What are QR Code Payments?

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Have you visited a restaurant that asks you to point your smartphone at a QR pattern to view their full menu? Pointing your camera at the QR code makes the restaurant’s website pop up in your browser, and some even allow you to order directly from your phone. Easy enough, right?

QR code payments are similar to this, except your phone automatically accesses your mobile wallet software to read and process the payment information coded into the QR pattern. Ostensibly, this means all you have to do is point, tap, and go. 

Even though this payment method is huge in Asia and other regions, it hasn’t quite caught on in the US. It will eventually, though, and we’re here to tell you why. 

What Are QR Codes?

A QR code (or “quick response code”) is a scannable technology featuring a 2D barcode that is readable by a camera on a smartphone or other device. Despite looking similar to the linear barcodes in retail and grocery stores, QR codes contain 4 distinct upgrades. QR codes:

  • Can contain a higher volume of data storage
  • Are scannable from photos or screens
  • Can still be readable even when damaged
  • Feature complex encryption

To illustrate this, imagine you’re standing in line at a coffee shop. When it’s your turn, the cashier hands you your drink and directs you to a contactless payment reader with a QR code, which you can tap or scan to pay. 

How Do QR Code Payments Work?

Once scanned, your smartphone or tablet decodes the lines and shapes in the QR code pattern matrix. This data is converted into a complex string of characters that your phone will read as a command to either open a link, verify geolocation, or confirm the payment information.

QR payments can be processed through any of the following methods:

Merchant QR Scan

The merchant will display a code at checkout, which you may scan to accept—or deny—the transaction. After you scan, you may be prompted to verify your identity or enter your card details or PIN. Sometimes, you may be required to present your card for authentication.

Customer QR Scan

In a customer QR scan, stores will provide you with a scanner at which to point your personal QR codes. The customer will produce a unique QR payment code, which your scanner will read and request payment through the appropriate app.

App-to-App QR Scan

If you and the merchant have the relevant payment apps enabled through your devices, you may scan the QR code displayed in the app and tap to confirm and process payment.

Where Are QR Payments Currently Being Used?

China leads the world in QR payments. Making payments via a QR-enabled device is the preferred transaction method in China, from luxury department stores to street vendors, leaving credit and debit cards in the dust. Most transactions in Asia occur via mobile payment apps like Alipay and WeChat.

Indeed, many Central- and East-Asian countries follow China’s lead. For instance, thousands of sellers in Vietnam, South Korea, and India have also embraced QR payments. Mobile QR codes have become the norm in much of this region, but the United Kingdom, Germany, and Portugal have also recently joined the US in QR codes and other contactless payment methods. 

Be Careful Where You Use QR Codes

If you haven’t seen many QR payment codes in stores near you yet, don’t worry: they’re coming.

The ease and convenience of contactless payments are catching on worldwide. This is particularly true after the Covid-19 pandemic. Because of the geolocation and verification software that is programmed into QR code payments, they are often a safer and more secure payment option. 

This shouldn’t lead you to assume that the platform is “fraud-proof,” though. You can still run up against scammers who are adept at breaking QR codes, like any other payment method. 

For your security, if your QR code is rejected at the terminal for any reason, don’t try to rerun the payment until you’ve ascertained what the issue may be with your bank. Some QR code payments can be rejected if the payment has raised a red flag with your bank, or the merchant cannot verify your identity.

In either case, and as always, be aware of your surroundings when shopping. Pay attention to where and how you shop, and investigate any irregularities immediately. This can help protect you against QR code-enabled fraud attacks.