QR Codes™ are Here: What do they Mean for Payments?

In this post, Brian Byrne, EMVCo Director of Engagement and Operations, explores the increasing popularity of QR codes and how the EMV® Specifications offer a common foundation for QR code payment solutions that will work both domestically and internationally, support multiple payment options and enable merchants to increase consumer engagement with loyalty and reward programs. Walk down a street in China or India and it becomes immediately apparent that QR codes are woven into the fabric of everyday life. Nothing demonstrates this more than the boom in QR code-based mobile payments. QR code payment transactions in China have increased fifteenfold over the past three years, and 40% of consumers in India regularly use QR codes to make payments[1]. Even in the U.S. where QR codes have been slow to catch on, the technology has enjoyed newfound popularity recently as businesses have sought quick and affordable ways to meet consumers’ appetite for touch-free convenience. QR codes have provided Americans an easy, hygienic method to view menus and order takeout, redeem coupons and rewards, and return online purchases. And this emergence of QR codes across retail and commerce in the U.S. has significant implications for payments. On the Horizon – QR Code Payments in the U.S. Payment convenience and choice are increasingly important to consumers, and the pandemic has intensified these expectations with more demand for socially distanced options that enable simple, touch-free transactions. A recent study[2] found that 84% of consumers around the world expect to make purchases when they want and how they want. In fact, 60% indicated they have changed shopping behaviour in recent months with convenience and value in mind. Merchants in the U.S. and globally are working to meet evolving consumer demands by supporting a range of consistent and convenient payment methods. As a relatively low-cost option requiring minimal equipment and set up, QR codes have attracted businesses aiming to pivot quickly in the midst of a pandemic and beyond. The potential is huge. Juniper Research[3] indicates that the ability of QR codes to combine payments and loyalty makes them ideal for retailers seeking to leverage valuable transactional data and predicts that the low-cost nature of these solutions will enable the value of QR code payments to grow to more than $2.7 trillion globally in 2025. In the U.S. alone, the number of QR code payments is forecasted to increase by 240% by 2025. Realizing this potential, however, is anything but guaranteed. A consistent, reliable and easy consumer experience is key to any payment method thriving, and it is no different for QR codes. As the trend towards contactless options continues, whether it is tap-to-mobile or QR code, consumers will gravitate to businesses and providers that make it simple for them to pay how they want. Solutions that support multiple and new payment options, efficiently and seamlessly, to deliver a frictionless consumer-centric experience will drive adoption forward. In contrast, fragmented ecosystems with various incompatible solutions create user confusion and frustration, as was the case in the early days of card acceptance when it was common in many parts of the world for merchants to have multiple terminals at the POS. The consumer or the merchant had to figure out which terminal was appropriate for a specific transaction. As happened with chip terminals, the most efficient and consumer friendly solution is a single terminal capable of supporting multiple payment options. It would introduce unnecessary friction to have multiple QR codes at the point of sale when one QR code is capable of supporting all payment types. For this reason, creating common technical foundations for QR code-based payments is critical. Where Specifications Come in EMV Specifications provide a baseline of technical requirements that enable any party to develop payment products and solut