One of the latest trends in the sphere of payment technology, which confidently overtakes payments with plastic cards, has become cash links (a type of QR code) offered by the Quick Payment System (QPS). Will this method of payment overtake the usual ‘plastic’ and what are its main advantages?

What are the main advantages of payment by means of cash links?

Firstly, the speed of the transaction is only a few seconds, secondly, it is a guarantee of a high level of security when making payments, since the data are transmitted in encrypted form and, finally, thirdly, it is the absence of commissions for the buyer, the availability of special discounts, bonuses, etc.

Mikhail Zubakin, director of Right line payment systems department, tells about the prospects of development and advantages of cash links SBP.

Let’s start with the most important thing: what are cash links and on what principle do they work?

– In simple terms, cash links are an additional way to pay for goods and services through quick payment systems (QPS) with the use of dynamic QR codes containing information about the payment. A user, scanning a QR code with a mobile device, can quickly and conveniently make a payment without the need to enter data or bank details.

The principle of operation of cash links is based on the transfer of payment information between the buyer and the seller through an encrypted channel. After the QR code is scanned and the payment is confirmed by the buyer, the funds are automatically transferred to the seller’s account. This process is fast, safe and without additional commissions for the buyer.

It should be noted that there are two types of QR codes in SBP – static and dynamic. In the static QR code the payment details are fixed and remain unchanged during the whole period of validity, and in the dynamic QR code, accordingly, they can be changed, that is the payment data are generated directly at the moment of making a purchase and can’t be used repeatedly. Checkout links are a subset of the dynamic QR code.

If a customer wants to make a payment via the Quick Payment System, a request to activate a cash link is received from the cash desk. Moreover, the request already contains information with the purchase amount and the currency in which the payment will be made. The buyer scans the QR code with his phone and the amount to be paid is immediately displayed to him. This makes the payment process more convenient for all parties.

How did users react to the new payment method? Have many people switched to paying for goods and services via SBP?

– According to the CBR website, the number and amount of purchases of goods and services made via SBP increased by more than 20 per cent in the first quarter of 2023 compared to the fourth quarter of 2022. In the first quarter of 2023, 0.2 billion purchases worth RUB 0.4 trillion were paid through SBP.

There are, of course, nuances here that are affecting the declining interest in paying via SBP QR codes. Many users still choose to pay for purchases with bank cards. They are used to using plastic cards and don’t see the necessity to change their usual ways of payment. Of course, those who often use payment by QR codes this way does not cause difficulties.

But if the seller at the cash desk in a grocery shop offers, for example, a pensioner to pay by QR code and tries to explain how to do it, the buyer is more likely to refuse and make a choice in favour of the usual plastic. Someone fears that the new technologies do not have a high enough level of security, and someone simply does not have the necessary equipment to make payments via SBP.

In addition, banks find it favourable that users pay for goods and services with plastic cards (they also earn money on this thanks to interbank commissions), so they offer their clients all sorts of discounts and bonuses in the form of the same cashback.

SBP also has its own loyalty programme, but at the moment there are not as many interesting offers as banks. As a result, it turns out that if a customer has a choice to pay with a card and get a cacheback in rubles or to pay with a QR code of SBP and help the shop to save on the commission for such an operation, the client, of course, will prefer the first way. Some shops already now offer promotions with cacheback when paying by SBP, but this is not a common practice yet.

I believe that with the development of technology, loyalty systems and bonuses for customers, as well as with the increase in the level of technological literacy in general, more and more users will gradually switch to this method of payment, realising its advantages and convenience of use.

It is understandable why business seeks to connect the possibility of accepting payments via QR codes of SBP, because in this way they save on commissions. Question: what then is the benefit for banks and customers?

– In general, it is obvious that it is more favourable for banks that users pay for purchases with plastic. However, many financial institutions realise that the future lies in new technologies and try to keep track of innovations and trends. They see the potential and additional opportunities in terms of providing services. For example, they make a service on their side, then come to merchants (merchants) who are not yet their customers and offer them to connect payment acceptance using the same cash links.

These banks can offer businesses the opportunity to use the new payment acceptance capabilities while remaining a customer of their acquiring bank. Why would they want to do this? Thus, these technological banks, having initially offered a small piece of service, open up the possibility for themselves to provide other services to this merchant in the future.

In addition, the Central Bank of the Russian Federation is trying to develop the market so that we have more opportunities for payment, so that payment transactions become cheaper and money moves faster between accounts. High competition gives a good impetus for more dynamic development of the banking sector in the country.

A separate topic is the benefit for customers. From 1st April 2024, SBP will have a new scenario ‘SBP Cacheback’. Promotions from TSP (trade and service company) are carried out at the expense of the partner (legal entity or individual), and not the bank (as it is customary with card cacheback), the terms and mechanics of the action are also determined by the partner.

At the same time, unlike classic card cacheback, payments will be made instantly. In other words, this is instant cacheback. We believe that in the near future there will be an increase in the number and volume of transactions through the Quick Payment System, because users themselves will be interested in it.

How soon can we expect the solution to be implemented?

– Despite the fact that the SBP cacheback will start working on 1 April this year, it will take additional time to roll it out. In principle, as with any innovation: it takes time for businesses to prepare and users to appreciate the benefits. For example, the Faster Payments System. In 2019, the Central Bank launched the FPS and connected systemically important banks to it, then, due to the pandemic, Russians became really interested in the service and there was a sharp jump and growth in the volume of non-cash transfers, and only after that there was market saturation, i.e. users saw the benefits and began to smoothly move to more favourable services offered by the FPS.

Mikhail Zubakin, director of Right line payment systems department.

For NEW RETAIL

Source: NEW RETAIL