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QR Codes Used in Payment Services

By Mike Faden

QR codes have become hugely popular as a mobile payment method in some countries, although they have not been widely used for payments in the U.S.1 Now, there is a broadening industry focus on supporting and managing the use of QR codes in payment services. The organizations involved include payment industry groups and payment services, smartphone manufacturers, mobile app providers, central banks, and major retailers.2,3

History of QR Codes


QR codes (abbreviated from Quick Response code) are essentially two-dimensional bar codes. They consist of a pattern of black squares arranged in a square grid on a white background.4 QR codes can be read with an imaging device such as a smartphone camera.


QR codes were invented in the 1990s by the Japanese company Denso Wave, and were initially used within the automotive industry for purposes such as tracking production and shipping.5 Their advantage over traditional bar codes is that they can hold much more data: roughly 7,000 numbers or 3,000 8-bit bytes, compared with the 12 digits in a typical one-dimensional retail bar code.6 The greater capacity means that QR codes can be used to store a wide variety of information, such as links to web pages or information that identifies specific people or products.


Although QR codes were subsequently adopted outside the automotive industry for some applications, including marketing and item identification, some experts say that they didn't take off as widely as initially predicted.7,8 But in some countries, most notably China, QR codes have been an important factor in the extraordinary growth of mobile payment services, largely because they allow businesses to accept digital payments without the need to invest in a point of sale terminal or other hardware.9


How QR Codes are Used by Payment Services


There are two primary ways that QR codes are used for payments. These are sometimes referred to as merchant-presented and customer- or consumer-presented QR codes.


With merchant-presented QR codes, a business is provided with a unique QR code by its bank or payment service. Customers scan the QR code using their smartphone camera device, then enter the payment amount and PIN. This initiates a payment to the seller. Key advantages of this method are low cost and simplicity. Sellers don't need additional point of sale technology; they simply print out their QR code for customers to scan.10


With customer-presented codes, customers select a product using the seller's website, app or other method. This generates a transaction-specific QR code, which the customer then uses to collect the physical product in-store. Besides capturing additional detail about each purchase, this method also can be used to offer loyalty points.11 However, according to experts, the seller needs a special device to read the customer's transaction-specific QR code.12


Where QR Codes Have Taken Off


QR code payments have taken off most dramatically in China, which is the world's largest mobile payments market, with an estimated $5.5 trillion in mobile payments in 2016, according to iResearch.13 According to Chinese news reports, one large payment service had 520 million users in 2017, about a third of China's population, with 82 percent of transactions executed using mobile devices. Across China, 40 million retailers established their own QR codes for the service in 2017, the reports said.14


However, due to security concerns, China's central bank recently imposed daily limits on the amount that customers can spend using such merchant-presented "static" barcodes.15 The move followed reports of QR code-related thefts, such as the replacement of legitimate QR codes with fraudulent ones.16 The bank also introduced other regulations, including a requirement that payment providers must obtain appropriate permits and that cross-bank transactions must be channeled through central clearing systems, according to local reports.17


In India, initiatives to promote digital payments included the development of a single QR code format that works with multiple payment services. Called Bharat QR, this enables a business to display a single QR code that can be used to accept payments via different payment providers.18,19


Industry Support for QR Code Payments


Support for QR code payments is growing within the payments industry. In mid-2017, global payments industry standards group EMVCo, which develops the standards used in chip-based payment cards, published specifications designed to ensure interoperability for merchant-based and consumer-based QR code transactions.


As an EMVCo executive explained, "it is important that the payments ecosystem provides a consistent experience for merchants and consumers. Given the early stage of deployment of this emerging payment technology and growing adoption, now is the time to ensure the technology's potential is not constrained in the future due to interoperability issues with the established payment infrastructure."20


Smartphone manufacturers and app developers are increasing support for QR codes. Notable developments, experts say, include Apple's 2017 enhancement of its iOS mobile operating system. This provides the ability to automatically scan QR codes without the need for a third-party app, and could enable QR scanning to reach hundreds of millions more users worldwide.21,22 Several widely used apps, including payment, social-media, and music streaming services, have introduced support for QR codes for various purposes, including as user identification codes.23,24 At least one major U.S. retailer uses QR codes together with a proprietary mobile payment app to speed the checkout and payment process in stores.25



QR codes are already widely used as a payment method in some countries, and are gathering growing support from payment services providers and technology firms worldwide. Their broader adoption may depend on the extent to which they offer advantages over other established payment methods in areas such as ease of use for customers and sellers, as well as the ability to provide adequate security.26

Mike Faden - The Author

The Author

Mike Faden

Mike Faden has covered business and technology issues for more than 30 years as a writer, consultant and analyst for media brands, market-research firms, startups and established corporations. Mike also is a principal at Content Marketing Partners


1. “QR Codes Sizzle, While Wells Behind The Wheel Fizzles,”;
2. “China moves to impose order on mobile payments boom,” Financial Times;
3. “How QR codes are changing e-commerce,” Mobile Payments Today;
4. “QR code,” Wikipedia;
5. “History of QR Code,”;
6. “Universal Product Code,” Wikipedia;
7. “QR code,” Wikipedia;
8. “QR Codes Sizzle, While Wells Behind The Wheel Fizzles,”;
9. “Why QR codes are on the rise, The Economist;
10. “Decoding QR Codes: Are they useful for merchant payments in emerging markets?,” GSMA;
11. Ibid.
12. Ibid.
13. “Race for China's $5.5tn mobile payment market hots up,” Financial Times;
14. “Mobile devices handle some 80% of Alipay's online payments in 2017,”;
15. “China moves to impose order on mobile payments boom,” Financial Times;
16. “QR code scams rise in China, putting e-payment security in spotlight,” South China Morning Post;
17. “China's central bank to standardize QR code payment,”;
18. “Bharat QR code launched to push less-cash economy,” The Economic Times;
19. “Bharat QR code,” Ministry of Electronics & Information Technology, Government of India;
20. “EMVCo Publishes QR Code Payment Specifications to Promote Global Interoperability,” EMVCo;
21. “Apple hid a QR Code scanner in iOS 11 -- here's how to use it,” Cnet;
22. “Why QR codes are on the rise,” The Economist;
23. “Venmo rolls out QR codes for user profiles in its mobile app,” TechCrunch;
24. “Why QR codes are on the rise,” The Economist;
25. “Walmart Pay,” Walmart;
26. “Decoding QR Codes: Are they useful for merchant payments in emerging markets?,” GSMA;

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