SBP issues standards for QR code-based payments

KARACHI: To accelerate digitalisation of retail payments, the State Bank of Pakistan (SBP) has issued standards for Quick Response (QR) code-based payments in Pakistan, a statement said on Wednesday.

These standards are to be met for issuing QR codes and accepting the payments through the same. This initiative is a part of the SBP’s drive to promote inclusion, innovation and modernisation of payment systems in the country.

The development and issuance of a single QR code was earlier announced by State Bank Governor Dr Reza Baqir, while chairing the 5th stakeholders’ consultation meeting on digital financial services in August 2021.

With the issuance of a single country wide QR code standard, Pakistan joins the list of countries who have taken similar steps to promote low-cost digitalisation of payment services, especially at the retail level.

The QR code-based payments are increasingly becoming popular around the world for being low-cost and easy to use via mobile applications. However, in Pakistan, these, being issued by the financial institutions, are not usually based on common industry standards and had limited interoperability due to which their acceptance and usage in the country is very low.

Accordingly, the common QR code standards have been developed by an industry consultative group, formed by the SBP and is based on EMVCo’s QR code specifications for merchant payments.

EMVCo is a global technical body that facilitates worldwide interoperability and acceptance of secure payment transactions by managing and evolving the EMV specifications and related testing processes.

The standards are designed to be flexible to adapt to new and innovative use-cases, with data objects allocated for scheme, acquirers and the SBP for future use.

To facilitate the issuance and adoption of QR code-based payments, the central bank has issued its two variations: one for person-to-person payments and other for person-to-merchant payments.

The person-to-person (P2P) standard would be used by the banks and financial institutions to generate personalised QR codes for their customers, using which they would be able to receive payments on their mobile apps.

Similarly, the person-to-merchant standard would be used for accepting and processing merchant-based payments, using mobile apps, on the lines similar to card-based payment acceptance.

All the financial institutions offering digital payment services would be required to comply with the new requirements and ensure that the mobile apps of all the banks and other payment institutions in Pakistan are able to scan and process any QR code that is issued as per the new standard not later than June 30, 2022.

The standards also promote the establishment of domestic payment schemes, which will provide an efficient and cost-effective payment alternative to the citizens of Pakistan.

Further, it will enable a fully interoperable mechanism for QR issuance with embedded information of multiple payment schemes within a single QR code, allowing the customers to choose from a range of available schemes. This will result in eliminating or reducing the number of multiple QR codes at the merchant locations.

The State Bank of Pakistan has also recently launched the person-to-person (P2P) version of its instant payment system, Raast, which will offer a fully interoperable payment mechanism for QR-based payments, as well.

With the issuance of the standard QR code guidelines, the State Bank aims at further enhancing the availability and promoting the use of low-cost digital payment acceptance points, i.e., QR codes across the country. The new QR code standard would simplify customers’ experience for paying or accepting digital payments in their daily lives such as for grocery shopping, school fee payments, bill payments, online shopping, ride hailing services, besides enabling P2P Fund transfers, i.e., fund transfers between individuals.