In North America, QR code-based mobile payment apps from Starbucks and LevelUp generate a code for each user, and the merchant scans the code to accept a payment. In Brazil, PicPay is flipping the model and making the consumer scan codes presented by the merchant.
By creating quick-response codes for each product, "PicPay allows merchants to literally add a 'Buy Now' button on virtually any offline/online media," says Anderson Chamon, co-founder of PicPay. Consumers scan the QR code with a smartphone's camera.
This shift provides a more secure transaction since it guards against the threat of fraudsters using screenshots or printouts of QR codes attached to payment accounts, says Dave Kaminsky, an analyst at Mercator Advisory Group.
PicPay offers more than just a new payment method, Chamon says.
"Customers will actually check out directly from the app wherever they are," Chamon says. "Imagine a user reading the newspaper gets interested in a new PC being offered by a local retailer. With PicPay they are able to buy that PC in less than 20 seconds. They are not only paying for it, it's a complete checkout with the delivery address being indicated on the app."
While many industry experts agree that near-field communication (NFC) chips will be used for contactless mobile payments in the future, QR codes are used today because they typically don't require merchants and consumers to purchase new hardware.
"QR codes are for short-term solutions that need to begin spreading now; NFC is for long term solutions that can wait a few years before gaining significant momentum," Kaminsky says.
PicPay's current retailers include sports retailer Kanui, surf magazine Fluir and Perfumagi, a perfume and cosmetics e-commerce retailer.
South America, especially Brazil, has received much attention from U.S. payments players over the past several months. In November, MasterCard Inc. announced it would help Grupo Telefonica develop mobile payment products in Brazil. The companies plan to launch a mobile MasterCard-branded prepaid account in April.
During PayPal's third quarter earnings call, the company mentioned plans to expand in Brazil. Before the earnings report, PayPal had already announced its work with Telefonica Vivo, a mobile operator, on a mobile payment platform.
"In the near future Brazil will be one of the biggest mobile payment markets in the world," says Chamon. "Brazilian citizens are open to new payment technologies, as long as they offer a better shopping experience and keep the process safe."
While PicPay is a global company, the iPhone and Android apps are only available in Portuguese currently. Chamon says the company plans on launching in different languages later this year, starting with Europe, Hong Kong and the U.S.