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QR Code Payments

QR Code Payments

Can Those Boxy Barcodes Make a Comeback? QR Code Payments Adopters Think So

QR codes—those blocky, black-and-white, pixelated barcodes you see from time to time—were largely written off as a failure in the US market. Now, though, QR code payments are giving the technology an unexpected second chance at life.

QR codes were first invented in 1994 by a Japanese firm for use in the auto industry. The idea was to allow for faster and more accurate component scanning compared to existing barcode systems. In response to that need, a single QR code can hold up to 7,000 unique characters, and scan up to ten times faster than a traditional barcode.

At the dawn of the smartphone age, some saw the QR code as a potential medium for exchanging all types of data. After all, just about any device with a camera can scan a QR code. It wasn’t long, though, before these codes fell out of favor and were relegated to the dustbin of failed tech concepts.

…at least, that’s what everyone thought.

Alternate Payment Adoption in Other Markets

In the same way different regions have different cultures, cuisines, and climates, people can also prefer different payment methods. As revealed in our Global eCommerce Trends for 2017 and Beyond guide, credit and debit card payments are the norm in a relatively small number of markets. A majority of global consumers use some alternate form of payment outside the cash/card dichotomy.


While alternative payment methods are an option for eCommerce, they may be even more of a force in brick-and-mortar retail.

QR code technology made a comeback in the payment space, and is now a dominant force in many parts of the world. More and more physical retail markets see QR code payments as a viable path toward faster, more secure payments. For example, Mastercard’s Masterpass QR is now available in many African markets. This technology puts the power of mobile payments in the hands of thousands of African retailers.

And when one market proves to be especially influential, it can affect customs and practices in other markets, as well. That’s what we’re seeing now with QR code payments; the news didn’t make headlines because the trend didn’t start in the US.

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China’s Mobile Payment Renaissance

Here in the US, the rate of mobile payment adoption is still relatively low. Only one in three iPhone users have ever tried to use Apple Pay, the company’s proprietary payment app. Outside of NFC (near-field communication) payments, adoption is much lower. The story is very different, however, if we look at a market like China.

As shown above, China is a dominant consumer marketplace. It’s the world’s largest eCommerce market, and now the world’s largest economy by purchasing power parity. And, China is on the forefront of mobile payments adoption.

In 2017, processors within the country registered $15.4 trillion in mobile payments. That’s an incredible figure, dwarfing every other market in the world.

Most of the mobile payments in China aren’t conducted using NFC-based tools like Apple Pay or Samsung Pay, though. 54% of mobile payments were made using Alipay, while Tencent’s WeChat Pay accounted for an additional 39%. Both platforms utilize QR code technology to conduct payments. So, why do Chinese consumers like QR code payments so much?

Convenient & Affordable Cashless Payments

The motivating factor behind QR code adoption is convenience.

Payment cards did not catch on in China in the same way in the US and Europe. Most Chinese consumers preferred to use cash, rather than rely on payment cards, until very recently. As this became increasingly impractical, the need for a convenient, cashless payment method was obvious.

Here’s the rub: service and equipment necessary to conduct card payments can be a costly up-front expense. Most businesses here in the US have accepted cards for years, and just see it as a cost of doing business. But in China, many smaller merchants, especially in rural parts of the country, never bothered to invest in the equipment because so few buyers used cards.

Mobile devices are ubiquitous in China, so mobile payments seem like an obvious solution. Still, the absence of card terminals precludes NFC payments like Apple Pay and Samsung Pay.

QR code payments provide an affordable, easy, and widely-adaptable solution to the market’s problem. Accepting these payments is as simple as generating a barcode and printing it on a sign. Customers can scan the code and pay with their mobile devices in seconds. For their part, merchants get the benefits of accepting digital payments, without the up-front investment of buying a card terminal and other costly equipment. It’s fast, secure, and opens the merchants’ customer base to a wider segment of the population.

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Could QR Code Payments Catch On?

Wider institutional embrace of QR code technology is already underway in Japan, with banks coming together to offer intrabank QR code payments.

Obviously, Japan sees a high volume of tourism coming from China, so there’s a clear motivation to offer the payment method with which these consumers are comfortable. However, one can easily picture the influence of China making QR codes the norm throughout the East Asian region. And, as the East Asian market grows and becomes increasingly dominant, it’s possible to imagine QR codes becoming normalized in US brick-and-mortar retail, too, especially in tourist hotspots like Orlando or New York.

Of course, that’s a matter of speculation. We’re not likely to see QR code payments become a phenomenon in the US on the same scale as in China. But, in many ways, QR code payments are already here.

Major retailers like Walmart, Dunkin, and Starbucks already use QR codes in their popular branded apps. Most consumers are familiar with at least one of these, even if they don’t personally use one on a regular basis. As of 2018, more than one in four adults in the US had used the Walmart Pay app at least once. That’s nearly double the number of adults who’ve tried Apple Pay.

The number of devotees is growing. While consumers seemed to reject QR codes in the last decade, they are more than happy to use them in-app. In March 2017, 28.8% of Walmart Pay users said they used the app “every chance [they] get.” By December 2017, that number rose to 52.5%.

Of course, the main reason consumers use apps like Walmart Pay is the prospect of saving money, receiving rewards, or other perks. But, integrating QR code checkout into the experience certainly doesn’t seem to turn buyers away. Buyers didn’t accept QR codes at first because they were a solution with no problem. But, once brands introduced the prospect of QR code payments to rack up rewards, consumers were happy to jump on board. Plus, while contactless payment fraud is still possible, the technology offers more protection than conventional eCommerce.

Upheaval in the Payments Space

The future of payments is wide open. As technology continues pushing forward, the payments industry will become even more complex and multifaceted. The smart merchant expects this upheaval, and lays plans to adapt to new scenarios with responsive payments tools and strategies.

Does your brand employ QR code payments? Do you have other ideas for the future of QR codes? Sound off in the comments below.

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