QR Codes Gaining Ground as a Contactless Payment Option

Merchants want low-cost payment, and consumers seek minimal human contact.

July 15, 2020

ALEXANDRIA, Va.—Many merchants are embracing QR code technology as a simple, low-cost way to accept payments with the added benefit of minimal human interaction, reports Mobile Payments Today.

QR codes are commonly used in China and other overseas markets, but adoption in the U.S. has lagged behind in the use of NFC, the technology that powers contactless payments via mobile wallets like Apple Pay and Android Pay.

QR codes generally work by allowing consumers to scan a barcode using their mobile phone camera, which then produces a direct link between the customer and merchant. QR codes are convenient payment solutions that allow customers to pay for a cup of coffee at a café or get price information from merchandise on a store shelf. They can even read updated food menus at restaurants.

Coca-Cola’s just-announced software update to its Freestyle beverage dispensers use a QR code that customers can scan to select and dispense their drinks without having to use the touchscreen on the machine.

Now, thanks to increasing upgrades in smartphone camera technology, consumers can get a clearer barcode scan from a safe distance and complete a purchase while standing several feet away from a product or merchant.

“QR code payments specifically have been gaining more attention lately since they can often provide a lower-cost contactless option for merchants and can also offer additional functionality, such as a built-in loyalty program or email capture for marketing purposes,” said Nate Hirshberg, vice president of marketing at Shift4Payments, a Pennsylvania-based provider of payment processing services.

Another benefit is that QR codes are ideal in businesses where NFC is more difficult to implement, such as in restaurants and bars where the payment device isn’t typically brought to the customer.

For smaller merchants, a QR code payment system opens up new possibilities because the cellphone itself can be used to process a transaction without having to fund expensive infrastructure and technology, allowing them to accept payments using their own mobile devices.

According to a 2018 study by Juniper Research, QR code redemption globally was projected to reach about 5.3 billion transactions by 2022, which was about four times the level of 1.3 billion transactions in 2017. However, the COVID-19 pandemic and the accelerated demand for QR code-based payments in the U.S. and other western markets may shatter those estimates.

In May, PayPal Holdings rolled out a plan to enable QR codes as a payment option in 28 markets around the globe. The payments firm said that QR codes would allow safe and secure digital payments among a growing number of use cases, such as farmers markets, sales of secondhand goods and other types of transactions.

Last month, Apple previewed a new feature in iOS 14 called App Clips, which allows merchants to use NFC tags or QR codes for specific types of products or transactions, such as renting a scooter or paying a parking meter. Reportedly, Apple is working on a feature in the new OS that lets customers make QR code payments using Apple Pay, but the company has hasn’t confirmed the feature.

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