What Businesses Need to Know About QR Code Payment

The recent pandemic led to increased demand from consumers and merchants for more payment methods that don't require person-to-person contact. Quick response, or QR, code payment has gained particular attention as a fast and secure touchless payment method.

Payment using QR codes has long been a popular method in China and throughout Southeast Asia but only recently gained a major foothold with US customers. A big reason for this was the pandemic, when large digital payment systems like PayPal and Apple Pay began offering the payment option on their platforms.

What is QR code payment?

Using QR code payments is quick and easy for both the merchant and the consumer.

Merchants that want to accept QR code payment need to display a QR code at their cash register, checkout area or anywhere a phone camera can easily scan it. When the customer scans the QR code, their smartphone directs them to a website or opens a payment-accepting app.

After the merchant rings up the purchase, the customer enters the transaction amount into their smartphone, selects a payment method (usually a credit card on file), and hits Pay now or Send. Both the merchant and the customer will receive a confirmation that payment was sent and received, and the merchant may ask to see the customer's electronic receipt on their smartphone.

The entire transaction is done in seconds, and the customer doesn't touch anything except their smartphone.

What are the advantages of QR code payment?

Compared to other digital payment types, QR codes have a few significant advantages.

One of the most popular forms of touchless payment is near-field communication, or NFC, which allows customers using tap-to-pay credit cards or digital wallets like Google Pay and Apple Pay to wave or line up their card or device to transmit payment information at the point-of-sale, or POS, terminal.

Using NFC technology requires merchants to invest in costly equipment and train staff to use it. QR codes don't require any extra equipment or major training to use, just an internet connection and their existing payment-processing software connected to a business bank account.

For customers, NFC requires that they line up or wave their card or device in the right area, and they must have an NFC-enabled smartphone or card. QR codes just require a phone with a camera.

Also, because the transaction is initiated on the customer's smartphone, their payment information isn't transferred or stored in the merchant's POS system—making the transaction more secure. The customer retains all of their payment information on their smartphone.

Where does QR code payment make sense?

QR codes aren't without their own drawbacks. Just as self-checkout lanes rely on customer input and steps, there can be errors and backups. For example, if the customer enters the wrong purchase amount, has an out-of-date credit card stored in their digital wallet or doesn't hit Send, it can drag out the transaction and frustrate both parties—as well as other customers waiting to pay.

QR code payments are a great option for merchants ringing up occasional transactions. This includes businesses offering professional services like plumbing, electricity or delivery. It can also be a good option for businesses that aren't too busy, like a boutique or specialty shop. On the flip side, it's a less attractive option for businesses with very busy locations and long lines of customers, like grocery stores, gas stations and fast-food restaurants.

The security, ease of use and lack of additional investment make QR code payments an attractive touchless digital payment option for most businesses. To see if it's right for you, speak to your trusted business specialists—including your payment processor and your business banker—to determine if you should add QR codes to your existing payment options.