QR stands for quick response and refers to the black-and-white square graphic label that looks like a bunch of large pixels. You can scan QR codes with your mobile device to perform many tasks, including visiting a website, placing an order, and making a payment. QR code payments involve digital payments made via the scannable graphic.
According to a study by Juniper Research, nearly 30% of all consumers will be using QR codes by 2025, with payments totaling $2.7 trillion globally. More and more, merchant services are processing QR code payments, making it easy to add this option for your customers. Easily scannable with a smartphone camera, QR codes have other uses as well.
The setup for QR codes is minimal, and the potential payoff is great. If you are interested in offering this payment method, there is no downside—as long as it is compatible with your existing payment processing and point-of-sale (POS) software.
How QR Code Payments Work
QR code payments work much like many other contactless payment methods. The customer scans the QR code with their mobile device, and the code then leads them to an online terminal where they are taken through the steps to perform an online checkout. The customer enters and approves the payment information, and the merchant then receives an alert that the payment went through.
How to Accept QR Code Payments
Many existing payment platforms and technologies are compatible with QR codes to some degree. And if you already use QR codes for things like your menu or marketing and promotions, setup is even easier.
If you’re not using tools that can handle QR codes, it’s still easy enough to get set up. Using PayPal or Square is a quick and affordable way to start taking online and in-person payments via QR code. Or talk to your merchant service or POS to see if it has that capability.
Once you have an app, you can print and set up a QR code for customers to scan, or you can have them scan it off your screen. You don’t need any special hardware. In fact, one advantage of QR codes is that they can work without a POS system or card reader.
Popular QR Payment Processors
PayPal is always a good processor to have because consumers trust it. It ranks on several of our lists, including the best free merchant accounts for small businesses. Its POS system, Zettle, accepts QR codes. It has a 1% per transaction rate until Dec. 31, 2021; after which, the rate increases to its standard card-present rate. Customers need to scan the code with their PayPal app.
Benefits of QR Code Payments
- No hardware needed: The QR code takes the customer to a website for payments, so you don’t need a card swiper or POS hardware. This can be an advantage for those just starting out or who have mobile or off-site salespeople.
- Lower fees: Typically, QR code payments come with lower fees than card-not-present (CNP) transactions. This is especially helpful when a customer has forgotten their credit card or wallet. Sometimes, fees are even lower than card-present. PayPal, for example, currently charges only 1% per QR code transaction.
- Faster payments: You can process payments from several customers at once since they scan the code and put in their payments themselves.
- Improved customer experience: In addition to paying faster, customers can easily pay with their preferred method simply by scanning the app with their phone. This seamless digital experience lets you concentrate on the customer.
- Greater security: QR codes are tokenized and encrypted, making payment details less vulnerable to theft or hacking. Plus, the processing takes place by the credit card company directly for a more stable transaction.
- Multiple uses: QR codes are also a handy way to share coupons and promotions. Customers can scan the code and be directed to a landing page or downloadable coupon to use for their next purchase. You can also use QR codes to promote your customer loyalty program and offer a way for customers to enroll. Juniper Research predicts mobile-enabled loyalty cards will double from 2017 to 2022.
QR Payment Trends and Outlook
- 1.5 billion people worldwide used QR codes to make a payment in 2020 as usage soared during the COVID-19 pandemic. Further, according to PYMNTS.com, more than half of consumers say the ability to use digital payments impacts their choice of where to shop.
- According to Juniper Research, the US will see a growth of 240% in the number of users paying with QR codes by 2025, with almost 30% of consumers using QR codes to pay in 2025. It also anticipates that 5.3 billion QR code coupons will be redeemed by 2022.
- QR codes are the norm in many Asian countries, especially China, Thailand, Singapore, Indonesia, and Vietnam.
- Amazon Go stores are offering frictionless shopping using QR codes. Customers simply scan a QR code upon entering, then shop normally and leave. The technology in the store tracks what they leave with and charges their accounts. While there are only 30 stores currently, nearly 60% of shoppers polled by Pipslay said they’d like an Amazon Go store in their area.
It’s not just the COVID-19 pandemic that has led to a desire for touchless payments like QR codes provide. As more consumers get smartphones, they are able and willing to use digital technology for convenience’s sake as well. Having QR payment codes can help you keep up with the times, improve your customer experience, and make things easier for you and your employees, too.