4 February 2021
By Sumitra Krishnan, AusPayNet Innovation Analyst
The year 2020 was a game-changer for QR codes. The technology saw a resurgence during the COVID-19 pandemic as businesses and venues widely adopted QR codes to register their customers. Concurrently, the pandemic also stimulated a move to contact-free retail. Driven by the need for a safe and convenient way to pay amidst a crisis, consumers embraced using their smartphones as mobile wallets to make contactless payments in-store.
As the use of digital wallets grows, the focus on using QR codes for payments is increasing. A recent whitepaper from Juniper Research: QR Code Payments: Beyond China and India predicts that the total number of QR code payment users globally will exceed 2.2 billion in 2025, which will equate to about 29% of all mobile phone users.
A Quick Response (QR) code is a two-dimensional code that can be scanned and read by a smartphone camera. Broadly there are two different ways QR code payments can be made:
Consumer-presented QR codes: The consumer uses their mobile device to display a QR code at the point-of-sale. The QR code is typically generated by a banking app, loyalty app or any other app the consumer has installed to pay for goods and services.
Merchant-presented QR codes: The consumer uses their smartphone to scan a QR code presented by the merchant. These codes could be static (i.e. a sticker displayed on a market stall) or dynamic (i.e. generated by the point-of-sale terminal). Dynamic QR codes can be encoded with different payment amounts, whereas the consumer may need to enter the payment amount when scanning a static code.
The strongest adoption of QR codes for payments has been in Asia, with digital wallets like AliPay and WeChat Pay experiencing rapid growth. The 2020 WorldPay from FIS Global Payments Report found that in 2019, mobile payments using QR codes drove nearly half (48%) of point-of-sale payments in China.
The popularity of QR payments overseas can be attributed to a number of factors, including:
Alongside the benefits, QR payments present challenges and risks that require consideration:
Though QR code payments are ubiquitous in Asia, recent developments overseas demonstrate that QR codes are front of mind in other markets:
Australia has one of the highest global smartphone penetration levels. The Deloitte Mobile Consumer Survey 2019 found that approximately 91% of Australians own a smartphone and a Roy Morgan report shows that about one in ten smartphone owners (10.8%) use them for payments. However, this has not translated into widespread adoption of QR payments locally. The reasons can be attributed to Australia’s:
Nevertheless, consumer payment preferences are evolving. The pandemic has accelerated the shift to digital payments and QR payments are gaining momentum:
With this in mind, AusPayNet’s Emerging Technology Experts Group has been exploring QR codes to determine if there is industry work to be done to prepare for any potential uptake. It will be interesting to see if QR payments become widely accepted in Australia, given the preference for and prevalence of NFC-enabled contactless payments here.