In restaurants all around the world, customers at various restaurants and eateries are having black and white QR codes placed at their tables to be able to scan and scroll through the menu. According to the New York Times, “QR codes — essentially a kind of bar code that allows transactions to be touchless — have emerged as a permanent tech fixture from the coronavirus pandemic. Restaurants have adopted them in mass, retailers including CVS and Foot Locker have added them to checkout registers, and marketers have splashed them all over retail packaging, direct mail, billboards, and TV advertisements.” Restaurants in the U.S, that have introduced QR codes in their day-to-day operations have saved 30-50% on labor costs as they eliminate the need for servers to take orders of each table.
As it has in so many other facets of finance, Covid-19 has changed commercial interactions and led to the promotion of methods that allow distance or contactless transactions, from providing information to consumers and restaurant diners to making payments.
Although newly adopted in the West, mobile payments are dominated by QR codes in countries all around the world, while merchants and service providers have gotten a growing number of options to receive payments from customers. As most consumers seek payment methods that are contact-free due to a post-pandemic situation, QR codes seem to provide the answer. Yandex launched a fuel payment service using QR codes so that drivers pay for the service while remaining seated in their cars.
Keeping in mind customer preference and hygiene, even cards everywhere are moving to virtual. This means they will not disappear but will certainly change their form, which eliminates the need of possessing something physical. In a post-pandemic world, 78% of people who not want to handle cash, making QR codes and distant scanning safer.
Since QR codes have come into wider practice, their ability to store information has let merchants build a database of customer preferences and their contact information. As we move forward and embrace this form of an advanced payment method, customers could very soon be provided with personalised offerings to enhance customer satisfaction. The “quick response” aspect in QR payments seems to be the only reason why this payment method has resurged, as it helps merchants eliminate long lines for making payments, ordering food, standing in queues to enter public transport.
Celent’s 2020 report on QR is right – QR codes have persisted well beyond expectations that they would provide a bridge to more technically sophisticated payment methods and then slowly fade into insignificance.
Jumping into the bandwagon of providing newer ways to pay, the transportation industry is also introducing more and more NFC and QR-related payment options to a wider public as people can see how early adopters use phones to pay with a swipe for rides on trains, buses, and minivans. The smart city paytech, O-CITY , is enabling tap and pay in public transport with its open-loop digital ticketing platform shaking the industry in highly populated countries that are transforming fast, such as Kenya, the Philippines, to Moldova.
The U.K’s second-largest airline carrier, British Airways, is world-famous for its hospitability lounges all over the world. Since the surge in QR payments, they no longer offer a buffet food service. Instead, passengers scan a QR code from wherever they are seated, and food arrives right where they are seated.
Moving from mag-stripe to chip-embedded cards took about 15 years before it was widely adopted in the U.S., the last holdout. (American card providers never adopted PINs because they didn’t think their customers could remember the numbers and would place any PIN card at the back of their wallet or the bottom of their handbag). Europe has had slow adoption of contactless because people are afraid money will be stolen. Only now with Covid has the adoption of tap to pay become more widespread in all of its forms. Sometimes technology can move faster than user acceptance.
QR adoption had been slow across borders because it lacked a dominant standard. We are beginning to see some development of standards that go beyond a single bank or fintech provider, and some tech solutions such as SmartVista by BPC that can work across multiple QR codes, but the ecosystem is still far from what EMVCo has achieved, but that took many years.
Even with the wide use of QR codes and other contactless ways to pay, cards, as we know them are not going to disappear. QR codes have been rapidly adopted in Asia and Africa because they don’t require much infrastructure. Europe and North America are in the third or fourth generation of infrastructure to support cards, readers, and sophisticated fraud protection software.
Governments are also interested in electronic payments to reduce the amount of tax-avoiding cash in the economy and to be able to track people for capacity planning in transport and contact tracing in response to the pandemic. For example, a European city, issued 10 million paper-based QR codes last spring to be able to trace people so they would contain Covid-19; they didn’t have time to develop a smartphone app for this.
Stores and governments are trying to get people off cash because cash is very expensive and it is not traceable. Electronic money is also much easier for retailers because they don’t need to have very expensive transport, and they don’t need to wait for it to hit their accounts. Typically cash is picked up at the end of the day and it takes one or two days before it is officially counted. A big retailer on a Saturday gets cash that goes to a central location. On Monday the bank starts to count the money, and on Tuesday it is in the retailer’s account. Now they can have immediate access to the revenue so on Monday when they have to buy new inventory, the cash is already there and they have less need for loans to finance their cash flow.
We do expect to see QR transform from a way to direct phone-carrying consumers to information, from product marketing to menus, to rank on top of the preferred payment methods. Payments will continue to evolve and QR code payments will continue to expand in developed markets, while banks, retailers, and fintechs will no doubt compete on finding new ways to help people spend their money.