Quick-response (QR) codes, the increasingly common square bar codes used in advertising and mobile payments, are stepping into new territory as a tool for bill payment.
QR codes can be used with paper bills as a second factor of authentication. Though the practice is not common yet, Nacha, the electronic payments association, established guidelines for QR code usage for bill payments last month.
Mitek Systems Inc., based in San Diego, Calif., says the QR code can complement its current mobile bill pay technology, which uses a phone's camera to scan bill details, says Jim DeBello, CEO of Mitek. The company supports the guidelines, which provide rules for eliminating the risks of using QR codes, and is participating in their testing.
“QR codes are an excellent supplement to what we have … because they are intentionally redundant,” says Mike Strange, chief technology officer at Mitek. QR codes “allow us to cross-validate the quality of the data extracted.”
Mobile Photo Bill Pay was a natural extension for Mitek, which offers imaging technology for depositing checks , DeBello says. Its bill-pay product launched with U.S. Bank in December. And on Feb. 1 Allied Payment Network and its community bank and credit union customers announced plans to add Mitek's Mobile Photo Bill Pay.
According to consulting firm AlixPartners, by 2016, 2.1 billion checks will be handled by mobile remote deposit capture, with 73% of paper checks being deposited this way.
QR codes address quality issues more than fraud issues, Strange says.
“In theory with a technology view you don’t need [QR codes], but occasionally bills will be smudged or there are errors in the ink … so it’s nice to have,” he says.
Since QR codes instruct phones to visit specific websites, telling the difference between a “real” QR code and one created for phishing and hacking consumer data can prove challenging, says Gareth Lodge, a London-based Celent analyst.
“How do I know that the code hasn’t re-directed me to a bogus site that is capturing my data as I add it?” he says. “The reason for introduction of the Nacha code is that there is a perception of misuse. Certainly there is an argument that [QR codes] have been poorly executed at times.”
But industry standardization is one reason the Nacha guidelines were established, says Strange, who is involved with the Nacha committee behind the QR-code guideline. Mitek plans to work with Nacha on the security and form factor of the codes.
Gil Luria, an analyst at Wedbush Securities in Los Angeles, says the QR code “has an advantage in that most people have camera phones and know how to scan a barcode, but is limited by the fact that it’s hard to authenticate.”