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QR payments and collections are an alternative form of mobile payment that doesn’t require a card chip or NFC technology: just a camera and internet connection.
Payments with a QR code are increasingly popular among younger consumers and tourists, as well as one of the most demanded forms of payment, especially by Chinese visitors to Spain. Retailers are adopting this payment method as they once did with the bank card and contactless payment. How can QR payment be included in a business?
A QR code, which stands for “quick response code“, is a type of two-dimensional barcode, in 2D, that can store up to 7,089 characters, including letters, numbers, and other symbols.
The first QR code system was developed in Japan by the company Denso Wave in 1994 to accurately track vehicles and parts during manufacturing. These codes have a two-dimensional matrix design with three squares in the corners that allow for quick decoding of the information contained.
A QR code stores data in a two-dimensional matrix of white and black modules. These data are encoded in the form of zeros and ones. When a mobile device or a QR reader scans the code, the device’s camera captures the image, and specific software interprets it, meaning it decodes the information quickly, allowing the user to access the content or perform an action associated with the code.
These codes are used in a variety of applications, from advertising and marketing to payments and product identification. To learn more about how financial technologies integrate into businesses, you can read this article on open banking.
QR codes can store all kinds of text. They can also be used to enter an email, contact information in .VCARD format, postal addresses, or WiFi network passwords. It is even possible to store an entire chess game. Sometimes they have also been used to generate ‘functional art.’ The more data they contain, the denser they are.
Although there are many types of QR codes being an open standard, the most widespread format is the one observed in this article: a square frame with three squares in the corners that help the scanner know the code’s direction. Generally, QR content is classified into two types: static and dynamic.
Static QR codes are those whose content is fixed, meaning the text or URL is fixed and does not change, nor can it be modified once generated. These codes store information directly in the data matrix, which means that when the code is scanned, the same content is always displayed.
A developer generates a static QR code that leads to a PDF file with an installation guide for one of their applications. Once the QR is printed in a physical manual, it will always lead to the same PDF file. If the developer updates the installation guide and needs to distribute the new version, they will have to create and distribute a new QR code.
The advantages of static QR codes include:
An example to better understand what a static QR code is would be:
A developer generates a static QR code that leads to a PDF file with an installation guide for one of their applications. Once the QR is printed in a physical manual, it will always lead to the same PDF file. If the developer updates the installation guide and needs to distribute the new version, they will have to create and distribute a new QR code.
Dynamic QR codes offer greater flexibility and functionality. Unlike static ones, dynamic codes do not store information directly in the data matrix and instead contain a URL that redirects to a server where the information can be updated without changing the original code.
This allows companies to modify the content without having to reprint or redistribute the codes.
The advantages of dynamic QR codes include:
To better understand what a dynamic QR code is, let’s look at this example:
A developer uses a dynamic QR code on their business card, which redirects to their online portfolio. If the developer updates the portfolio content or changes its URL, they can simply update the link on the server. The printed QR code remains valid and will always direct to the most recent content without needing to be replaced.
For years, Japan and China have been using QR codes for payments, which is a smart solution for transmitting information between merchants and users. For example, it is possible to communicate something as complex as a bank address, a payment protocol, or a link that allows money transfers with a QR. Additionally, making payments with QR allows for streamlining a business’s treasury management.
QR code payment is a way to standardize or simplify mobile payment without using the classic card chip or an NFC system. The usage system of a QR payment is simple and quick:
How to include QR code payments in your business
Currently, there are many options for including QR codes in businesses, many of which are embedded in already known mobile payment applications or APIs such as WeChat, PayPal, Bizum, or AliPay.
At the end of 2021, Bizum announced a new feature for its users: Bizum’s QR collection, initially designed to facilitate the collection of the Christmas Lottery. Shortly after, Bizum launched a complete payment system through its platform, aimed at payments in State Lottery and Betting Administrations.
Currently, it is already possible to make collections with QR through Bizum, although it is necessary to use a third-party application like Pacomet or Monei. These services allow businesses to generate QR codes that include text information about the Bizum system, the amount, the concept, and the phone number that will issue or receive the payment.
WeChat Pay is the first QR payment service for businesses to arrive in Spain. It is imported from China, where it has been used as a payment system since 2013. In 2018, the Michelin Guide helped introduce these QR payments in Europe. It is still rarely used in Spain, and its main users are businesses run by Chinese citizens, as well as customers from that country.
In 2020, PayPal launched a QR payment service for merchants. The mechanism is very simple: the merchant uses PayPal to generate a QR code with a defined amount, and the user uses the PayPal app to scan that code and pay from their PayPal account, making it easy to pay with QR.
Since only two phones are needed (one from the merchant and one from the customer), it is a very interesting solution for mobile points of sale such as markets, stalls, fairs, etc. The payment is made via mobile, and the receipt is sent to the email.
It is also possible to generate a QR through any other web payment system by entering the URL into the payment platform in a free QR generator like QR Code Monkey or requesting automatic QR generation through payment APIs from the payment system provider. It is relatively simple, and in Spain, many point of sale terminal (POS) providers offer it.
QR payments have revolutionized the way payments are made in businesses, offering a fast, flexible, and secure solution. Below are some of the main advantages of implementing QR payments in a business.
Moreover, paying with QR has all the advantages of electronic payment. As we have mentioned, it is immediate, very secure, it is possible to purchase goods and services remotely, they allow the creation of a history, they prevent fraud as they are traceable operations, etc.
On the downside, one of the biggest criticisms of payment via QR code is the lack of security mechanisms for consumers at the time of scanning, as they do not know what they might find when scanning it. Today, there are already applications to avoid these types of problems, as if the QR leads to an insecure site, the applications do not open it.
Interestingly, QR is a technology that turns 30is 2024, but is just now taking off. At least in Spain. The pandemic made it popular to scan QR menus in restaurants, and contactless payments became equally popular.
QR payment is an alternative way to merge both features, so you do not need to have an NFC phone to make a mobile payment, or a physical credit/debit card. Instead, you “only” need a phone with a functional camera, internet connection and a secure payment app.
Given the trend of use in Japan and then in China, everything seems to indicate that QR payment will have a relevant role in the coming years because of how easy it is to pay.
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