The too-firm footing of QR codes
Despite the considerable momentum behind contactless technologies such as NFC, the unloved but effective QR code continues to live on. QR's success keeps outweighing its clunkiness, winning more support from companies that might otherwise prefer newer technology.
Recent announcements from China’s UnionPay, Mastercard and EMVCo only serve to strengthen the QR code's status as the mobile payment method of choice worldwide — even in tech-savvy markets such as the U.S.
Last week, EMVCo officially released the EMVCo QR Code Specification for Payment Systems: Consumer-Presented Mode Version 1.0, to provide interoperable technical solutions for QR code payments.
Under the new EMVCo specifications, UnionPay has plans for expansion of its QR code products and services in markets outside mainland China as well as expanding the acceptance of its QR code system in the fields of transport, health care, social security and education.
Mastercard also announced that beginning this month, the company will broaden its products to offer QR codes that can be scanned by either consumers or merchants under the same common set of EMVCo specifications.
"Today's news builds on the momentum of our QR work in India and Africa," Ajay Bhalla, president of global enterprise risk and security for MasterCard, said in a release. "We look forward to the adoption of the EMVCo global QR standards. In the meantime, we'll continue to work with our customers and partners to make every device a secure way to pay and be paid."
Paid in America
The regional proliferation of QR codes may portend a shifting in technology preferences in other markets, such as the U.S.
After all, the most successful domestic mobile payment initiative to date, the Starbucks app, has demonstrated on millions of occasions that the unsophisticated bar code works fine in a high-traffic retail setting. Bar codes and QR codes also allow the merchant to keep the technology under its own control rather than take a gamble on an emerging tech provider.
However, James Hicks, executive vice president of global acceptance and solutions at Mastercard, sees more of a continuum for payment technology adoption rather than a single winner or loser.
“You can look at it as an evolution," Hicks said. "In certain markets where cost is prohibitive around point of sale ... with QR you can enter new people into the ecosystem and as they grow, there’s a natural path to say, well, I need to move to mPOS, I maybe need to move to NFC.”
It seems a reasonable assumption that there will be a mobile payments ecosystem with a number of technologies catering to specific consumer or merchant needs.
The continued support of QR codes by standards bodies such as EMVCo may, however, have consequences in markets where QR is less necessity and more option since it may ultimately delay the evolution of the mobile payments value proposition as legacy solutions are seen as good enough.
The road ahead
One might imagine that the emphasis on QR codes is a step sideways, if not back, for mobile payment technology. However, the prevalence of QR codes in Southeast Asia means that any technological alternative would have a hard job in displacing the incumbent.
In a recent New York Times article, the potential for a cashless China is outlined, highlighting the incredible pervasiveness of QR code payments in the region, particularly as a connective element within the messaging ecosystems of Alipay and WeChat. According to recent data from WeChat's parent company, Tencent, 92% of Chinese mobile internet users pick mobile payments as the preferred method of offline payments. While NFC is available in the region through initiatives such as UnionPay’s QuickPass platform in half a million retail locations, QR codes are the connective technology of choice.
With ubiquity, familiarity and trust, it simply makes sense for global payments networks such as Visa and Mastercard to adapt to regional QR preferences.
There are three critical components to payments adoption, according to Hicks.
“The first is, is it safe?" Hicks said. "The second thing is, is it simple? And a third, is it ubiquitous? They are all probably equally important, but the first two don't matter if you don't get ubiquity right.”
Mastercard’s plans for expansion of QR code-based payments are dependent on a number of factors at a regionally specific level. “In certain markets around the world, we’ll say, do we have the ubiquity where we can get issuers and consumers, acquirers and the acceptance ecosystem together to say this really makes sense?” Hicks says.