Quick summary
- Get insights on what exactly a QR code is and how it works.
- Know how does it work in retail, and it’s advantages
- Get insights on fraud detection in QR codes and future of QR Code Payments
Today’s economy runs on speed and efficiency, making QR code payments revolutionary as people can pay for transactions with a simple scan.
As per a recent study, the QR code payment market in India is projected to grow at a Compound Annual Growth Rate (CAGR) of 16.9% from 2023 to 2033, reflecting increasing consumer preference for contactless payments. (Source: futuremarketinsights.com)
QR codes can enable payments for multiple use cases across retail and e-commerce. With the added requirement of contactless payments, business QR codes are being adopted rapidly. This article will focus on the features of QR codes, how they work, their benefits, security features, and how businesses can use them.
What is QR Code Payment?
A QR Code payment is a modern payment technique that allows users to make instant payments anywhere without contact with a smartphone using a mobile app or a digital wallet. The process is user-friendly and improves payment accessibility for both users and business owners. In simpler terms, QR Codes represent payment information which, upon scanning, allows the transfer of funds from the user account to the account associated with the QR code
How QR Payment Works in Retail?
The retail QR payment makes the payment process seamless by making it easier and faster than a regular payment procedure. These payments work as follows:
- Display QR codes: At the payment section of the retail store, the merchant displays a business QR code on a screen or printed page.
- Scanning QR Code: The customer can scan the code with their mobile phone using a mobile app or a digital wallet.
- Processing Payment: The scanned code redirects the customer to a payment page where they can review the payment details.
- Complete Transaction: When the user confirms the transaction, the funds are transferred, and both parties are informed that the transaction was successful.
Types of QR Code Payments:
QR code payments are categorised into two primary types:
1. Static QR Codes for Business Payments
Static QR codes contain fixed information about the business and provide a means to facilitate business payment transactions where the amount is not pre-filled. A merchant displays the static QR and the customer enters the transaction amount themselves.
2. Dynamic QR Codes in Retail Transactions
Dynamic QR Codes are used for retail transactions as they are created for every transaction and include specific information such as payment amount and generally have a time validity. This type is more secure and less prone to mistakes, which makes it well-suited for retail payments where the merchant would want to ensure the exact amount is collected.
Advantages of QR Code Payments for Businesses:
Implementing QR code payments offers several benefits to businesses:
- Cost Saving: Does not incur the cost of advanced point-of-sale systems and their peripheral devices.
- Is Highly Secured: Eliminating chances of traditional payment method fraud.
- Customer Satisfaction: Provides an easier way to make payments, which enhances the level of satisfaction of customers.
- Data Collection and Analysis: Offers pertinent transactional data that provides a deeper understanding of customer patterns and preferences.
How to Generate and Implement QR Codes for Business Payments: Steps
Businesses can have their own QR codes for payments by following these steps:
- Select a Payment Service Provider: Choose a preferred bank or payment service provider that provides QR code payment processing.
- Set Up a Merchant Account: Having a merchant account is required here. This account is the one where payments would be received and will be linked to the QR Code.
- Access the QR Code: Banks or payment service providers offer a static QR or a dynamic QR generation facility.
- Test the QR Code: Test scan the QR code on various devices to check its accuracy and efficacy.
- Deploy the QR Code: Place the QR code on invoices for payment, digital platforms, and at the cash counter where clients can quickly scan and pay.
Security Features:
While QR code payments offer convenience, it’s essential to address security considerations:
- Encryption: QR codes are generally secure as they use data encryption and secure transfer protocols. This protects sensitive data during transmission and prevents unauthorized access.
- Two-Step Verification: Additional verification for transaction authorization like transaction PIN is required by most payment applications.
Steps to Pay through a QR Code:
- Open Payment App: Open a mobile banking app or a third party payment app or a digital wallet app with a QR scan and pay option.
- QR Code Scanning: The mobile application scanner should be used to scan the merchant’s payment code.
- Verify Payment Details: The information of the merchant, as well as the amount for the transaction, should correspond.
- Authorize Payment: Validate the payment via the application, which may include biometric confirmation or PIN entry.
- Receive Confirmation: The completed transaction is immediately confirmed to the customer and the merchant.
Protecting Against QR Code Payment Frauds:
To safeguard against potential fraud:
- Educate: Get yourself and surroundings educated towards basic do’s and dont’s in the payments through QR codes. Make sure the scan codes are provided by known and trusted organisations.
- Secure Display Areas: QR codes should be placed at locations that can be accessed by very few people. Publicly reached QR codes can be tampered (this can include being replaced with malicious codes, etc.). Restricting access reduces the risk of fraud.
- Use Dynamic QR Codes: These codes are specific to a particular transaction, thus have minimum chances of being misused. The QR code includes the exact payment amount, receiver details, and a timestamp. Once scanned and paid, the QR code expires, preventing reuse or duplication. Merchants or businesses can track transactions as each QR code is linked to a unique order or invoice.
- Implement Monitoring Tools: Businesses should be able to monitor the flexible changes made to the QR code and should be alerted when there are unauthorised attempts to change it.
Integration of QR Codes with Mobile Wallets:
In India, payments through bank accounts have been made easier using QR codes via UPI, Paytm, Google Pay, and PhonePe. These third party apps and mobile wallets make it easier to make transactions while providing cash back, loyalty rewards, and protection against fraudulent activities.
QR Code Payments in E-commerce Platforms:
E-commerce platforms nowadays integrate QR payments along with payment gateway on checkout. With QR codes obviously allowing customers to scan and pay rather than type credit card details, the payments are super easy in e-commerce eliminating the fear and hassle. Merchants using business sites like WooCommerce, Amazon incorporate QR code API integrations for easy transaction procedures.
In conclusion, QR payments have not only transformed domestic transactions but are now expanding across borders. With the rise in international travel and trade, cross-border QR payments are gaining momentum. Countries are actively working toward interoperable QR systems that facilitate seamless international payments—minimizing currency conversion costs and eliminating the need for multiple payment platforms. This evolution underscores how QR technology is redefining the future of payments, breaking geographical and economic boundaries alike.
FAQs?
1. What is the main purpose of a QR code?
QR codes store and quickly share data, primarily for payments, authentication, and marketing.
2. Who invented QR codes?
QR codes were invented in 1994 by Masahiro Hara from Denso Wave, a Japanese company.
3. What are the different types of QR codes?
- Static QR Codes – Fixed data, cannot be edited.
- Dynamic QR Codes – Editable and trackable.
4. What are the limitations of QR codes?
- Requires a camera-enabled device to scan.
- Can be tampered with for phishing attacks.
- Static QR codes cannot be updated.
5. Can QR codes work without the internet?
Yes, QR codes can work without the internet if the data is stored within the code itself (e.g., URLs, text, contact details). However, online payments may require an internet connection.
6. What is the maximum size of a QR code?
A QR code can store up to 7,089 numeric characters or 2,953 alphanumeric characters, with a maximum module size of 177×177.
