What will the world of retail look like after the pandemic? There is already a new norm and fintech experts seem to agree that QR codes will become the dominant payment method. Why, might you ask? Because of the benefits they offer merchants and customers, and their positive impact on sales and the world’s economy.
To see the potential of QR code payments, you must understand what they are, how they work, and the advantages they offer. Read on to learn more about this technology and how it applies to contactless payments.
What are QR codes?
QR is the abbreviation of Quick Response. QR codes are like the linear bar codes we see on store products but more powerful as they can store large volume of data, can be scanned from paper and from a screen, can be read even if part of the code is damaged, and are more secure because the information they contain is encrypted.
What are QR code payments and how do they work?
QR code payments are a contactless payment method allowing customers to scan a QR code with an e-wallet app on their smartphone to purchase products online or offline. QR codes can also store more encrypted data, which makes it the ideal technology for payment processing. There are three ways QR code payments can be processed:
- Smartphone scanning: Customers open the relevant QR code payment app on their smartphone and scan the merchant’s code displayed at the store’s checkout, on products, on the website, or on the printed copy of the bill to finalize payment;
- Merchant scanning: When customers see the total transaction amount confirmed on the merchant’s POS at checkout, they open the merchant’s—or their own—QR code payment app on their phone to pay. The app displays a unique QR code with the customer’s financial information that is processed by the merchant with their QR code scanner to finalize the transaction;
- App-to-app payment: The customer and the merchant both open the QR code payment app. The customer than scans the merchant’s unique QR code displayed in their app with their own app before confirming the amount and processing the payment.
Benefits of using QR code payments:
- Instant payment: The biggest advantage of using QR codes for payment is that it makes paying for goods and services extremely quick compared to other forms of payment, allowing merchants to offer a seamless checkout experience to their clients;
- Top security: A QR code is a tool used to exchange information between customer and merchant. Data transferred via QR code is encrypted, making payment secure for both parties;
- Easy to install: QR code payments require little infrastructure and are easy to set up. Merchants only need a smartphone with a camera, and QR codes in electronic or printed form. It eliminates the need to invest in POS terminals and other sophisticated payment equipment.
The pandemic increased the awareness of QR code technology used for contactless payments. Customers who initially turned to QR code payments for safety reasons are now used to the benefits and unlikely to give it up.
According to a recent Mastercard study, the demand for contactless payments worldwide soared to 79% over the last year and it looks like the shift will be permanent. Payments Canada also released new data since the onset of the pandemic showing that close to 36% of Canadians avoid buying from merchants who don’t accept contactless payments, and that 50% limit their purchases to ensure they stay within their contactless payment limit.
In China, people have been using QR code payments for a long time via super-apps like Alipay and WeChat Pay, with 15 million merchants accepting QR code payments. In the U.K. and in the U.S., QR code payments have also become increasingly popular since the beginning of the pandemic, with new investments in NFC contactless cards and mobile wallets.
Over the last year, merchants worldwide have raced to offer QR code payments to customers and what stemmed from necessity eventually became the norm. QR code payments offer substantial benefits to customers and merchants in terms of convenience and security, and enable businesses to keep costs down and maximize profitability. And as the number of global smartphone users continue to increase, it’s easy to see how QR code payments can play a major role in economic recovery as the world moves into the post-pandemic period.
OTT Pay is a leading fintech firm that helps Canadian retailers and small business owners get started within the digital payment ecosystem and leverage the power of QR code payments to reach out to all potential customers. Give our Customer Support team a call at (+1) 800-688-9838 or email us at info@ottpay.com to get started!
References: Payments Canada Mastercard, EY, mobiletransaction.org, JPMorgan, digipay.guru