Unfolding now: Quick response from banks on the QR codes front

Borrowing a leaf out of the book of non-banking apps such as Google Pay, Paytm, Phone-Pe, Indian banks have started rolling out their own quick response (QR) codes, The Economic Times has reported. ICICI Bank, HDFC Bank and Axis Bank, the three largest private sector banks have taken the lead, with the first two already installing QR codes at different merchant locations while the third bank is ready to roll out its own version.

The underlying objective is simple. An increasing number of banks are reluctant to let customers move out of their ecosystem and allow the fintech entities partake of the gains. Banks now want to retain the customers in their universe, a banker told the newspaper.

The first to get off the starting block was ICICI Bank. Exploiting its InstaBiz application, it began installing its QR code at merchant locations. HDFC Bank, the largest private bank in the country and Axis Bank followed quickly. Axis Bank has BharatQR code which is ready to go live.

InstaBiz has now ramped up 15 lakh active users while HDFC Bank that has SmartHub Vyapar comes second with more than 10 lakh installations.

An ICICI Bank spokesperson told the newspaper, “Through InstaBiz, merchants can digitally manage all their banking and collection transactions, intuitive dashboard and instant settlement of funds…. As of March 31, 2023, over 122,200 new-to-bank merchants were onboarded on the InstaBiz app.”

Axis Bank said it was going to offer a combination of QR codes and sound boxes. Sanjeev Moghe, president, cards and payments of the bank said, “This combo of QR code and sound box will offer great value to merchants who are price conscious.”

Over the past few years, while the fintechs were unleashing their apps and taking the country by storm, banks kept hoping that hardware point of sales would retain their predominance in traditional merchant transactions. But their hopes were belied with payment apps seriously eroding the card payment space. There were recent reports on how fast debit cards losing out to payment apps.

BharatPe and Paytm, in fact, expanded their domain and began merchant lending business, using their increasing network of QR codes. In the January-March quarter Paytm disbursed Rs 2,313 crore. It has a network of 68 lakh active merchants on its platform.

Banks are now scampering to regain the zone they ceded to the fintech entities in the vast consumer payment space.
Axis Bank is preparing a merchant-facing app that will offer payments and other financial services.