Quick Response Code (QR Code) is a two-dimensional code composed of black and white squares that can be read by a smartphone camera, point of sale (POS) terminals, or other devices. The QR code was first invented for Japan’s automotive industry and was patented by Toyota’s subsidiary Denso Wave. Acceptance of QR codes for digital payments has increased due to increased access to smartphones and high-speed internet connectivity. It is becoming popular as it is easy to generate and customers don’t need any additional hardware to pay, just a smartphone with a camera is enough
1. How QR Code Payments Work?
A QR code with a payment link can be generated by both the seller and the buyer, although, usually the seller generates the QR code for his shop or for any fixed or variable amount. It can be scanned from both paper and screen. It opens a payment link and confirms payment. The customer just has to scan it using their banking and finance application and then proceed to transfer the payment.
There are two types of QR code payments: static and dynamic.
Static QR code can not be tracked and altered. It directly includes the payment URL. Static code is created in advance, and it can be printed and placed near the cash register. Customers only have to scan the QR code, enter the purchase amount in the smartphone, the merchant will verify the details and then the customer can initiate the online payment.
Dynamic codes are generated for a specific payment and the amount for the payment in advance, as determined by the seller. It comes with extra features like password protection, scan analysis, etc.
2. QR Code Growth In The Market:
The usage of QR codes in India, China, and Kenya had grown slowly. Two banks in Singapore, DBS and OCBC have launched their own proprietary QR code acceptance solutions. However, the pace has started increasing.
Once the banks have decided to initiate an interoperable QR code payment, then the process is straightforward. Banks have developed QR code payment solutions and integrated them into their existing bank applications, and then turned them over to customers and merchants with many announcements and direct guidelines for implementation. So many people using QR codes for shopping or payment in other channels, many consumers and merchants have instinctively adopted QR codes for payment very quickly.
Some scholars believe the NFC payment solution is more effective than QR codes. While that is definitely debatable & true, QR codes always have the upper hand when it comes to marketing. NFC and QR codes are virtually identical when being used for promotional purposes.
3. QR Payments Used Around The World:
Paying for goods and services using QR code is quite common overseas, especially in Asia and other developing countries. In China and Japan, the QR code processed $1.65 trillion in purchases in 2016. In India, the initiative to promote digital payments involves the development of a single QR code format that works with multiple payment services. The use of QR codes is too widespread in India.
In some developed countries parking businesses are adopting a QR code-based payment and ticketing. Where eWallet parking payment solutions use QR code to make payment directly from the e-wallet and make the parking process smooth and leisurely.
QR codes are becoming more popular in the U.S. as well. Mercator’s data show that 34% of people used this payment technology before this corona pandemic situation, and people are using it more since COVID began because it provides contactless payment solutions to salvage you from getting infected.
QR code payment system rolling out across the world. Saudi Payments have also appointed a high-tech payment system that is an interoperable unified QR code platform to introduce a QR-based national payment system that enables seamless interaction between all stakeholders.
4. QR Codes As Way Of The Future:
The potential uses for QR codes are numerous – Wi-Fi network login, virtual stores, URLs, code payments as a cashless payment solution. The coronavirus epidemic has taught people to use QR codes in new and widespread ways.
In the future QR codes will be used for the following purpose widely:
- To Promote businesses
- Encourage App download
- Event/Airline/Rail/Bus tickets
- Mobile coupons/Loyalty cards
- Mobile Payments
It also appears that the coronavirus crisis can spread the practice around the world, leading the QR code-based fintech industry to a definite success.
5. Industry Support For QR Payments:
Support for QR code payments is increasing in the payments industry. In mid-2017, the global payment industry standards group EMVCo released specifications designed to ensure inter-efficiency for merchant-based and customer-based QR code transactions.
There is a broadening industry focus to support the use of QR codes in payment services. Smartphone manufacturers and app developers are increasing support for the QR code payment solution. Many widely used apps, including payment, social media, and music streaming services, have introduced support for QR codes for various purposes.
COVID-19 pandemic has led the world to cashless payment solutions, especially with the fear that physical currency may possibly be a virus transmission vector. Customers, as well as merchants, can deal with this payment solution without entering into proximity. It is very secure to use QR codes for online payment. QR code payment solutions reduce data loss and security breaches. It will lead the QR code in the future for widespread use across multiple platforms.