Committee on the Analysis of QR (Quick Response) Code

December 9, 2020
Committee on the Analysis of QR Code

The Committee on the Analysis of QR Code was constituted by RBI on December 23, 2019 under the Chairmanship of Prof. D.B. Phatak (Professor Emeritus, IIT-Bombay) to review the prevalent system of QR Codes in India for facilitating digital payments and submit recommendations.

Members of Committee on the Analysis of QR (Quick Response) Code

  • D.B.Phatak Professor Emeritus, Indian Institute of Technology, Mumbai
  • Shri Arvind Kumar, Director General, STQC, Ministry of Electronics and Information Technology, Government of India
  • Shri Sunil Mehta, Chief Executive, Indian Banks’ Association
  • A.S. Ramasastri, Director, Institute for Development of Research in Banking Technology
  • Shri Dilip Asbe, Managing Director and CEO, National Payments Corporation of India
  • Shri Vishwas Patel, Chairman, Payments Council of India Executive Director, Infibeam Avenues Limited

Terms of Reference

  • To examine and review the current system of QR codes in India for facilitating digital payments
  • Analysis of benefits arising out of a common QR code
  • Assess the scope for improvement in existing QR codes and suggest measures towards adoption of Bharat QR as a convergent which would be future-proof

Recommendations of Committee

The recommendations are based on four pillars:

  1. Interoperability and Scalability
  2. Innovation
  3. Security
  4. Customer Education and Awareness

Interoperability and Scalability

  • Proprietary, closed loop QR codes are a hindrance to an open, interoperable payments ecosystem. There should be a clear plan to phase out proprietary, closed loop QR codes in favour of open, interoperable standards
  • RBI should encourage multiple interoperable QR codes like Bharat QR and UPI QR to enable faster on-boarding of all types of merchants for digital payments

Innovation

  • Standardization of apps (banks and non-banks) and network (common) QR branding to be assessed to deliver a consistent and seamless experience for customers
  • Consumer presented offline QR code can be explored for low value payments like transit, ticketing etc
  • QR enabled apps can explore additional features such as ‘Save QR’, ‘Invoice relay through Dynamic QR’, ‘Setting up eMandate’ etc. for recurring payments
  • The regulator may accept the existing bank account as a valid KYC for faster merchant onboarding.
  • P2PM (Merchant treated as person) category may be extended to Bharat QR to enable faster and simpler on-boarding of micro merchants, using their existing bank account
  • Bharat QR-specific: Participation of non-banks and fintechs can be explored to increase penetration of Bharat QR.
  • UPI QR-specific: Multiple UPI IDs for a single recipient may be permitted.
  • In due course when the 4G/5G network connectivity is available in India, the QR resolution should happen from the backend using APIs. This will help to build lot more value added services.

Security

  • To enable UPI QR, the signed QR must be fast tracked.
  • Consumer presented offline QR should preferably be a signed dynamic QR
  • Security test and security audit of the Application being used for QR Code based payment must preferably be conducted by 3rd party entities. The use of encrypted and signed API instruction between app provider, payment gateways and banks may be evaluated.
  • Resolution of the merchant name should be at the acquirer systems instead of it being hard coded in the QR. There is need for a common registry that enables payments apps to look up and validate recipients. Such a registry could be accomplished by a central trust-provider or by a blockchain-based approach.
  • Framework for revoking / rotating keys used to sign static QR codes to be formulated without causing a lot of disruption

Customer Education and Awareness

  • All stakeholders should drive education and awareness campaigns for QR code adoption.
  • Multi-currency and multilanguage support can be explored to ensure customers in different countries can work in their native languages and currencies.
  • Payment apps should provide users a deeper understanding of security.
  • Consumer education and awareness towards usage of secured wifi network or his / her own mobile network for digitaltransactions
  • P2M QR scans should provide meaningful, user-friendly names.
  • 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, Government should provide incentive schemes to ensure popularity of QR code transactions among consumers in the country.

After examining the recommendations and the feedback received, the following has been decided:

  • The two interoperable QR codes in existence – UPI QR and Bharat QR – shall continue as at present.
  • Payment System Operators (PSOs) that use proprietary QR codes shall shift to one or more interoperable QR codes; the process of migration shall be completed by March 31, 2022.
  • No new proprietary QR codes shall henceforth be launched by any PSO for any payment transaction.
  • RBI shall continue a consultative process to standardise and improve interoperable QR codes, to enable beneficial features identified by the Phatak Committee.
  • PSOs may take initiative to increase awareness about interoperable QR codes.

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