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2020: The Year of QR Codes

2020: The Year of QR Codes


Abdullah Abdelkafi


30 Nov 2020

Read time

5 minutes



In the west QR Codes have arguably had little momentum when compared to other channels of payment acquisition.

When considering other contactless payment methods, facilitated by NFC or even barcodes, QR codes considerably have had little presence in the western market until COVID-19; performing more to consumers as a ‘scan to inform’ entity than a payment facilitator.

With a more recent adoption in the west, has the QR code finally cemented its foothold as a global payment method?

What are QR codes?

QR Codes are a digital store of data, typically containing valuable information to enable tracking tool technology, but has since evolved within merchant services to make payments or store media.

The trending uptake in use cases for QR codes have come in the form of merchant payment deployments; as first popularly seen in APMs such as Alipay and peer-to-peer payments such as cryptocurrency e-wallets.

QR codes are linked to a customer’s card or bank account and can either hold a preloaded value or directly debit their account.

Types of QR Codes:

Dynamic: Dynamic QR codes are only valid for short periods and are unique for each transaction.

Merchant Presented: These QR codes can be dynamic or static and are presented by the merchant for the customer to scan to make a payment.

Customer Presented: The customer presents their dynamic or static QR code to the merchant, where a balance is debited from the customer’s card or bank.

P2P: A dynamic or static code is used to facilitate a transaction between two individuals.

How it works:

Whereas the technology behind NFC-facilitated payments can be widely read about, the technology behind QR codes is less heard of.

QR code payments are facilitated by USSD (unstructured supplementary service data). Whereas other contactless payments can be made by near field communication, QR codes act similarly to SMS messages; bundling up messages into the pixelated squares that you scan or present at the point of sale.

Like a message, QR codes can be 182 characters long and contain an essential and encrypted message to communicate processes between two devices.

The QR code payment process can be defined as a:

An in-store or online transaction channel

A communication channel between merchants and customers

A Payment Type

A presentment of a balance

A key player in contactless payments?:

Digital payments made by consumers in 2020 are expected to top more than £3.2 trillion. Of that, the contribution made by QR codes is substantial with two particular key players dominating the market in the east (Alipay and WeChat Pay) and more recently the west, through partnership schemes.

Looking at the Data:

In 2019, Alipay saw 640 million customers regularly shop across two or more services. Alongside competitor WeChat Pay, 64% of Chinese shoppers are regularly using QR codes to make payments.

Alipay has since expanded into North America, enabling QR payments with partners Nayax and Yuansfer at more than 100,000 self-serve locations.

Even before the pandemic, QR code usage, in general, had seen a 7% increase across US households between 2018 and 2019.

However, digital payments are still considerably more popular in China with a 44% market share in 2020. Despite Alipay’s expansion, the move should be considered one made for touristic consumers, much like its European demographic.

The share of digital payments continues across the world with the USA taking a 20% stake, to be jointly followed by Japan and the UK with a minimal 4% share.

Narrowing it down to QR codes specifically, China’s share of the global QR code payments is significant thanks to Alipay and WeChatPay at 16.4%, but they’re not a world leader.

In 2018, 30% of China’s mobile payment volumes – $13 trillion – were made via QR codes. However, on a global scale, their overall market share is much less – with Japan rivalling the Chinese market at 16% in thanks to brands such as Line Pay.
Equally across the Middle East, Saudi Arabia holds a much larger stake with a 24.2% share due to brands such as BayanPay.

Whilst the data doesn’t clearly define a western presence for the QR payments market, it is clear that the QR code has significantly established itself across the globe and is making its way across larger western markets such as the US. But, at what pace?

Although it feels longer than the approximate year that COVID-19 has had to dominate its way around the globe, the payments landscape has had to adapt fast, and the real question is whether QR codes fit the criteria of being more convenient and smarter than what consumers currently use to pay with.

A key reason behind QR code’s success in the east falls to the minimal use in credit, and thus the resulting lack of need for NFC technology and the rising use of cryptocurrencies. In the west, the rise of QR codes was more or less borne out of hygiene security and tourist consumerism.

Are QR payments here to stay?

So whilst 2020 might have been the year of QR codes, are they here to stay?

Well, QR codes are on track to account for 10-15% of all payments worldwide by 2023, even if the rate at which certain countries use them remains uneven.

On a whole, the adoption of mobile payments across the world is expected to grow at a compound annual growth rate of 27 per cent between 2020 and 2025.

This adoption is backed up by a McKinsey report that found that as the volume of classic point of sale transactions was set to decrease by up to 40%, whereas the number of contactless payments was set to increase – due to the perceived sense of hygiene security.

In reaction to the current trajectory of digital payment adoption, global payment leader Apple is rumoured to further enable QR functionality within future iOS versions.

Within the current iOS 14, users can effectively jump through to apps or URLs by scanning a QR code through their camera or control centre function.

However, leaked Apple reports reveal that this may be a function that users may eventually access through their Apple wallet.

Estimated to account for 1 in 10 payments globally by 2025, Apple’s adoption of QR payments alone might have a significant impact on the western trajectory of QR payments.

Besides the aforementioned reasons, QR code scanners have long sat aside the POS for years now in Asia and it looks to remain that way, even as credit adoption in other QR dominant nations such as the middle east is on the rise. In terms of the west, it depends on how long consumers will care about hygienic security and the trajectory of digital payment adoption.

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