QR Codes and Their Use in Payment Processing

Editor’s Note: This blog entry was originally published on March 7, 2018, and was updated on May 28, 2020.

What are QR Codes?

A QR, or Quick Response, code is a two-dimensional code usually formatted as a pattern of black squares in a grid with a white background. QR codes are similar to barcodes; however, they can store a larger amount of data and can be scanned from both paper and screen. Devices such as smartphone cameras and apps are used to read the data in a QR code.

How QR Codes Work

When a QR code is scanned, the software on a smartphone decodes the data embedded in the code and converts it into a string of characters. Those characters contain a command for the phone to complete an action, such as confirming a payment or opening a link in an Internet browser.

Uses of QR Codes

QR codes were first created in 1994 for use in tracking vehicles and parts in the automobile manufacturing industry. Since then, the technology has expanded to a number of different uses. A few of these uses include:

Social Media

Many companies use QR codes as an easy way for consumers to follow them on social media. Instagram, for example, offers custom QR codes called “Name Tags” for each account. Users can scan the Name Tag and be taken directly to a company’s profile, rather than having to search for it.

Personalization of the In-Store Shopping Experience

Nike’s flagship store was designed around the use of QR codes in the Nike app. It offers features such as “Shop the Look,” where customers can scan a QR code on a mannequin to have the outfit sent directly to a fitting room for them.

Informative Product Packaging

QR codes are used on product packaging to allow customers to access additional product information, such as detailed ingredient lists.

Healthcare

Many hospitals are now featuring QR codes on patient’s hospital bracelets, allowing medical staff to access the patient’s health record, current medication list, allergies, and more information all in one place.

Car Dealerships

Some car dealerships display QR codes on their vehicles’ window stickers. Scanning the code brings up the vehicle details for the potential buyer.

QR Codes and Payments

In the United States, QR codes have been mainly used for information sharing such as the examples above, as NFC technology, rather than QR codes, has become the popular choice for contactless payments. However, in other countries, QR codes are used quite frequently for payments. For example, in China, QR codes were used to process an estimated $1.65 trillion in purchases in 2016 alone.

While NFC technology will likely continue to be the most popular form of contactless payments used in the United States, some companies are incorporating QR codes and payments into their business model through store apps.

Some coffee companies allow customers to place mobile orders in their app, which they can then pick up in-store and pay for by using a QR code in the app. Some retailers combine coupons, gift cards, loyalty cards, and more into one app QR code.

Conclusion

Research indicates QR codes will continue to find widespread and varied use in the United States. Research from Statista estimates that 11 million households in the US alone will scan a QR code in the year 2020. While some of those QR codes will be used for payment processing, it is likely that the majority will be used as a form of information sharing.

Ashley Jones

Marketing Content Coordinator

Ashley Jones is the Marketing Content Coordinator at Global Payments Integrated, where she is responsible for digital content strategy, development, and analysis. A communications and digital marketing professional, Ashley has experience in the areas of social media, digital content creation, event planning, broadcast journalism, and administration.

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