A Quick Response (QR) Code Payment is a form of contactless payment. A QR code is a scannable barcode containing horizontal and vertical lines, dots, and patterns (unlike a traditional barcode, containing only horizontal lines).
Most smartphones are equipped to scan QR codes with their cameras to initiate an action such as opening a link in the phone’s browser, making a payment, or viewing a menu at a restaurant.
QR codes have a number of advantages, including:
- The ability to be scanned from a screen or from paper
- The ability to be scanned even if part of the QR code is damaged or unreadable
- Keeping data safer, as it can be encrypted
- A wide variety of of uses and applications
- Speed and ease of use, as they can be scanned using any smart-device camera
- Facilitation of faster payments
To make a QR code payment, a consumer uses their smartphone to scan a QR code that is displayed at a point-of-sale or printed on an invoice, enter the amount they need to pay, and submit their payment. QR payments offer more flexibility and less infrastructure than traditional point-of-sale payment terminals or cash payments.
The History of QR Code Payments
Invented in Japan in the early 1990’s, QR codes were initially created specifically for use in the automotive industry. Since then, QR codes have earned more ubiquitous applications across various industries throughout the world—gaining a specific foothold in the world of contactless, faster payments.
QR code payments, specifically, have grown in popularity in the US in recent years. However, QR codes are already a popular choice for instant payments in a number of countries:
- In China, consumers can scan QR codes to make payments via Tencent’s WeChat or Alibaba’s Alipay.
- In Singapore, consumers can scan what’s called a unified QR code, which combines different QR codes for different payment apps into a single multipurpose QR code. Once users scan the code, they’re prompted to complete transactions using the payments app of their choice.
- Consumers in India can use their mobile banking app to scan Bharat QR codes and make payments via the Unified Payments Interface Faster Payments Network.
- The UK’s Faster Payments Service is facilitating QR code transactions from consumers’ financial institution transaction accounts.
- The Netherlands has developed a type of QR code payment specifically for e-invoicing and remittances. Businesses are able to place a QR code on an invoice and, once the invoice is delivered, the payee can simply scan and pay using the code.
- The European Payments Council (EPC) has recently published guidelines for European businesses initiating QR code payments, via codes placed directly on invoices. These QR code payments will be sent and received on instant payment networks that are in compliance with the EPC’s SEPA Instant Credit Transfer Scheme.