The move comes barely three months after Cred entered the offline payment segment through the
launch of its ‘Scan & Pay’ feature, which allows its users to make offline payments by scanning a QR code.
NPCI operates the Unified Payments Interface (UPI) financial payments railroad.
As part of its latest experiment to promote offline payments, Cred had printed the static QR codes of merchants linked to various other payment players, including Paytm, BharatPe and PhonePe, on its Cred-branded placards, giving the impression that these QR codes were being issued by it.
“This QR is partial to Cred members,” read the Cred placards with the codes, further adding to the perception that the QR codes were issued by Cred.
Paytm, owned by One97 Communications Ltd, has been pushing to grow its offline acceptance network over the past few years and create its own branding at offline stores, and had complained to NPCI about Cred’s move. Paytm had 29.5 million registered merchants on its platform, according to its September quarter results.
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The company monetises on its merchant network by providing them loans and collecting monthly subscriptions on payment products such as Soundbox.
“Since the launch of Scan and Pay three months ago, members have loved the frictionless, rewarding experience of scanning any QR code to make UPI payments from the Cred app. We’ve been working with merchants to enhance the experience for Cred members at their retail outlets. To promote this, we created a marketing standee custom-designed for each merchant, which can be placed on the billing counter,” a Cred spokesperson told ET.
According to the company, the experiment was run with less than 30 offline merchants near its headquarters in Bengaluru.
“With 29 merchants near the Cred office in Bangalore, we ran a small experiment where the merchants gave us their existing VPA to put on the Cred standee. Since Cred Scan and Pay is interoperable as per NPCI guidelines, it can scan any NPCI-compliant QR code. Now that the experiment has concluded, we will iterate and scale as per market feedback,” the spokesperson added.
As part of the marketing campaign, the Kunal Shah-run company had also given incentives to merchants to place these QRs at their outlets, the sources said.
“As a company policy, we do not comment on speculation,” a Paytm spokesperson said in response to ET’s queries.
NPCI did not respond to a request for comment.
At present, NPCI has not laid down clear guidelines on players leveraging existing QR codes issued by rivals.
The squabble over QR codes is not new among Indian digital payment players.
In August last year, PhonePe
had filed a police compliant in Greater Noida against three of rival firm Paytm’s employees for mass burning of its QR codes.
PhonePe, in its complaint, said the activity took place with “the clear intention of causing wrongful loss to the company’s property.” It also added that “these actions may form a part of a larger conspiracy to malign the reputation” of the company and to cause “further financial losses.”
In September 2020, BharatPe also invited controversy after its merchant acquisition team distributed pamphlets to merchant partners pointing out the foreign ownership of competitors Paytm, PhonePe, Google Pay and Amazon Pay.
As a result, competitor Paytm served a legal notice to BharatPe, and PhonePe reached out to regulator Reserve Bank of India (RBI) to stop the aggressive marketing campaign.