Thought Leadership

The state of QR code payments in 2021 (Part 2)

April 1, 2021

What is the future role of QR code payments?

The fact that QR codes offer a quick and efficient way to bridge the offline and online world offers up some interesting use cases for QR code payments in the coming years. Here are three of them:

1. Embedded finance and open banking

Embedded finance is setting the scene for the financial services industry. With the new Open Banking and PSD2 regulations already in place, the definition of financial data sharing is changing and therefore so is the payments industry.  

QR codes play an important role in the Open Banking movement. As we mentioned above, QR codes enable all types of payment methods when partnered with the right payment provider. This means that with QR codes, consumers can pay for items in stores with their phones through direct transfers powered by Open Banking:

  1. A customer scans a QR code inside a shop
  2. This takes them to a separate payment screen where they can select their bank, authenticate the payment and push the payment to the merchant
  3. No card or bank account details are disclosed, and the payment is deposited immediately

For merchants, this means: up to 80% lower processing fees, faster payment deposits and higher security, as well as no chargebacks. This also opens up opportunities to use QR codes to offer payment services to a wider range of customers: with QR codes, customers can choose to use an e-wallet to complete their payment, and this can translate into additional opportunities such as offering credit at point of sale.

2. Cryptocurrencies

Although cryptocurrency payments are not mainstream in retail or business payments just yet, there is growing research in central bank currencies and digital currencies as a whole. QR codes will play a large part in enabling cryptocurrencies, as Sam Boboev, freelance Product Manager says:

“The feature I am most excited about is the wide usage of QR codes in the crypto world and payments. One of the global card players - Mastercard - recently announced they will start supporting cryptocurrencies in their network. QR codes are very essential in crypto payments. The combination of price efficiency and wide use cases makes QR codes the technology of the future in the payments industry.”

Several countries are experimenting with a rollout of digital currencies including China, Singapore, Estonia and Sweden. It’s very possible that QR codes will play a large role in increasing adoption of a country’s digital currency.

3. Government issued QR codes

Following on from the topic of centralised currencies, many governments are also looking into issuing country based QR codes.

These QR codes allow governments to track payments and enable digital payments for specific industries. The most common example is India, which has already issued two QR code standards that make banking more accessible: the UPI and Bharat QRs.

Japan recently released one in April 2020, which will allow account holders to pay for items with their QR codes. We’re also seeing this in Singapore, which is issuing its own Quick Response Code to complete payments within the public healthcare system.

In the UK, Barclays is partnering with merchants to enable Alipay QR code payments in the UK. In the future, it’s likely we’ll see more governments issue national QR codes to enable digital payments, encourage adoption of new currencies and provide credit to those that are financially excluded.

Pomelo Pay and QR codes

After seeing how effective QR codes were in Asia, Pomelo Pay’s CEO, Vincent Choi, decided to implement a similar technology in the UK in 2017. QR codes help solve remote and distant payments, and contactless payments help businesses take payment during and after the pandemic.

Fast forward to 2021, and Pomelo Pay now offers several features that help businesses take full advantage of QR codes:

1. QR code payments

One of our first ever features was QR code payments. With this feature, Pomelo Pay users that have been approved by the compliance team can download our app, create an account and immediately start taking payments with QR codes. This means they don’t need a separate card reader to take card payments and each transaction is encrypted, allowing owners to focus on their business.

Read how this local taxi business is taking card payments with Pomelo Pay

2. Contactless table ordering

What’s so great about QR codes is that they can be used for anything that transmits information - so it doesn’t just have to be payments. With Pomelo Pay, businesses can also use QR codes to display their menus. This way, customers can scan a QR code, access a digital ordering system, and order and pay directly from their phone.

With Pomelo Shop, businesses can start taking online orders. They can integrate it into their own website, or they can choose to use Pomelo Pay’s website builder. Pomelo Shop is completely free and a lot more straightforward than other complex shop builders online.

This street food vendor boosted revenue by 10% with Pomelo Pay

Read more about the advantages of using an online ordering system

3. Payment links

When setting up an account with Pomelo Pay, businesses also have the option of requesting a payment via payment link if the customer is not present. This means businesses can send a request directly to a customers’ phone or email, making it a lot easier and secure to complete payments.

David Fox, manager of EPC, uses payment links to whenever he completes a job at a client’s house. With payment links, he gets paid a lot faster and his customers feel the system is a lot more convenient.

Read how this business owner uses Pomelo Pay to get paid instantly

2020 was a big year for QR codes. Although adoption was already increasing, lockdowns and subsequent acceleration of digital transformation has helped stimulate its use cases even further. QR codes play a key role in helping the world move from offline to online, and as we’ve seen in this report, there are still many opportunities to be explored - especially in payments.

At Pomelo Pay, we are proud to be helping businesses take their payments system online with QR codes, payment links, and now soon to come, contactless mobile payments.