One-scan payment: prospects for QR-payments

In recent years the using of QR-codes has turned from a fashionable trend of internet business, which was used in everything in a row, to a fairly systemic process. The most qualitative development of QR-codes is in the transactional business. Previously I talked about how successful China was in it and what payment solutions became a common thing for Chinese citizens thanks to WeChat Pay. Clearly, the topic was not fully covered, so I decided to make a full introduction for QR-payments.

History and market volumes

Let’s start with the basics. First, QR is an abbreviation for “Quick Response”. Technology appeared in Japan in the 1990s as a method of marking the cars on the assembly line. This is a type of matrix barcode, an optical label with which the device can read information about the object to which it is attached. QR-code can be created on the basis of four standardized coding modes: numeric, alphanumeric, binary, and also based on the Japanese kanji alphabet.

The main advantage of QR-code is the effective storage of data and the it’s provision by an open channel for uploading without additional installers, torrent clients, and so on. A smartphone with the Internet scans the code — and gets the necessary information “without registrations or SMS.” A perfect foundation for the payment method.

For the first time, payments via QR-code began to apply in South Korea. At the end of the “zeroes” grocery online retailer Tesco launched a virtual supermarket in Seoul metro. The idea was that passengers can fill a virtual food basket using QR-codes under photos of a particular commodity position. After confirming the order, food will be delivered to any address and at the specified time.

For a megapolis like Seoul, the idea was simply brilliant — for the whole year the application became the most downloadable in South Korea, which allowed Tesco to become a leader in retail trade.

This logic is now repeated in other countries, and I can already see how the Ukrainian supermarket network, which will the first to implement adequate logistics of such process, will become the leader in our 1 000 000+ population cities .

But let’s get back to history. A few years later, Tencent and Alipay launched payment systems based on QR codes, which had a huge popularity among users. Adding to this payment solutions from WeChat Pay and we can get an incredible statistics. Are you ready? In 2017, PRC residents spent more than $ 15 trillion using mobile payments and QR codes. For comparison, US residents spent $ 150 billion — 1/100 part of it. And now they’re expecting that the use of mobile and QR-payments by 2020 will grow by more than 300% — almost to $ 50 trillion.

QR code — it’s brilliantly simple. Therefore it’s successful

As I said before, QR-code gives you the opportunity to get information or to interact with it on a direct channel. This utilitarian idea, brought to the masses in China, was applied in the UK for the needs of those who most need help. The non-profit initiative Greater Change launched the possibility of helping the homeless through a QR payments.

Homeless people received special badges with company logo, short description and QR-codes, which they put on their necks. Passers-by, who want to help a homeless person, often don’t have cash with them (Britain is one of the most «non-cash» countries in the world), but can scan the code with their smartphone and make a donation with it. Money comes to an account managed by a social worker — he/she guarantees that money will be spent for agreed purposes: a new passport, clothing, food or a deposit for new apartment. People can start a new life — simply because charity has been able to go out into personalized digital crowdfunding.

Simplicity for business

To start accepting payments in favor of goods and services, merchant can place the QR-code on a sheet of paper. No POS-terminal settings, no endorsements for the requirements to the trade point. As a result, anyone who sells anything, from an elite boutique to a shawarma seller, can accept payments. It’s also simpler for customers — from them it simply requires downloading a payment application with a QR payment function.

And here goes fintech companies with these payment applications. This can be as mobile banks (in Ukraine, the practice of payments via QR-code successfully uses PrivatBank), and mobile wallets. Naturally, the introduction of such an option is not a matter of one day. Company need to work out the “stepping-in” of the application screens for both the user and the merchant, to conduct serious work with the backend and UI / UX specialists to get a simple flow with minimal steps and maximum benefit. But the costs are justified by new opportunities.