Two decades after its inception, the humble quick response (QR) code is growing in popularity amongst merchants and shoppers, shaking up the payments scene and forcing banks and regulators to sit up and take notice.
The evolution of QR codesInvented in 1994, QR codes were originally used to track vehicles during manufacturing. These black and white pixelated patterns store information as numeric, alphanumeric, bytes and Kanji (a Japanese writing system), making them much more versatile than barcodes. And as access to smartphones that could read QR codes grew, so did their popularity.
It’s no surprise then that QR codes are taking off in a big way in the digital payments space. Capgemini’s most recent World Payments Report shows that of the 700 billion digital transactions made last year, more than one billion were made using a mobile phone. The consulting group has said it expects QR codes to be one of the big drivers of mobile payments.
This is especially true in South Africa which, while underbanked, has high mobile penetration that makes the use of QR codes an ideal solution in a local market very willing to adopt mobile technologies. A 2019 study conducted by Deloitte showed that 73% of South African consumers say they are ready to pay with their mobile phones, and merchants said that by accepting QR payments they typically increased their revenue by 10%.
In-app scan-to-pay drives digitalizationThe growing acceptance and popularity of QR codes in South Africa meant that banks needed to integrate this technology into their digital offering in a way that made their customers feel safe and required little further action on their part.
To solve this problem, Entersekt designed an in-app feature that allows a bank’s customers to use its banking app to scan any QR code. A quick update, and the feature appears in the bank’s app, without customers needing to go through any additional enrolment or login processes. This lack of friction is a big win for QR code payments, and it should be no different for any of a bank’s other digital offerings.
Keeping the scan-to-pay solution in-app gives a bank’s customers another incentive to download and use its app – a key part of a digitalization drive. Also, because our solution can scan any QR code, users aren’t forced to download multiple QR apps, handing over their card and personal details each time. In an environment where consumers are becoming increasingly wary of sharing their details, this is a clear win for the banks and their customers. And since Entersekt clients can scan Zapper QR codes, they can use their apps for anything from their first cup of coffee to their parking to filling up with petrol.
Locally, two of South Africa’s largest banks have integrated our solution into their banking apps. Nedbank’s Scan to Pay functionality has performed well and Capitec Bank’s offering quickly caught the attention of its customers. All reasons we can expect this payment method to continue its steep growth trajectory.
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The future is fluidAs use of QR codes grow and the number of scan-to-pay offerings increase, the industry will need to address a standard for interoperability. Having too many options just doesn’t work and simply frustrates both consumers and the industry.
Part of this standardization conversation is how QR codes are processed. The argument of push versus pull payments, and which payment rails will be used, is one that the industry and regulator will have to settle. For now, though, it’s good to see banks getting behind contactless mobile payments that answer their customers’ needs. This can only facilitate trade, and that works for everyone.