QR Code Payments: What Merchants Need To Know

QR Code Payments: What Merchants Need to Know

By Jean Kany

Modern-age consumers are all about customer experience. As COVID-19 pushed technologies ahead by at least two years, adopting QR codes became necessary for many businesses. Today, you can find companies of different sizes and industries using this technology, paving the way for advanced QR code payment architecture throughout the country. 

QR Codes Are the Future

​​QR codes are gaining in popularity in the US, in Asian markets and globally. According to the aforementioned Juniper Research whitepaper, the total number of QR code payment users is expected to exceed 2.2 billion in 2025, up from 1.5 billion in 2020. That’s equal to 29% of all mobile phone users in the world. The paper also predicts that the US will see upwards of 240% growth in QR code payment users over the next few years, with significant growth expected in emerging markets where credit card infrastructure is weak.

Growth is also fueled by retailers’ rapid adoption of the technology. Because QR codes can combine payments with loyalty programs, retailers find them to be valuable tools for leveraging transactional data. Combined with their low-cost appeal, use of QR codes is forecast to grow to over $2.7 globally by 2025.

Watch this video or keep reading to find out how QR codes work for payment transactions.

What Is a QR Code?

QR — a two-dimensional code — is an abbreviated form of the term quick response. It contains black square patterns that imaging devices like smartphone cameras can read. 

A QR code works the same way a barcode does, but the former offers several business advantages.

  • A QR code can hold more data
  • You can scan it from a screen as well as on paper
  • Even if part of a QR code gets damaged, you can still scan it 

In 1994, Japanese Toyota subsidiary Denso Wave invented the first QR code system. The company used it to track vehicles and parts more accurately during the manufacturing process. 

During its first years, the QR code didn’t take off as expected. However, when industries started discovering its potential, they started using the technology for other functions. For example, QR technology played a crucial role in boosting QR-based mobile payment services in China. Today, many businesses use QR codes for functions such as payments, marketing, and inventory. 

The growth of QR codes in retail locations and applications has extended well beyond China’s borders, and into regions around the world. According to a recent whitepaper by Juniper Research:

  • India has embraced QR payments. With the introduction of the UPI (United Payment Interface) and Bharat QR in 2016, retailers can tap into a centralized payment system developed by NPCI (National Payments Corporation of India), Visa and Mastercard. It offers a common QR-based payment interface that works with RuPay, Mastercard, Visa and American Express.
  • Singapore has standardized QR payments. In 2018, National regulators in Singapore introduced SGQR – the world’s first unified payment QR code. It combines multiple payment QR codes into a single SGQR label. This standardization makes QR payments simple for both consumers and merchants. Today SGQR can be found in more than 160,000 merchant acceptance points.

>> For a look at recent QR code payment developments, including how QR code-based payments and other solutions have gained steam around the world, checkout our QR Code Payment Tracker, created in partnership with PYMNTS.com. 

Experts classify QR codes into two main categories: static and dynamic QR codes.

  • Static QR codes store fixed information. Once you generate them, you cannot change the destination address or URL. You will find many of these codes in restaurants, enabling you to view the menu and order.
  • Dynamic QR codes allow you to edit information, saving you time and money on printing. These codes are better suited for business functions like payments and marketing. These code types let you track valuable information like number, location, and device used for scans. 

Launching QR Code Payments

QR code payment architecture helps elevate the customer experience because you can scan them from paper and screens. You can use QR codes for both in-store and digital applications. 

QR codes can be scanned directly from iPhones or Android phones.












You need one of the following to process a QR code:

  • A gadget with a built-in camera like a smartphone or tablet
  • A barcode reader that can scan a QR code
  • A reliable internet connection for URL destinations

A few years ago, you needed a separate QR reader app on your phone to recognize codes. Today, you can scan QR codes directly from your iPhone or Android phone if you have the latest software installed. You can find QR codes virtually anywhere now in retail stores, advertising materials, business cards, etc. 

How QR Codes Work for Payment

Many businesses now use QR codes to process payments. Let’s look at some of the ways consumers and companies use the technology.

Merchant-Presented QR Code

The customer scans a code displayed at checkout. In most cases, your customer has to input card details manually to make a payment. If you have an application for your store, you can apply offers and loyalty rewards in one convenient transaction. Merchant generated QR codes work well for restaurants offering curbside pickup and/or pay-at-table, as well as for POS payments for retailers who might not have the technology to scan customer QR codes. 

Customer-Presented QR Code

Some applications require scanning a QR code from a customer’s mobile phone or tablet. Once your point-of-sale (POS) system confirms the total transaction amount, your customer opens a payment app. The app will then display a unique code with your client’s card details. Afterward, your shop staff can scan the code to finalize the transaction. This method is commonly used in loyalty programs. 

Merchants that don’t have POS systems can get in the QR game, too. Some payment processors integrate with platforms like PayPal and Venmo, so that customers can pay using a QR code even if you don’t have a POS system. 

Today, virtually any merchant can generate a QR code for their customers to scan, which gives your customers more opportunities to use mobile payments – the fastest growing payment choice in the US – in new places such as unattended kiosks, vending machines, and parking machines not equipped with scanning camera functionality.

6 Advantages of Accepting QR Code Payments

If you don’t accept QR code payments yet, it’s time to consider it. Here are some QR code benefits that can transform your business.

1. Convenience

Setting up a QR-based payment system is easy. If you have a physical store, you only need a smartphone with a camera to set up QR payments. It doesn’t require an additional POS machine

2. Accessibility

A recent study shows that 97% of Americans now own mobile phones, most of which have built-in QR code scanners. With most of your consumers having mobile phone access, accepting QR code payments will give them more payment options. 

3. Hygiene

One of the reasons the pandemic boosted QR code payment use is that it’s hygienic. Many customers now prefer going touchless to minimize the risk of acquiring infectious diseases. During the COVID-19 surge, companies had to find ways to offer germ-free experiences, which has become the new norm for consumers. 

4. Transaction Speed

Consumers also appreciate the fast transactions associated with QR code payments. With a reliable internet connection, QR transactions will be complete in seconds. If you accept QR code payments, all your customer has to do is open a QR code scanner, scan a code, and confirm the transaction. 

5. Enhanced Security

QR code payments offer enhanced security. Any information exchange is encrypted, making this payment method foolproof. If you haven’t set up your payment system yet, it’s best to use dynamic QR codes instead of static ones. 

6. Popularity Among Younger Consumers

Gen z and millennials are attractive demographics for many retailers. They also happen to be the most open to using QR technology. In a Food Institute survey, 68% of gen z respondents reported using a QR code when ordering at a restaurant, compared to 49% of the general population. Millennials are even more supportive of QR codes, with 78% reporting in the same study that they like using them to bring up menus. Merchants in the U.S. should seriously consider accepting QR codes to make paying easier for their customers.

Elevate Your Customer Service By Accepting QR Payments

QR codes are ideal for markets with high digital banking and mobile use penetration. In these environments, you can easily set up payments with a mobile phone and an internet connection. There are also opportunities in less developed areas. With lagging infrastructure for traditional payment methods such as credit cards, offering QR code payments to customers could potentially level the playing field when it comes to global digital payments.
















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