SUMMARY
The issue arose when CRED started using Paytm’s QR codes on its standees as part of a marketing campaign
CRED created a custom marketing standee for each merchant, which would be placed at the billing counter
CRED asked merchants for their existing VPAs, and some of the merchant VPAs belonged to Paytm
Bengaluru-based fintech unicorn cred
has stopped placing Paytm’s merchant QR codes under its branded standees at offline stores following the intervention of the National Payments Corporation of India (NPCI) based on a complaint filed by Paytm.
Last year, CRED entered the digital payment segment through the launch of its ‘Scan & Pay’ feature. Following the launch of the feature, CRED users can make merchant payments by scanning QR codes.
The issue arose when CRED started using Paytm’s QR codes on its standees with the words, “This QR is partial to CRED members.” This created a perception that the QR codes were issued by the fintech unicorn.
Following this, Paytm, which has been pushing to grow its offline network with Paytm Soundbox as a point-of-sale (PoS) device, filed a complaint with the NPCI. The payment body then asked CRED to stop using Paytm’s QR codes.
As per Paytm’s latest performance update in December 2022, it has deployed 5.5 Mn PoS devices across the country.
Further, the listed fintech had 29.5 Mn registered merchants on its platform as of September 30, 2022. The company monetises its merchant network by providing working capital loans to them and cross-selling Soundbox.
According to a CRED spokesperson, the startup has been working with merchants to improve the user experience. The fintech unicorn created a custom marketing standee for each merchant, which would be placed at the billing counter.
It was a short-term marketing campaign, which saw the participation of 29 merchants close to CRED’s office in Bengaluru for 2-3 weeks. Merchants were asked for their existing virtual payment addresses (VPAs) to put them on the CRED standee. Incidentally, some of the merchant VPAs happened to belong to Paytm, hence the issue.
“Since CRED Scan & 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 told Inc42.
It is interesting to note that NPCI does not have any guidelines on players leveraging existing QR codes issued by rival payment solutions providers. This has resulted in more than one spat over QR codes among digital payment players in the country.
For instance, PhonePe filed a police complaint in Greater Noida against three Paytm employees last year alleging that they mass burned its QR codes.
In a statement given to Inc42 then, PhonePe stated, “PhonePe has approached the police based on a video of a pile of its QR codes being set ablaze. We were able to identify some of the people in the video, including a Paytm area sales manager.”
On the other hand, Paytm said at that time that the matter was between PhonePe and its ex-employees.
CRED is trying to carve a niche in the UPI payments space which is dominated by PhonePe, Google Pay and Paytm. According to the app-wise breakdown of UPI payments, CRED saw 2.56 Cr transactions in November 2022, a growth of 20.4% month-on-month (MoM).
