QRPh Part 1 - What is it, and why does it exist
Most, maybe all, countries in South East Asia have their own national QR code standard which is usually based on the EMV merchant-presented QR standard (for instance, Cambodia (1), Singapore (2) or Vietnam (3).
The Philippines, where the standard is called QRPh, is no exception. However, as far as I know, neither the QR code part nor the backend processing part of the QRPh standard are in the public domain.
But since the QR codes out there can be analyzed based on the EMV standard, and the backend processing can be inferred from press releases and other public sources, we know quite a bit about it.
In the next couple of posts on my blog, I will look at the QR code format, the user experience, the backend processing and the EMV underpinnings.
For decades, other than in the big shopping malls, electronic payments were as good as non-existent in the Philippines. Consequently, there was not a lot of enthusiasm for investments in the EMV migration either. And so, little happened in the electronics payment markets until the QR E-Wallet wave swapped over from China.
Initially, local e-wallet providers used proprietary QR data and formatting standards with hardly any interoperability between providers. But then the central bank developed and mandated the use of a common standard known as QRPh.
When I came to the Philippines in 2015, I remember thinking that this low-tech QR stuff cannot possibly take over from smart card technology. Maybe I was too invested in the whole smart card thing, for me to see the potential of QR payments.
I think I overlooked the proliferation of smart mobile phones and with it the increasing ppopularity of e-wallets, especially for bill payments.
While I did not see it at the time, around 2015, the Philippines was ready for an e-wallet revolution:
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Pretty much everybody already had or would soon have a smartphone - in the future, financial transactions would take place on the phone. At the same time, it was not obvious whether NFC will be available in a large enough number of mobile phones.
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There was still a large population without a bank account and therefore without any of the traditional general purpose credit cards. The e-wallets took the place of banks for a large portion of the population
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Bill payments on e-wallets became very popular, and therefore lots of people were familiar with loading the e-wallets from a variety of sources.
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Merchants had not invested in POS terminals yet, so there was no legacy infrastructure to content with.
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The e-wallets realized that a payment is simply a money transfer between two e-wallet accounts. Everything, from transaction messages and processing, risk management, fraud prevention and so forth was the same.
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Fast roll-out and competition between the dominant e-wallets was more important than interoperability. Nobody wanted to wait for some standard that would complicate and slow everything down.
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China (starting in 2011 with Alipay) had already developed the technology and demonstrated how a fast penetration rate can be achieved. . So, in hindsight, it is not surprising that the two dominant e-wallets (GCash and PayMaya) took over the payment market within a few short years.
Generally, the fast roll-out was based on a very pragmatic approach that valued common sense more than global interoperability and overengineered specifications.
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As nobody wanted to pay for expensive POS terminals, the wallets handed out very inexpensive mobile phones that only had one purpose: receive the approval code for a transaction. This was made even easier as the e-wallets were closely related to the dominant mobile networks, Globe and Smart.
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All the security was done in the backend and on the mobile phone. The merchant simply got a piece of cardboard with their name and QR code on it. All the customer had to do was to scan the QR code, which provided the destination for the intra e-wallet money transfer.
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There was (and probably still is) a "don-ask-don’t tell" policy in place for merchants using their personal account to accept payments. Personal accounts may allow only a limited number of transactions and a limited transaction amount, but for many small merchants it was enough.
I imagine that neither the Central Bank nor the banks were entirely happy about this development. After all, the payment domain should belong to the financial industry, shouldn’t it?
To bring the QR payments market back into the fold of government regulated financial institutions, the "industry", under the tutelage of the Central Bank and the Philippine Payments Management, Inc., started to develop the Philippine’s own QR Payment standard. That happened sometime between 2016 and 2019 (see (4)). The end goal was the mandated adoption of a national standard and with it domestic interoperability.
Eventually, the QRPh Standard was borne. I don’t know when it happened exactly, as nothing about the standardization process was public, but at least since 2023 (see (5)), the Philippines had a national QR payment standard that was mandated by the Central Bank.
When QRPh became available, GCash was the dominant player in the e-wallet payment market, while PayMaya seemed to focus on developing an acquiring business that is open to all payment instruments. That was probably the reason why PayMaya was an early adopter of the QRPh standard, as it allowed them to accept payments from the dominant e-wallet, GCash, among others.
The BSP memorandum dated February 2023 mandates the adoption of QRPh by all receiving PSP from 1. July 2023. It is August 2024 now, and I am still seeing plenty of GCash QR codes all over the place. In my experience, the receiver name is almost never the name of the merchant, but the name of the owner or somebody who would take the fall when the inland revenue comes calling. This means that most of the Non-QRPh acceptance may just be merchants using personal GCash accounts to receive payments.
So, how does QRPh actually work? Well, I do not know for sure as there is very little public information available about the standard. However, we know a little bit from press statements:
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The focus of the standard is, at least initially, Person-to-Person and Person-to-Merchant payments.
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Currently, only receiver/merchant-presented QR codes are implemented.
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The format of the QR data follows the EMV Merchant Presented QR specifications (see (6)).
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All QR receivers must use the QRPh QR code format.
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All QR senders must be able to scan QR codes following the QRPh standard.
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The backbone of the QRPh system is InstaPay, which allows near instantaneous money transfer between participants.
In my next post, I will review the EMV standard for merchant-presented QR codes, which is the basis for QRPh.
References
(1) NBC, “Prakas F14 020 351 PR KHQR Code Specification in Cambodia,” National Bank of Cambodia, Prakas, 2022. [Online]. Available: https://www.nbc.gov.kh/download_files/legislation/prakas_kh/Prakas_F14-020-351-PR_KHQR_for_Payment_in_Cambodia_appendix.pdf.
(2) S. G. Q. R. TASKFORCE, “SINGAPORE QR CODE FOR E-PAYMENTS (‘SGQR’) SPECIFICATIONS,” MAS & IMDA, Specification, May 2018.
(3) napas, “TECHNICAL SPECIFICATIONS ON NAPAS QR SWITCHING <Apply for Member Institution> PART IV: QR CODE FORMAT,” NATIONAL PAYMENT CORPORATION OF VIETNAM, Specification, Jan. 2021. Accessed: January 13, 2025. [Online]. Available: https://www.kiemtrabank.com/documents/QR_Format_T&C_v1.5.2_EN_102022.pdf.
(4) BSP, “Circular No. 1055 Series of 2019 - Adoption of a National Quick Response (QR) Code Standard,” Office Of The Governor, Bangko Sentral ng Pilipinas, Memorandum, Oct. 2019. [Online]. Available: https://www.bsp.gov.ph/Regulations/Issuances/2019/c1055.pdf.
(5) BSP, “MEMORANDUM No. M-2023-005 - Implementation of BSP Circular No. 1055 on the Adoption of a National Quick Response (QR) Code Standard,” Office Of The Deputy Governor Payments Currency Management Sector, Bangko Sentral ng Pilipinas, Memorandum, Feb. 2023. [Online]. Available: https://www.bsp.gov.ph/Regulations/Issuances/2023/M-2023-005.pdf.