Are QR Codes an Alternative for Contactless Payments?

Ahead of this Covid-19 pandemic, many physical-store merchants considered contactless payments for a trend. Most didn’t find a reason to implement contactless systems. They were, after all, expensive to install and difficult to operate with little apparent yield on the investment.

Then came the coronavirus. Everything changed for contactless payments. Now clients are reluctant to touch PIN-pads, money, pens, and receipts.

My previous article addressed near field communication, the technology that powers most contactless payment approaches in North America. Apple Pay, Google Pay, and all plastic tap-to-pay charge cards use NFC to transmit payment credentials from the customer’s phone or contactless card to the point-of-sale card reader — without actually coming into contact with each other.

In this post, I will examine an alternative for contactless payments: QR codes.

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QR Codes

A QR barcode can be read by optical scanners and from the cameras in practically all modern smartphones. When a QR code is scanned, the device can quickly answer the instructions embedded in the barcode. A QR recorder –“quick response” — is two-dimensional because it can arrange the information vertically and horizontally. A linear barcode is one-dimensional because the info is stored only horizontally.

A QR barcode (at left) organizes data vertically and horizontally. A linear barcode (at right) stores data only horizontally.

Normally, the QR code will instruct the scanning smartphone to navigate into a website automatically. As opposed to asking someone to create a lengthy URL, it is a lot easier to point a smartphone in the QR code and have the website or app open automatically. It’s this ease of use which makes QR codes a replacement for NFC for contactless payments.

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Once scanned, a normal QR code will instruct the smartphone to navigate to a URL. Instructions, including the URL itself, are embedded in the two-way recorder picture.

NFC vs. QR Codes

NFC is the leading technology for contactless payments in North America. Nonetheless, it has several troublesome issues, for example:

  • Clients should have NFC-enabled smartphones or NFC contactless credit cards.
  • An NFC-enabled smartphone requires an installed app, such as Apple or Google Pay, employing a registered payment card in the app.
  • It could be frustratingly tough for customers to find the suitable area to wave or tap on the apparatus so the point-of-sale terminal can choose the transaction.
  • Merchants must install costly point-of-sale equipment to take NFC payments and, frequently, train their workers to operate it.

QR codes for contactless payments have the potential to overcome these challenges.

QR Codes for Payments

Merchants that accept QR codes exhibit that code at the checkout counter or any location inside or outside the store (such as websites and apps). The display can be a sign, a sticker, a poster, a business card — anything a phone camera can scan.

Once scanned, the QR code activates the customer’s phone to navigate to a website or launch an installed app. A merchant can create a payment-accepting website, but it’s a lot more common to use an existing QR-code service from a payment processor or lender. An easy, cost-effective solution in my experience is PayPal’s QR code functionality.

PayPal’s QR code functionality is simple and cost-effective.

When a scanned QR code opens a website, the customer enters the purchase amount, selects a payment method (typically a card or other method on file), and then presses a”pay now” or”send” button.

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In most QR-code-based payment systems, the customer and the merchant will be given a payment-complete notification immediately. Frequently a merchant will request to ascertain the customer’s electronic receipt (displayed on the phone ) in the exact same time the merchant is checking to ascertain whether the payment was received. When both parties are satisfied that the transaction is completed, the customer can exit the store with the product.

Throughout the process, a customer does not have to touch anything except her smartphone. The merchant has just to look at a computer display, smartphone, tablet, or any other internet-connected device.

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QR-code payments, such as NFC, face obstacles to widespread adoption. Some of the disadvantages are:

  • Training. Customers need to be trained to scan QR barcodes properly.
  • Entering an amount could be perplexing. After scanning the QR code correctly, customers’ phones will open a website in order to join the amount owed. This procedure can be complicated and mistake-prone as customers are used to a point-of-sale terminal displaying the total owed.
  • A secure online connection is required for both the merchant and the customer. A weak connection will result in errors and frustration.
  • Clients require a card stored in the QR-code app. It’s most likely not a problem for PayPal’s QR payments since most customers already have a payment system stored in their PayPal account. However, it is less likely for different services.
  • Speed. Though they are contactless, QR-code payments are not necessarily fast due to internet glitches, customer confusion, and misunderstanding.

Thus QR-code payments are acceptable for occasional transactions during off-peak hours. Markets, pop-up shops, special deliveries, and professional services (e.g., gardeners, plumbers, electricians) are good candidates. But for busy shops with lines at the checkout counter, NFC is a better option for contactless payments.

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