ETA Expert Insights: QR Codes in Payments

QR codes have seen a resurgence, and according to a report by the World Economic Forum, payments using QR codes are expected to reach $2 trillion by 2025, with as many as 30% of all smartphone users using them to make payments.

ETA’s Mobile Payments Committee shares their insights on how QR codes are becoming a key payments technology in their white paper titled QR Codes in Payments.

A summary of the white paper is below.

The Origin of QR Codes
(QR) Code System was built by a team led by Masahiro Hara, who worked for the Japanese company Denso Wave in 1994, to eliminate the need for multiple barcodes. Since its creation, QR code use in payments has surged, especially in Asia, where its popularity has grown just as the use of ATMs and point-of-sale (POS) terminals has declined.

How QR Codes Work
This payment technology uses information embedded in the barcode-like image about the merchant or payment provider to complete a transaction. QR code payments have become widely available as they only require a mobile device with a camera to enable this technology.

Types of QR Code Payments

• Merchant-Generated QR Code: A merchant’s device displays a QR code for a consumer’s device to read.
• Consumer-Generated QR Code: An app on the consumer’s device generates a unique QR code containing their embedded payment information, which the consumer presents to the merchant.

Use Cases
The utility of QR codes transcends the realm of consumers’ transactions with merchants. Their versatility extends to other uses like P2P, advertising, and mass transit. QR-enhanced advertisements empower consumers to embark on immediate quests, researching and purchasing products or services conveniently. Furthermore, QR codes find purpose in facilitating peer-to-peer (P2P) transactions and effortlessly facilitating the smooth movement of commuters within public transportation systems.

Pros and Cons
As with any technology, there are advantages and disadvantages to its adoption. On the benefits side, QR codes are easy to use because a mobile device is all that is needed. QR codes are also less costly, reducing the need to purchase or lease more expensive hardware. QR codes are also faster, reducing friction during checkout. There are always risks associated with any technology, including QR codes. Hackers may create counterfeit QR codes to steal sensitive information or redirect payments to their accounts. Fraudulent QR codes can be used to distribute malware that can infect a user’s device and steal sensitive information.

Conclusion
QR codes are a convenient and secure way to transact. This technology is more accessible than traditional payments, such as credit cards, which require a physical card, specialized hardware, and infrastructure. As with any payment solution, successful payment technologies start with understanding the offering, evaluating the benefits and risks, and implementing a solution that best fits the merchant’s needs.

To download the full version of the white paper, click here.