The matrix, decoded: How QR codes are transforming payments in India

QR code, the little pixelated square, has changed how India pays or accesses information. Its applications are only limited by imagination

Last month, a video shared on Instagram showing a quick-response (QR) code embedded on a tombstone at a cemetery in Kerala went viral. Upon scanning the code, a website pops up, directing to a page that provides information about the person, including what he did, and family details of the deceased! 

That may not have been the application QR code’s Japanese founder had in mind when he was looking for a better alternative to barcodes in manufacturing setups. But today, if there is a ubiquitous face of the digital world, it could well be a pixelated one: the QR code. On roadside stalls, payment gateways, airline boarding passes, restaurant menus, product packaging, newspaper ads, and a host of other things, the small black-and-white square (a standard QR code is square, though there are also rectangular versions) has become a universal gateway to payment, information, and interaction. And its use cases are only expanding. 

The rise of the QR code has been dramatic. Affordable smartphones, cheap mobile data and the Unified Payments Interface (UPI) have made it a default way of sending and receiving money for all kinds of merchants, online and offline. Beyond payment transactions, hospitals and diagnostic centres have started using QR codes to manage patient data. In colleges, students can scan these codes for assignments. And across companies, it could soon become the way to mark attendance. 

The beginnings 

The QR code’s origin dates back to 1994, when Japanese engineer Masahiro Hara was looking for a better alternative to barcodes to track auto parts at Denso Wave, the auto company he worked at. Barcodes could only store limited information and had to be scanned in one direction. 

Hara came up with a two-dimensional matrix, which could store over 4,000 characters, be scanned from any angle, and withstand damage, thanks to an in-built error-correction technology. 

Denso Wave patented the technology, but allowed it to be used free of charge, leading to its rapid proliferation. However, for years, QR codes were confined to manufacturing. 

The arrival of camera-enabled mobile phones — and later smartphones — gave them a whole new life as a consumer tool. 

The camera now acts as the scanner, auto detecting the code at any angle, and even in low light — lending it ease of use. Post the Covid pandemic, QR codes took off as a means for contactless, cashless payments. 

Before QR codes entered payments, sending money digitally meant typing bank details or mobile numbers, a slow process prone to errors. “QR codes automated information capture, making payments faster and easier,” says a spokesperson for Walmart-owned PhonePe, the largest payment app in India. 

Today, they are fast replacing barcodes as well. Enumerating the USP of QR codes, Mihir Gandhi, partner and leader, payments transformation, PricewaterhouseCoopers (PwC) India, says, “QR codes can hold around 4,000 alphanumeric characters versus 20-25 in barcodes.” They can also store multimedia, URLs, and encrypted data, and work even when partially damaged or faded. 

“It’s a free, auto-generated tool,” says Nakul Kumar, cofounder and chief marketing officer, Cashify. “QR code is like an information-rich address in the shape of a picture. There’s no central controlling authority.” Cashify, an ecommerce platform, helps users sell their old devices, including smartphones, gaming consoles and laptops. It then refurbishes and sells them. 

QR codes are generated instantly via most payment and other apps by converting data (like URLs, text, or contact information) into a pattern of black-and-white squares using a specific algorithm defined by the QR code standard. This pattern is then represented as a code, which can be scanned and decoded by devices like smartphones. 

The Bharat QR effect 

In India, these strengths met the perfect partner: UPI. A merchant can print a QR code and instantly start receiving money from any UPI payment app — PhonePe, Google Pay, Paytm — without needing an expensive point-of-sale terminal. 

The launch of Bharat QR in 2017 by the National Payments Corporation of India brought standardisation. Interoperable QR codes meant a single display could accept payments from any major bank or wallet app. This eliminated silos and boosted adoption. 

Two types of QR codes are common: static and dynamic. Static QR codes carry fixed merchant details — ideal for small shops. Dynamic QR codes  — generated at checkout — embed the transaction amount and purpose, reducing steps and errors. Modern retail, e-commerce and fuel stations often use dynamic codes for speed and accuracy. 

The results are striking. According to the Reserve Bank of India, in 2024-25 (FY25), UPI QR codes grew 91.5 per cent year-on-year (Y-o-Y) to 657.9 million. India now logs over 80 billion QR-based UPI transactions annually, says PwC; and the number is growing rapidly. Credit card growth has, meanwhile, decreased by 7.94 per cent Y-o-Y, pointing to an increased adoption of QR codes to complete transactions. 

And now companies are customising codes to improve user experience. PhonePe upgraded its QR scanner to a machine learning kit, improving recognition speed under peak loads. Auto-flash in low light, pinch-to-zoom, and the ability to scan QR code from a photo in your phone have made scanning more reliable. The app also lets users tap ‘Pay’ while processing the code in the background, shaving seconds off the transaction. 

A model for scale 

The qualities that make QR codes ideal for payments — low cost, easy generation, universal scanning — also make them valuable in other contexts. 

Energy Efficiency Services Ltd (EESL), a joint venture of public sector units under the power ministry, uses QR codes in marketing, electricity bills, and WhatsApp messages to drive traffic to EESLmart.in, an online marketplace for energy-efficient appliances. Unique affiliate QRs empower grassroots promoters, while product QRs link to warranty and efficiency data. 

“Smartphones have transformed QR codes from a niche utility into a mainstream gateway. The frictionless scan-to-access experience has allowed EESL to reach citizens across socio-economic strata, particularly in areas with low digital literacy, bridging the last-mile gap in digital commerce,” says Animesh, chief general manager and head (sales and corporate communication and PR) at EESL. 

Around 30 per cent of EESL orders (for products like bulbs, lights, fans, aircons) on its website come via QR codes.

The code’s versatility has spawned some creative uses as well. 

Bengaluru-based startup Twid, for instance, aggregates users’ reward and loyalty points from multiple programmes (credit, debit cards, brands etc), and lets them pay with those at merchant checkouts. Often, users forget or are unaware of the points they have accumulated. Twid, founded in 2020, solves that problem of aggregating the points and helping users avail of them.  Its UPI app (in beta stage) can scan any merchant’s QR — say, Indian Oil, BookMyShow, MakeMyTrip, and Swiggy, among others — on its platform, apply the points, and settle the balance. 

“QR is a beautiful model for scale. That’s how UPI has scaled in India,” says Amit Koshal, cofounder and CEO, Twid, noting that 48 per cent of its users interact via QR codes. 

Gurugram-based Cashify uses QR codes for internal needs. It has replaced physical barcodes with in-device QR tags linked to the International Mobile Equipment Identity (IMEI) numbers of devices. This eliminates sticker fraud, boosts security with rotating codes, and allows tracking without special scanners. “The QR code becomes the device’s passport,” says Nakul Kumar, cofounder, Cashify. 

Smartphones is its largest category, comprising 90 per cent of the business. All devices that come to Cashify’s warehouse were earlier marked with barcodes stickers. Cashify would take 360-degree pictures of the phone, but if there was a sticker on the phone, it would hamper the process. “We wanted to make a unique identifier that would be present inside the phone and would be available on demand. Hence, we moved to QR code,” says Kumar. “Now all our tracking is done through a unique QR code generated in the system and linked to the IMEI of the phone.” Cashify buys around 200,000 devices a month and uses 12,000 to 15,000 QR codes daily. 

Industry experts see the next wave of QR innovation in integration with biometrics, geolocation, and digital product passports. PwC’s Gandhi imagines scanning a QR to securely access Aadhaar-linked benefits or get location-specific offers. Global sustainability pushes are also opening new uses: in fashion, electronics, and food, QR codes can give instant sourcing information, recycling instructions and authenticity checks. 

Despite QR codes’ ease of use, versatility and appeal, there are a few challenges. They aren’t a “one-size-fits-all solution,” Gandhi points out. QR codes, he adds, must be visible and unobstructed to be scanned. Scanning requires a smartphone or compatible device, limiting access for users without one. Many QR codes link to online content, so they’re ineffective without internet access. 

Besides, barcodes are still used in logistics, warehousing, supply chain and other operations because old systems depend on them. That said, QR codes are emerging as a valuable complement, bridging the gap between physical workflows and digital ecosystems. 

A universal passport 

For merchants, QR codes are a zero-to-low-cost acceptance method. For payment apps, they’re a gateway into larger customer relationships. For businesses like PhonePe, Paytm, EESL, Twid or Cashify, they’re infrastructure: part identifier, part transaction trigger, part workflow optimiser. 

As Cashify’s Kumar sums up: “The QR code becomes the device’s passport and gateway to user, enterprise interactions, and transactions.” That’s true for more than just devices — it’s increasingly the case for products, services, and even personal identities. 

From an engineer’s sketch inspired by the board game ‘Go’ to billions of transactions and innovative uses, the QR code’s applications are only limited by imagination. 

Why QR codes are becoming ubiquitous 

*  Smartphones: QR codes can be scanned by a smartphone’s camera (India has over 750 million smartphone users); cheap data accelerates use 

*  Contactless interactions: Thanks to hygiene concerns and convenience, QR code-based payments have gone mainstream 

*  A push for digital India: People are getting used to quicker ways of scanning, tapping and swiping to pay or access information

  *  Business needs have evolved: From offline marketing to checkout services, companies now use QR codes as part of broader omnichannel strategies

  *  Software: UPI apps make the process a two-step action, making it easier than even using cash

  Source: qrcodekit.com; industry

The writer is a Delhi-based independent journalist