Now playing out: Banks responded quickly to the use of QR codes.
Now playing out: Banks responded quickly to the use of QR codes.
More and more banks are reluctant to allow clients to leave their environment and give the fintech companies a chance to benefit. Banks increasingly aim to keep their clients within their realm.
Following in the footsteps of non-banking applications like Google Pay, Paytm, and Phone-Pe, Indian banks have reportedly begun implementing their own rapid response (QR) codes, according to The Economic Times. The three biggest private sector banks, ICICI Bank, HDFC Bank, and Axis Bank, have taken the lead. The first two have already installed QR codes at various merchant sites, while the third bank is getting ready to launch its own version.
The main goal is uncomplicated. More and more banks are reluctant to allow clients to leave their environment and give the fintech companies a chance to benefit. According to a banker who spoke to the publication, banks now want to keep their existing clientele.
ICICI Bank was the first to take a step forward. It started placing its QR code at retailer sites by utilising its InstaBiz programme. Axis Bank and HDFC Bank, the two biggest private banks in the nation, shortly followed. BharatQR code from Axis Bank is prepared to go online.
With more than 10 lakh installations, HDFC Bank, which includes SmartHub Vyapar, is second behind InstaBiz, which has 15 lakh active users.
“Through InstaBiz, merchants can digitally manage all of their banking and collection transactions, intuitive dashboard, and instant settlement of funds,” an ICICI Bank representative told the publication. Over 122,200 new-to-bank merchants had been onboarded as of March 31, 2023, according to the InstaBiz app.
According to Axis Bank, it will provide both sound boxes and QR codes. The bank’s president of cards and payments, Sanjeev Moghe, stated that “price-conscious merchants will find great value in this combination of QR code and sound box.”
Banks had been holding out hope that hardware point of sales would continue to rule traditional merchant transactions over the past few years as fintechs were releasing their apps and sweeping the nation. However, the payment space is being rapidly eroded by mobile payment apps, dashed their aspirations. Debit cards are quickly losing ground to payment applications, according to recent reports.
BharatPe and Paytm, two prominent players in the digital payment space in India, have leveraged their extensive network of QR codes to venture into the domain of merchant financing. These companies have expanded their services beyond payments to offer financial solutions to merchants.
During the January to March quarter, Paytm distributed an impressive amount of Rs 2,313 crore as part of its merchant financing business. This indicates the significant scale of operations and the growing demand for such services. Paytm, with its vast user base, has approximately 68 lakh active merchants on its platform.
In the realm of consumer payments, traditional banks have faced challenges from fintech companies in recent years. However, they are now making efforts to regain lost ground. Axis Bank, for example, is developing an application specifically aimed at retailers. This app will provide various financial services, including payments, to cater to the needs of retailers and enhance their overall banking experience.
The move by Axis Bank to create a dedicated app for retailers demonstrates the recognition of the importance of the merchant segment in the digital payment ecosystem. By offering specialized services and solutions to retailers, banks aim to strengthen their presence and compete with fintech companies that have gained significant traction in this space.
The development of such targeted apps reflects the evolving landscape of financial services in India, with traditional banks adapting to the changing dynamics of the market. These apps are designed to offer convenience, efficiency, and tailored financial solutions to specific user segments, such as retailers.
With the increasing adoption of digital payments in India, merchant financing has emerged as a key area of focus for companies like BharatPe and Paytm. By leveraging their existing network of QR codes and customer base, these companies have expanded their offerings to include financing options, thereby providing merchants with access to capital and enabling them to grow their businesses.
The competition between traditional banks and fintech companies in the digital payment space underscores the significance of the merchant segment. As retailers continue to embrace digital payment solutions, there is a growing need for financial services that cater specifically to their requirements. Banks like Axis Bank recognize this opportunity and are actively working towards providing tailored solutions to retailers through dedicated apps.
