It took over 20 years for Indian banks to put 6.1 million Point-of-Sales (PoS) devices on merchants’ counters. Now, India’s largest private sector bank, HDFC Bank, wants to get to the 20 million-merchant mark in the next three years. At the centre of this ambition is a rather simple strategy—the QR code.
It’s a party to which India’s banks are more than five years late. Between the Indian government’s demonetisation demonetisation On November 8, 2016, Prime Minister Narendra Modi banned currency notes of Rs 500 and Rs 1,000 denominations wiping out 86% of India’s currency overnight. move in 2016 and 2020’s pandemic, digital payments have exploded in the country. And the most telling image of India’s digital payments growth story is the image of a merchant’s counter littered with multiple QR codes—one for each payments service the merchant accepts. Somewhere along the line, banks lost their place in the money hierarchy. They went from being masters of the money to becoming just a place to park money.
Banks now want to claim their rightful place back at the top of the payments funnel. And they’re using the same tool that took the status away from them in the first place. Their biggest advantage lies in that very same image—a merchant’s counter littered with multiple QR codes, one for each payments service the merchant accepts.
“We used to have a QR code each from Paytm*, PhonePe, and we kept getting approached by those like Amazon Pay, Google Pay… it was getting too much,” says Chirag Jain, who runs a sporting goods store that does about Rs 2 crore ($0.2 million) worth of business annually.
The QR code’s superfluousness comes from here. Payments companies each claim a big chunk of merchants—PhonePe says it has about 25 million merchants, Paytm claims 21 million, BharatPe claims another 15 million. But across the country, only 25-30 million merchants accept UPI payments in total, says Raman Khanduja, CEO and co-founder of payments platform Mintoak Innovations.
Obviously, there’s plenty of overlap—merchants can’t exactly say no to customers who adopt app after app, thanks to incentives. But multiple apps also mean multiple points of conflict. “I have an excel sheet to keep track of transactions on various apps, because if a transaction fails I need to know on which app it (the failure) happened,” says Jain. His store sees almost 50% of its payments happen through India’s real-time payments system, the Unified Payments Interface (UPI), but it got annoying enough that he decided to nix the QR stickers on his counter around two months ago.
So when HDFC Bank, where he holds a current account, offered him a PoS device that could accept all forms of payments—including the QR code—Jain jumped on board quickly. The bank also gave him an in-house app called Smarthub, on which he could track all transactions made through the PoS, and also record cash transactions.