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QR Code payments

Are QR codes staging a comeback through banking and payments?

I’m a marketing professional, so I know what my line is meant to be on QR codes – they are a bit laughable, anachronistic, and surely already dead. So finding out that these square barcodes are used by the likes of PayPal, Tesco PayQwiq and Tide – major players in the world of banking and payments – has given me pause and, quite frankly, challenged my self-confidence. Am I wrong? Are QR codes cool?

I thought QR codes (as a replacement for a short URL) died out around 2013, but it seems they are being resurrected thanks to better support from Google and Apple for the technology. Brands may not have learned to put them in useful places (the underground example is terrific – both dangerously far away and in a place with NO INTERNET) but the native support hurdle has, at least, been somewhat overcome.

As it turns out, EMVCo (the global technical body responsible for managing and evolving the EMV® Specifications and related testing processes) has recently released new QR Code Payment specifications – allowing retailers to process transactions by scanning those weird two-dimensional barcodes, and potentially broadening the acceptance of QR-code-based payment solutions. Visa, who helpfully contributed to the new guidelines, alongside American Express, Discover, MasterCard, JCB and UnionPay, coincidentally offers a service – mVisa – that lets retailers accept a scannable QR code as a method of payment.

Mapa QR Code

To be clear, this is good stuff. Not the embarrassing black maze on your phone, admittedly, but the fact that payment goes directly from your Visa account to the account of the merchant. It works whether you have the same bank or not. And it provides real-time notifications to both parties – something financial services is only just starting to realise is pretty helpful. Active in India, Kenya and Nigeria, mVisa is being used by 328,000 merchants and 33 banks.

QR Quota

In India, where mVisa is taking off, the catalyst is clear – the government took 86% of the cash away. In a world scrambling around for better alternatives to paper money, QR codes have proved a surprisingly handy technology. Mastercard announced in July that it too had plans for expanding QR-code-based payments, with a focus on India and Africa, as a ‘fast, secure and inexpensive way’ for merchants to accept payments. Its solution releases consumers from the indignity of presenting a QR code to a store owner – the merchant is the one who supplies the code; the shopper scans it to pay, if their phone has a camera.

China has also seen massive uptake of QR codes – including but certainly not limited to the world of payments – thanks to the unstoppable WeChat application. As ClickZ notes: ‘WeChat is much more than just a messaging app – it has in-built functionality for making payments, transferring money, hailing a cab, hiring a bike, and donating to charity to name just a few… WeChat became a game-changer for the uptake of QR in China. Scan a QR code with WeChat, and you can do almost anything.’ According to PYMNTS, ‘There were $5.5 trillion worth of mobile payments made in China last year, the vast, vast majority of which are handled via QR code on the WeChat and Alipay apps.’ Mobile has ‘leapfrogged’ cash, credit and debit cards there. This is a case of adoption begetting adoption – when everyone does something it becomes the norm.

In Singapore too, OCBC Bank’s new standalone payment app offers QR code payment functionality, following their announcement of a ‘war on cash’.

QR Quaint?

And it’s not just taking off in Asia. The truth is, they do perform a useful function as a workaround. With mobile payments replacing cash, and in some places card payments, and all-powerful Apple blocking other providers from using the NFC component to assist in P2P payments, payments apps have had to look for alternatives.

PayPal actually ‘embraced the unpopular technology’ (Mashable’s words, not mine) in 2013, in a bid to make its users more likely to use mobile payments. This was arguably not as convenient as card payments – users have to log into the app, check in to the shop on PayPal, then bring up the code (or a PIN) for the merchant to scan… if they have the right technology to do so. (The added value comes from collecting and redeeming coupons from PayPal’s digital wallet. Also, as of 2014, the app and ‘available retailers’ let you order ahead via PayPal’s app.) With the acquisition of Venmo, the process for in-store purchases may soon change.

QR code paypal

Starbucks, the app for coffee-lovers that is muscling in on digital payments, also makes use of the much derided QR code. Not content with simply popping them on posters to educate customers, or try to encourage app downloads, the java masters are letting customers in some stores use QR codes to pay for their daily latte (and collect loyalty points while they are at it).  Walmart Pay is similar.

Tesco’s PayQwiq app, a neat way for shoppers to pay, collect points and track Tesco spending without needing a bunch of cards, advertises its QR code element as a ‘barcode’ – presumably it’s still a bit embarrassed about resurrecting the tech.

Tesco PayQwiq QR Codes

Other (recent) European examples include Jiffy in Italy (P2B payments) and BBVA’s partnership with Alipay in Spain.

QR Quirks

It’s not all about paying in store. This month, Venmo revealed new functionality for adding connections – those pesky QR codes, masquerading as ‘Venmo codes’. In a move to speed up the process of paying a contact or being paid yourself, the P2P payments app doesn’t just provide a scannable code, it has also made it straightforward to email, text or AirDrop your code to friends who owe you money.

Moreover, Tide shows how QR codes can be used in banking beyond scanning them to make payments. The mobile-first SME banking app uses a simple QR code as a security measure on its desktop site. Scan it with your (linked) smartphone to use the web version. (WhatsApp uses similar tech if you are one of the people who uses it on desktop…)

 Tide QR Codes

QR Quiz

So what’s the problem? Apart from being unsightly? One issue is around what data is transmitted and how. As barcodes are easy to copy, the only data transmitted is a transaction code and account information (not the actual card number). It works like an online card-not-present transaction, costing retailers more because it’s less secure. Moreover, screen brightness and camera quality can cause transactions to fail.

However, Jim McCarthy, executive vice president, innovation and strategic partnerships at Visa, recently commented on the benefits of QR codes, calling them easy, familiar and secure. With both a ‘push’ and ‘pull’ element to the technology, ‘the consumer can get a [tokenized] QR code… Or the consumer can scan the merchant QR and push their funds to the merchant’s account — again, eliminating fraud, but also digitizing the entire transaction end to end.’

QR Quest

My friends in the marketing press are also having a volte face about the humble QR code. Christopher Ratcliff, former editor of Econsultancy, experienced a similar reaction when we discussed QR codes on Twitter: ‘QR CODES ARE MAKING A COMEBACK??? But… what? Haven’t we learnt anything? Didn’t enough people die leaning over rail-tracks to snap a QR code on the opposite platform? Well, we deserve our fate I suppose. But wait, that’s the pre-2017 me talking, the one that doesn’t understand how the barriers to using them have come crashing down, and that if we’re constantly encouraged to digitally interact with a physical thing using our phones, then there needs to be a standardised signifier to say “point your mobile here” otherwise we won’t know what the hell we’re doing. Mmmm… I think I may have changed my mind. Do I love QR codes now???’

airplane-towing-qr-code-blog-full

As for the future of this Labyrinth Noir (struggling for QR code euphemisms now) in payments, EMVCo has promised ‘a self-testing framework for the merchant-presented and consumer-presented specifications which allows POI implementers to evaluate whether their QR Codes are generated or interpreted in compliance to the EMV QR Code Specifications’ in 2018. ‘Testing for consumer device applications will be undertaken by the payment systems.’ Apple is reportedly testing a QR code scanning solution that works directly from the phone’s camera.

So, until we are all using NFC-enabled devices, sound waves or simply letting payments happen in the background of our IOT-enabled lives, we should expect to see the resurgence – or, more accurately, the resilience – of the QR code.

For more information on payments solutions and how the customer experiences them, sign up to our Digital Wallets & Payments Monitor.

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