Thought Leadership

The state of QR code payments in 2021 (Part 1)

March 19, 2021

In 2011, there were under 1 million QR code transactions per year.

In 2016, that number was $1.65 trillion in China alone.

And now the rest of the world is catching on, with 37% of Americans using QR codes in 2019 (Pew Research) and 40% of UK and European citizens saying they’ve scanned a QR code to use a payment method specifically in the last 7 days in 2021.

As we can see, the number of QR code payment transactions has increased exponentially. Although QR code adoption has been a little slower in the West, it’s slowly catching up with the East - some of the largest QR code payments providers are iDEAL in the Netherlands and Belgium.

We wanted to put together a summary of the state of QR code payments 2021, gather some comments from some of the top leaders in the industry, and most importantly, find out what role QR codes will play in the financial services industry in the next few years.

How QR codes took over the world

QR codes were first invented by Masahiro Hara in Japan in 1994. He needed something a bit more versatile than the barcode to transmit information in manufacturing: the barcode didn’t store enough data, causing employees to scan over 5 separate barcodes in order to transfer information.

Then one day Masahiro realised that instead of using a one dimensional barcode, he could instead use a two dimensional one. With two axes on the barcode, the image went from storing 20 characters, to over 7,000 - and so the QR code was born.

Masahiro didn’t expect QR codes to become as popular as they are today. They grew exponentially in China, where Jack Ma used them as a digital payment method in his payments app, Alipay. In 2016 nearly a third of all Chinese payments were made with QR codes.

QR codes came onto the Western scene in 2011, but adoption was slow. It was so slow, in fact, that most people in 2014 said QR codes were “dead” and would never be adopted in Europe. However, this all changed in 2017 when consumer facing apps such as Snapchat and Spotify implemented QR codes to encourage users to add each other on the app - this is also when Pomelo Pay was founded, and became one of the first apps in the UK to enable QR code payments. Apple further propelled this change by enabling a feature that allowed smartphone users to scan a QR code with their camera app, rather than downloading a separate app. QR code adoption soon skyrocketed, with QR code transactions increasing from 16 to 28 million in just 5 years in the US.

Now, in 2020 and 2021, QR code adoption has once again received a boost due to the Covid-19 pandemic. As one of the few payment methods that is quick, secure and doesn’t require any physical contact, the QR code was quickly adopted by restaurants, cafes and retailers worldwide as a way to take socially distanced payments

Kathleen Booth, VP Marketing at says that QR codes have given rise to “touchless commerce”, which is a trend that will only become more prevalent in the years to come. QR codes are here to stay, and will play a big role in the future of financial services.

Top use cases for QR code payments in 2021

The QR code was the obvious solution to managing payments during the pandemic. Customers could pay for items with their smartphones without having to touch anything: no keypad, no cash, and their smartphones don’t even have to touch the card reader. Governments were also quick to adopt the QR code for contact tracing, and restaurants used it for online ordering.

This is where QR codes’ unique feature truly stands out: bridging the offline and online world.

We’re slowly becoming part of a much more visual environment. With Instagram, stories, Youtube videos and Twitter fleets, we can suddenly see the world through a real lens. Our cameras are becoming our new browsers, and are letting us experience the world around us in a much more real way. It means that anything that is physical can now be transposed to digital. And that includes payments.

At Pomelo Pay, we’ve seen taxi drivers use QR codes so they can finally take card payments and not rely only on cash. We’ve seen street food vendors increase their revenue by double digits growth during the pandemic with contactless QR code payments. With QR codes, people are able to bridge both worlds in ways they didn’t before.

Tedd George, Fintech consultant on African markets talks about QR codes in developing countries:

“I have seen moto-taxi drivers in Kigali with QR codes on their helmets, one-woman street kitchens in Accra with QR codes propped next to boiling pots of food, even itinerant vendors weaving through Lagos traffic jams with a QR code on their shoulder. With a QR code the vendor doesn’t need electricity or an Internet connection, just a buyer with a mobile phone.”

There are three main features that make QR codes unique and appropriate for payments.

Take card payments, anywhere at any time

Card payments are still the most popular way to take payments in Europe and the US. The infrastructure has been in place for decades, and cards can be easily used for both online and offline payments.

Businesses who cannot take card payments are at a serious disadvantage, which affects revenue and therefore their bottom line.

With QR codes, anyone can now accept card payments. That’s how rural fishermen and farmers in China and Malaysia can now take card payments. With QR codes, merchants only need their phones to take a card payment. No card reader, no setups, and not even an internet connection (although the payee does need a connection).

Rahul Kanotra, product manager at Crosscard, says it himself:

“For the west, the next 5 years will be a focus on the adoption of various [QR code] use cases - such as small merchants or even street performers with static QR code payment stickers, or big merchants adopting dynamic merchant or customer generated QR codes.”

QR codes play an essential role in digital transformation, whether it’s encouraging businesses to move online or including more people into the financial system.

Accept all payment methods

A big trend we’re seeing in the financial services industry is the rise of alternative payment methods (APM). These include Buy Now Pay Later (BNPL), Apple/Google Pay, direct bank transfer and e-wallet payments. With governments and regulators introducing more laws and regulations such as 3DS2 and 5AMLD, more payment methods are appearing that have identity verification integrated within the customer experience - making payments smooth and seamless for the customer.

With QR codes, that isn’t a problem. Due to their versatility, QR codes are incredibly easy to integrate with API solutions. Not only can they be added to a website, CRM or printed on a storefront, but they can also be used as a way to direct the customer to any local payment method. One QR code, and the customer can pay using the APM and currency they pick. With Pomelo Pay QR codes, for example, UK merchants can accept Alipay payments.

Safe and Secure

Although the fear of transmitting a virus won’t be as prevalent in the decades to come, consumers’ awareness of cleanliness with cash and payments will surely stay. This means that contactless payments such as QR codes will likely remain a popular method that ensures a hygienic way to pay for items.

QR code payments are also more secure than most other payment methods. In a world where everything is becoming increasingly digital, consumers are more aware now than ever of their personal information online. With QR codes, sensitive payment information remains on their private device, transactions are tokenised and encrypted and the payment is pushed directly to the merchant bank.

This is Part 1 of our State of QR code payments Report. Stay tuned for part 2!