In 1994, the quick-response (QR) code was created by Denso Wave, a subsidiary of Toyota, as a way to track vehicles and parts. Today, this two-dimensional (2D) barcode has changed how we transact and continues to impact consumer behavior and the payments industry.
What is the role of QR codes in the present and future digital payments landscape? In this guide, we will discuss how this innovation can provide businesses with a competitive edge in an ever-evolving market. We will also look into how this technology has impacted digital transactions and industries worldwide.
What are QR Code Payments?
QR code payments use a unique 2D barcode that looks like a square grid with a white background with black squares arranged inside. This contains transactional information that customers can read and obtain when they scan the code using their smartphone camera or another device. The digital data will usually show the transaction amount and payment account details of payers or payees, making it easier to conduct contactless payments.
Photo by Jack Sparrow, sourced from Pexels
Types of QR Codes
- Static. This cannot be overwritten once it is generated. It is mostly used for one-off campaigns, when the information it contains does not require any updates, or when you do not have to track any metrics.
- Dynamic. This can be edited as needed without redeploying or reprinting the code. It is ideal for tracking analytics, faster scanning during digital transactions, and changing important payment details.
- High-Capacity. This is usually used in more complex cases when a code needs to contain lengthier URLs, entire contact details, comprehensive product information, and more extensive data.
- Customized. This allows businesses to create QR codes that incorporate their brand, including their logo, colors, and other elements that can improve their visual appeal and branding.
Whether it is different types of QR code payments or the best automated invoice processing software, it pays to know which options will best suit your needs to meet your digital transaction goals. Ultimately, you want to maximize technological advancements that create smoother processes for managing business finances and payment methods.
Image Sourced from Statista
The Rise of QR Code Payments
QR codes have come a long way from being a means to track inventory and monitor product quality three decades ago. It is now one of the preferred methods of contactless payment.
A report from Statista shows that about 89 million smartphone users in the United States scanned a QR code on their mobile device in 2022. Predictions indicate constant growth, projecting more than 100 million users by 2025.
However, these two-dimensional bar codes were already a popular contactless payment method in other countries even before the 2020s.
- Consumers in China were already using it as early as 2011 when the Chinese company Alipay introduced a QR code payment method so their offline store partners could accept Alipay Wallet payments via scanning. When WeChat launched a code-scanning payment product in 2014, QR codes gained even more popularity in the country.
- The Czech Banking Association introduced and endorsed an open-format payment information exchange in 2012. This move allowed for the deployment of QR code payments on a large scale in the Czech Republic.
- Paypal debuts QR codes for payments in 2020 to help more small and medium-sized businesses (SMBs) with contactless transactions.
- Japan and members of the Association of Southeast Asian Nations (ASEAN) will reportedly unify QR code payments in 2025 to facilitate an integrated cashless system between these countries.
QR codes have a significant impact on the future of digital payments across various sectors worldwide, offering convenience, speed, and security. Here is a brief overview of how QR codes have influenced different industries and their common uses.
- Retail and E-commerce. These industries have adopted QR code payment methods to streamline transactions, reduce the need for physical cash, enhance customer experience, enable quick checkouts, and provide a seamless in-store and online shopping experience. Walmart and IKEA are two big-name companies that have embraced QR codes.
- Subscription Services. Subscription-based businesses utilize QR codes for easy subscription sign-ups, payment processing, and managing recurring payments efficiently. This makes subscription services more accessible and user-friendly.
- Restaurants and Cafes. From major players like Starbucks to smaller neighborhood diners and coffee shops, QR codes have revolutionized the dining experience. They let customers access digital menus, table ordering, and secure contactless payment processing. They also allow food establishments to enhance operational efficiency and increase customer satisfaction.
- Events. Event organizers are now using QR codes to streamline event ticketing, registration, and cashless payments, offering attendees a hassle-free experience before and even on the day of events. QR codes are becoming more common in concerts, conventions, and international sports competitions.
- Promotions and Discounts. Many marketing campaigns now integrate QR codes to offer discounts, loyalty rewards, and other promotions. This method can make it easier to engage customers, drive sales, offer exclusive deals, and track promotional activities. Nike, Macy’s, and L’Oréal are famous brands that have successfully launched marketing campaigns via QR codes.
Benefits of QR Code Payments
Thanks to the multifold benefits that QR codes provide, consumers and businesses have more options for frictionless digital payment solutions today. As the technology used in creating and sharing QR codes continues to evolve, the advantages of these square barcodes have also increased.
- Cost-effective. Since today’s QR codes typically require only a smartphone to facilitate financial transactions, merchants can do without credit card readers and expensive point-of-sale (POS) infrastructure.
- Scalable. Thanks to its digital format, you can easily scale your payment methods and market reach by adding a QR code to the checkout section of your free e-commerce website template or including it in an invoice sent via email. This allows customers to order and pay online and either pick up the items from your physical store or have them delivered.
- Secure. With the increasing threat of cyber theft and fraud, many QR codes today now have an added layer of security with authentication mechanisms and encryption. Consumers and businesses are becoming increasingly aware of the security issues when using digital payment methods and are adopting safer practices when doing contactless transactions.
- Efficient. QR codes can make checkout faster and more hassle-free, especially for businesses that tend to get extra busy during peak hours or seasons. For instance, retail stores and food trucks can handle holiday shoppers or the lunch break crowd more efficiently when customers can pay using QR code payments.
- Inclusive. With its cost-effectiveness and ease of use, QR codes are considered by the World Bank as a great way to boost financial inclusivity. This is especially important in an era where digitized cash is becoming the norm.
Transitioning into the Future of Digital Payments with QR Codes
QR codes have become a prevalent and favored form of digital payment due to their simplicity, security, and convenience. Businesses can streamline transactions, enhance customer experiences, and even leverage ways to maximize online presence by incorporating QR codes into their payment systems, marketing strategies, and customer engagement initiatives.
However, businesses must pay attention to the potential risks associated with QR codes, especially when integrating them into websites or online stores. You need to implement necessary security measures, regularly update systems, and educate customers on safe QR code usage to safeguard your business and customers. By taking these precautions, you can harness the benefits of QR codes while ensuring a secure digital environment for all stakeholders.
