A guide to QR code payments

QR code payments are increasingly popular payment method, needing only a quick scan to initiate a transaction. Thanks to the ease and accessibility of smartphones, the global QR code payment market is projected to grow 59% between 2023 and 2028.

Most commonly QR code payments are made via the customer’s smartphone when they scan the code using the camera. Once scanned, the customer can authorize payment through a mobile wallet to complete the transaction.

A vendor can also scan a QR code on their customer’s phone. In this case, the code is generated via the customer's bank or payment app and uses their account details to authorize the transaction request.

Let's take a closer look at how QR codes work in payments, what the benefits are, and how to use them in your business.

What are QR codes in payments?

The QR code – an abbreviation of "Quick Response code" – is a type of barcode that stores information as a series of pixels. When scanned on a smartphone, the user can make a speedy payment to a business, transfer money to a peer, donate money to a charitable cause, sign up for a paid subscription, or carry out a range of other transaction types.

As there are multiple ways to use QR codes in payments, there can be some confusion around the topic. The main use case is to request payment from a customer through mobile payment. This can take a number of forms, such as initiating a request from the customer's payment app with the merchant's details auto-filled. Another merchant may use a QR code to open a payment page in the customer's web browser, where the customer selects their preferred payment method.

The basic QR code structure is always a square, because it mirrors the grid of the board game Go, which inspired its creator Masahiro Hara. Its popularity exploded in 2017, when Apple enabled the iPhone camera to scan QR codes. They're particularly popular in developing economies where mobile payments are more commonly used than credit cards or cash.

How does a QR code payment work?

Also known as scan-to-pay, a QR code payment gives businesses an easy way to take mobile payments from customers. Firstly, you need to figure out the payment flow so you know which data to include in the QR code. Common options include: requesting authorization to transfer a certain amount, opening a hosted payment page on the user's browser, or prompting the user to send funds through their mobile payment app.

Once you've decided where the QR code fits into your customer payment flow, you need to use a purpose-built tool to generate the code itself.

Once created, display the code somewhere that’s easily accessible to your customers. This could be on the checkout page of your website or app, printed on a paper receipt, or placed on a physical sign.

Then your customer scans the QR code. What happens when your customer scans the code depends, again, on your particular payment journey. You should inform your customer whether they will need to choose their own payment method, open a specific app, or if the transfer happens instantly once scanned.

Alternatively, you can collect a payment from your customer by scanning a QR code that they have saved to their mobile wallet. To do this, you’ll need to have the ability to use the same app or POS software that generated the code. You’ll also need a mobile device or barcode scanner capable of scanning QR codes.

Benefits of using QR codes for payments

The "Quick Response" code is aptly named, because it's a much faster payment method than traditional swiping a card and entering a PIN code on a physical reader. With a smartphone, the QR code enables payment with hardly any effort, enabling a stress-free customer experience. The good thing about using a smartphone is it typically has built-in authentication methods such as fingerprint scan, face scan, one-time passcode generation or passcode lock.

Here's a summary of the main benefits:

• Low equipment costs - unlike credit and debit cards, which require standalone card readers that link to a POS system, QR code payments require very little specialized equipment. Often, all you need to do is download an app, making it incredibly easy to roll out either online or across multiple in-person locations.
• Simple payment experience - QR code payments are fast and convenient, which is fantastic for both you and your customers. That means happier customers, more conversions, and more revenue.
• Easy data collection - Since your customer is already on their smartphone, you could choose to request extra data from your customer such as email address and phone number. That's great for marketing messaging opt-in or simply sending a digital copy of the receipt.
• Improved security - as all payment information is encrypted, and there’s no need to store personal information from your customers in order to complete the transaction. This could lower your payment compliance liability, depending on the payment channels you're using.

Are QR codes a safe payment method?

QR code payments benefit from the additional security features available through mobile payments. These include:

• 2FA: Depending on the exact payment method used, a QR code payment can involve two-factor authentication. This means the payment must be approved using at two methods of confirmation, such as entering a one-time passcode, CVV, or log-in through a payment app.
• Biometrics: Smartphones often use fingerprint scan, face scan or other biometric methods of authentication. This is more secure than using a plastic payment card or cash, which can be used by anyone if stolen.
• Tokenization: Customer payment is stored as a token in a digital wallet, which is converted into a payment instrument for transaction purposes. The token is meaningless outside of the context of its transaction cycle, meaning data thieves cannot access account details if they should intercept the payment request.

Furthermore, QR codes are often used in Electronic Funds Transfer (EFT) payments, which are inherently more secure than payments by cash or check. Reason being they are encrypted, and require authorization from the payer (unlike cash which is easily stolen or checks which can be falsified).

On the other hand, there is an emerging trend of using QR codes to facilitate scams. To combat this, you should check that a QR code comes from a trustworthy source. Sometimes a fraudster will use a QR code in an email or text message to link to a malicious website (this is known as "quishing"). You can use a QR code URL preview tool to help you find out whether or not the link is reliable.

How can merchants use a payment link with a QR code?

Merchants can create payment links to use with QR codes. Payment links give you a way to accept payments through any channel or device, allowing you to be responsive to your customers’ preferences. You can create a payment link within the Checkout.com API or dashboard. Each code can be used to accept a one-time payment and is valid for 24 hours. The customer just needs to scan the QR code to be taken to the payment page in order to complete the transaction.

QR codes and superapps

QR codes payments are a cornerstone of superapps, and therefore extremely popular in East Asian countries such as China, where WeChat Pay and Alipay allow for speedy bill payment. When the customer scans the merchant's QR code, funds are deducted from their account in near real-time.

Similar solutions include: Kakao Pay in South Korea, LINE Pay in Japan, and GrabPay in Malaysia.

The "superapps" are designed to be all-in-one-solutions which allow the user to carry out a range of actions they'd normally need several individual apps for. For this reason, they generally offer multiple payment types, and even more than one way to pay using QR codes. To give an example, LINE Pay allows merchants to charge a fixed amount that's paid upon scanning the QR code. Alternatively, the merchant can allow the customer to enter a custom amount after scanning the QR code. This means the solution is flexible enough to cater for a range of business models, allowing for different payment types, as needed.

Adopt mobile payment methods with Checkout.com

Checkout.com offers merchants a variety of ways to take digital payments, maximize conversion, and boost revenue for your business. To find out more about the alternative payment methods we offer, take a look at our payment methods directory.