Thursday, May 19, 2022

QR Codes & The Future of Mobile Payment Systems

Quick Response code or QR code has grown in popularity for the last few years. Since it went mainstream, QR codes are visible almost everywhere. However, soon the perception of people changed as QR codes were used to redirect consumers to some websites only. Thus, people stopped using it as it was just used as a marketing gimmick.

However, QR code came back in a better way. Now they are facilitating mobile payments for users around the globe.

Juniper Research estimated that the usage of QR codes for electronic payments will increase to 300% over the next five years. Tech companies are making way for the upcoming QR surge as both Apple and Alphabet’s mobile operating software are putting integrated QR code scanners in the respective cameras app of their phones.

Back when QR codes were introduced, separate apps were needed to scan them. This limited the practical use of the technology. Now that they are easily available in the camera app, they can be used by a large number of people.

What is a QR code payment?

QR codes are like bar codes where they store data in a physical representation. These are a pattern of dark and light spots within a limited space.

Barcodes can store a relatively lesser volume of data, QR code can store more data.

It has the following implications for the merchants and their customers:

1. They can be scanned from digital surfaces like mobile phone screens. Thus it makes digital information transfer more open and possible.

2. They have built-in integrity checks. Therefore QR codes can be read even if some part of it is damaged or hidden.

3. QR codes have the ability to get integrated.

4. QR codes can also store URLs, payment confirmations, text or geolocation data.

A payment via QR code involves using A QR code payment uses a camera or scanner to read a code and process the information within the payment app or the website redirected. However, the device used to scan should have the software needed. QR Code payments can support app-to-app payments, POS scanning, and customer scanning from a smartphone.

Types of QR Codes

There are 2 types of QR codes – static and dynamic.

1. Dynamic QR codes are generated by the system at the time of a transaction. A seller or a buyer needs to scan a generated code by their devices. This type of QR code does not have long time validity. They include unique data elements for the transaction currently operating only. For example, after scanning a dynamic QR code, the buyer receives a form with the automatically filled in data of the product they want to buy.

2. Static QR codes usually come out in the form of stickers. Such stickers can be placed at different locations such as check-outs or any other location. They have static or unchangeable information. When buyers scan the sticker having the static QR code, they receive an all-payments form where they need to add product information manually.

Course on: The rise of Buy Now, Pay Later

QR Code Payment Modes

Payment modes are the payment relationships between a seller and a buyer. There are two main QR code payment modes – merchant-presented mode and customer-presented mode.

1. The merchant-presented mode- the buyer needs to scan the seller’s QR code to undertake a transaction.

2. The customer-presented mode- the seller needs to scan the buyer’s QR code to undertake a transaction.

How the QR Code Payment Works?

1 Make sure that the used device is connected to the internet

2. Open a payment app with the QR code scanner (can be a smartphone or a scanner device)

3. Scan the QR payment code

4. Input or just check the payment details and authorize the payment. The app connects the buyer’s bank with the seller’s payment system through API and fulfils the payment.

5. Receive the payment confirmation

Where are QR payments already being used?

China is the country where the QR code renaissance began. It started with QR-enabled mobile payments replacing cash as the preferred transaction payment method. Soon it took over every realm of transactions, from street vendors to high-end department stores. This is how it overtook more time-consuming payment methods like credit and debit cards completely. In China, the sum total of mobile payments surpassed $13 trillion dollars in 2020, as most of that amount was coming from QR code payments on the WeChat and Alipay apps. Chinese authorities recognized that these payments represent a big part of their consumer economy. Therefore they are taking steps to regulate and standardize mobile payments.

Therefore China is regarded to be a leader and disruptor in the fintech sector in the world.

Even India has taken steps to reduce the amount of cash circulating in its economy. The country made use of QR code payments enabled by mVisa filling in the gaps. In many other countries in the world, where access to traditional banking companies is limited and cash is unreliable or hard to come by, mobile payment systems have been widely adopted. Thus it imparted  financial empowerment to many people who had been shut out of these markets for many years

Over the past few years in particular, standardized QR code payments have become very famous in Southeast Asia, especially in countries like Thailand, Singapore, Indonesia, and Vietnam.

Suggested: How do tokenization and encryption secure digital payment?

How QR code payments could change eCommerce?

The brighter side of using QR codes for eCommerce may not look convincing now. It seems less obvious because of the ways it can streamline and speed up brick-and-mortar store transactions. However, the security and cost benefits of scanning QR codes for payment could mean that the days of eCommerce companies saving credit card data for future purchases are numbered.

Stored card data is the most lucrative by-product for most of the digital thieves who attempt to hack into eCommerce companies’ servers. When a customer’s card information never leaves their own device, there’s nothing for the hackers to steal.

With QR code payments, the web is no longer the platform on which the transaction takes place—everything happens on the customer’s device.

QR code payments may not be a very famous concept in the West, especially in the United States. However,  as more retailers encourage their adoption with app-enabled loyalty programs and promotions, more and more consumers will also start using QR payments for the sake of concurrent convenience and added advantages.  Therefore, eCommerce companies who try to provide as many payment options in the checkout page have to adopt this as well.

 E-commerce companies need to look at the case study of eastern countries like India and China to understand how QR code payment can become famous even in the West. QR code payments might be the payment method of the future, or at least a significant part of it. Many other countries around the world are already using and regulating this technology. It remains to be seen what kind of response QR code payments will get in the U.S. Implementation among merchants has been slow. Therefore the customer demand for this payment method so far is also not quite good. But that could change if the benefits become more well-known.

Also Check: Digital Payment Fraud Prevention with 3D Secure 2.0

Should you learn this technology?

As technology is still a new concept in the West, there is a high chance of further development of it. So, you should definitely learn this program as it has a huge scope.

Our course on Fintech – QR code-based digital payments

Why should you enroll in this GFA Course?

Global FinTech Academy aims to make the knowledge behind Financial Technology available to all. We offer a range of courses that make the understanding of Technology easier for you. You can use this to strengthen your career, knowledge, disrupt the FinTech market with new and innovative product/s that are full of potential, or for literally anything. The good news is you get to learn all this in an easy language and from ground zero. Our aim is to deliver the best knowledge to you in the easiest way possible.

In this Business-Oriented course, we will understand;

  • Basics of QR code,
  • its components,
  • Static, dynamic and one time use QR code,
  • QR code payment,
  • closed and interoperable QR code,
  • authentication in QR code,
  • global adoption data and examples,
  • EMV Co QR code process for customer and merchant presented QR code,
  • backend transaction flow,
  • security and challenges and a comparison between QR code and NFC.
  • BharatQR, mVISA, Masterpass, Alipay and We chat Pay QR code system,
  • Mobile Payment,
  • Payment Processing
  • FinTech Digital Banking, Digital Finance, Financial Technology.

After completing and reflecting well on the discussed points, you will have a good understanding of QR code-based payments, their back end processes and challenges.

To get this course for USD10 only, apply code GFA10 at the checkout page.

Get it HERE

See you on the other side of the course.

You will get this course on Udemy too. Get it Here



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