QR-Based Cross-Border Payments

QR-based cross-border payments refer to international payment mechanisms that use Quick Response (QR) codes to facilitate retail transactions across national boundaries. In banking and finance, this model enables individuals and merchants to make and receive payments in different countries by scanning interoperable QR codes, without relying on traditional correspondent banking channels. For the Indian economy, QR-based cross-border payments represent an important step towards faster, cheaper, and more inclusive international transactions, particularly in the context of tourism, remittances, and regional trade.

Concept and Meaning of QR-Based Cross-Border Payments

QR-based cross-border payments extend domestic QR payment infrastructure to international use through bilateral or multilateral arrangements between countries. Under this system, a customer from one country can scan a merchant’s QR code in another country using a domestic payment application, while currency conversion and settlement are handled seamlessly in the background.
Unlike conventional cross-border payments that depend on banks, intermediaries, and messaging networks, QR-based systems focus on real-time retail transactions. They reduce procedural complexity and enable instant payments, making them particularly suitable for small-value, high-frequency cross-border transactions.

Evolution of Cross-Border Payment Systems

Traditional cross-border payments have long been characterised by high costs, delays, and limited transparency due to multiple intermediaries and time zone differences. These limitations posed challenges for individuals, small businesses, and tourists, especially in developing economies.
Advances in digital payment infrastructure and real-time settlement systems have encouraged countries to explore alternative models. QR-based payments emerged as a practical solution, building on the success of domestic QR systems and adapting them for international interoperability. In India, the widespread acceptance of QR-based payments created a strong foundation for extending such systems beyond national borders.

Role of the Reserve Bank of India and Policy Framework

The development of QR-based cross-border payments involving India is overseen by the Reserve Bank of India, in coordination with foreign central banks and payment authorities. The Reserve Bank of India supports these arrangements as part of its broader objective to modernise payment systems, improve efficiency, and reduce the cost of cross-border transactions.
Such initiatives align with India’s strategic goal of enhancing its global payment connectivity while ensuring regulatory compliance, consumer protection, and financial stability. Bilateral agreements typically govern operational standards, settlement mechanisms, and foreign exchange conversion.

Operational Mechanism of QR-Based Cross-Border Payments

In a QR-based cross-border transaction, a merchant displays a QR code linked to a domestic payment system. A foreign customer scans the code using a compatible payment application from their home country. The payment request is routed through interconnected payment networks, where currency conversion takes place at agreed exchange rates.
Settlement occurs through designated banks or central bank–linked accounts, ensuring that funds are credited to the merchant in local currency while the payer is debited in their home currency. The process is designed to be near real-time, offering speed and convenience comparable to domestic payments.

Significance for Banking and Financial Institutions

For banks and payment service providers, QR-based cross-border payments reduce reliance on traditional correspondent banking networks. This lowers operational costs and settlement risks while expanding the range of services offered to customers.
Banks play a key role in foreign exchange conversion, settlement, compliance with anti-money laundering norms, and customer dispute resolution. Participation in QR-based cross-border payment systems enhances banks’ integration with global payment networks and strengthens their role in facilitating international trade and travel-related transactions.

Impact on the Indian Economy

QR-based cross-border payments have important implications for the Indian economy, particularly in sectors such as tourism, remittances, and small-scale trade. Indian merchants benefit from increased spending by foreign tourists who can pay using familiar QR-based applications without needing cash or cards.
For remittances, especially low-value person-to-person transfers, QR-based systems offer a cost-effective alternative to traditional money transfer channels. Reduced transaction costs increase the net inflow of remittances, which is a significant source of foreign exchange for India.

Advantages of QR-Based Cross-Border Payments

The primary advantages of QR-based cross-border payments include speed, lower transaction costs, and enhanced convenience. The use of existing QR infrastructure minimises the need for additional hardware investment by merchants, making adoption easier and more inclusive.
Transparency in pricing and near real-time settlement improve user confidence, while interoperability between payment systems promotes regional economic integration. These features support the broader objective of creating efficient and user-centric international payment frameworks.