QR Code (Quick Response Code)

A QR code is a square pattern of light and dark cells that a camera reads in a moment. In payments it carries what a phone needs to start or finish a payment, so a scan takes the place of tapping a card or typing a long number. The code holds no money, and in most schemes no card data either. It holds a pointer: a payee, a scheme, often an amount, and the reference the payment should carry. What happens after the scan depends on the scheme sitting behind the code.

The format is not new. It was drawn up in Japan in the 1990s to track parts on a production line. Payments borrowed it because a camera costs a good deal less than a card reader and almost every shopper carries one, and that bit of maths is why QR took hold fastest where card terminals were thin on the ground. EMVCo now puts out a shared spec so a single code can serve several schemes at once, and its overview of EMV QR codes sets out the two modes the trade settled on.

Who Shows The Code

Almost everything about a QR payment follows from that question. In merchant-presented mode the shop shows a code, on a sticker, a screen or a bill, and the customer scans it with a bank or wallet app. In consumer-presented mode the customer's app draws the code and the shop scans it. EMVCo's guide to how EMV QR codes work covers both. The choice drives the cost. A code the shop shows needs almost no kit, while one the shop has to read needs a scanner on the counter.

Static And Dynamic Codes

A static code carries fixed details, usually a payee and little else, so the customer types the amount in. It costs nothing and can be printed once and taped to a window. A dynamic code is built for one sale and carries the amount and a reference, which lets matching happen on its own. Small traders live happily on static codes. Anyone with real volume moves to dynamic ones, since a static code leaves finance matching by hand.

Where QR Took Over

Take-up is uneven, and the pattern follows history more than the tech. In several Asian markets QR is the normal way to pay a small trader, tied to a virtual payment address and not to a card number. It also reaches people with a phone but no card. Elsewhere it sits behind cards and contactless payment as a second option. A business selling across borders does better treating QR as one local payment method among several. This look at accepting QRIS in Indonesia shows what one national scheme looks like up close.

Inside The Payload

The payload is short and tightly built. It names the payee and the scheme, often the amount and a reference, and it carries a check value so a damaged code fails cleanly instead of paying the wrong hands. It does not carry the primary account number, which is much of the appeal, since nothing sensitive sits on the sticker. Some codes carry a web address in place of scheme data, and those behave quite differently.

The Sticker Is A Physical Thing

A printed code can be covered up, and that is the whole of the fraud problem. Someone pastes their own code over the real one, money lands elsewhere for a day, and nobody notices until the takings do not add up. Codes that open a web page are weaker still, since the address can be changed long after printing. Checking codes on a round, and showing the payee name in the app before the customer approves it, does more good than any clever technical fix.

Matching The Money Afterwards

A dynamic code can carry a payment reference and tie the sale to the order with nobody typing anything. A static one usually cannot, so the business matches on amount and time. That works until two customers pay the same amount inside a minute. Every scheme hands back a transaction ID, and holding that against the order stops an unmatched transaction becoming a weekly chore.

Cost, Speed And Who Carries The Risk

Pricing varies a good deal by scheme and market, and it is often a flat fee, not a percentage, which favours larger baskets. Money can land in seconds on an instant network or the next working day on a slower one, so the promise to the customer has to match the network in use. Dispute rights differ too. A QR payment drawn from a bank account tends to carry less cover than a card payment, and a business should know which one it is taking before the first refund lands.

Fitting QR Beside Everything Else

QR tends to arrive alongside other methods. It sits next to a mobile wallet button, a card field and whatever local options a market expects. The same code can serve a counter, a table or a kiosk payment unit, and where staff take payment away from a till a virtual terminal covers similar ground. Treating QR as one line in the alternative payment methods list keeps reporting sane.

Rolling It Out Without Surprises

Pick the mode before the supplier, since the two need different kit. Use dynamic codes anywhere volume earns them. Put the payee name where the customer will read it before confirming. Walk the floor and check printed codes often. Agree who carries a disputed payment before launch. And keep QR in the same reports as every other method, so nobody opens a second system to close the month. Alternative payment methods covers what adding a local scheme involves. This piece on going global with local methods covers how to choose between them.

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