is an inter-bank exchange fee that banks charge for enabling digital transactions.

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.

Are wallets being further sidelined?

The exclusion of wallets in BharatQR is curious again, considering that they more or less pioneered QR code payments during demonetization. It seems like the UPI all over again when banks wanted to keep wallets out to get an advantage over them. BharatQR now looks like it is protecting the business of card networks.

Note that merchants are not charged for QR code payments through wallets and may have an upper hand over card networks right now. However, they are charged when the move the money to bank account. For example, Paytm charges 1% for verified merchants. It needs to be seen which proposition merchants will find more economical. At the moment, wallets QR codes are in the mind space of merchants and find them cheaper than POS machines.

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