Paytm vs Cred: Cred stops using Paytm QR codes on its own placards after NPCI steps in

The Bengaluru-based fintech firm Cred has stopped showing Paytm's merchant quick-response (QR) codes on its branded placards at offline stores. This step came in response to Paytm's complaint against Cred to the National Payments Corporation of India (NPCI) over the latter's false impression of other merchants' QR codes. The Unified Payments Interface (UPI) financial payments railroad is managed by NPCI.

Cred entered the offline payment segment three months ago with the launch of its 'Scan & Pay' feature, which allows users to make offline payments by scanning a QR code.

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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 as part of its latest experiment to promote offline payments, giving the impression that these QR codes were 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, which is owned by One97 Communications Ltd, has been pushing to expand its offline acceptance network and create its own branding at offline stores in recent years, and had complained to NPCI about Cred's move. According to Paytm's September quarter results, the platform had 29.5 million registered merchants.

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The company monetises its merchant network by providing them with loans and collecting monthly subscriptions on payment products.

A Cred spokesperson told The Economic Times, "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".

According to the company, the experiment was run with less than 30 offline merchants near its headquarters in Bengaluru.Aspart of the marketing campaign, the Kunal Shah-run company had also reportedly given incentives to merchants to place these QRs at their outlets.

Both Paytm and NPCI have not spoken on this matter as of now. At present, NPCI has not laid down clear guidelines on players leveraging existing QR codes issued by rivals.

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The war over QR codes

The dispute over QR codes is not new among Indian digital payment providers.In August last year, PhonePe filed a police complaint in Greater Noida against three employees of rival firm Paytm for the 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".

BharatPe sparked controversy in September 2020 after its merchant acquisition team distributed pamphlets to merchant partners highlighting the foreign ownership of competitors Paytm, PhonePe, Google Pay, and Amazon Pay. Paytm issued a legal notice to BharatPe, and PhonePe requested that the marketing campaign mustbe stalled by the Reserve Bank of India (RBI).

(With inputs from agencies)

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