Recently, choosing between NFC payments and QR codes would have been an easy choice. Now, with EMVCo releasing QR code payment specifications, large processors Mastercard and Visa exploring the method for merchant payments, and popular P2P apps like Venmo using the technology, it seems like the barcode-based system is resurfacing.
But what has led to this recent glut in QR innovation?
According to Scott Harkey, payments practice lead for consultancy company Level, it’s Apple’s fault. Said Harkey in an emailed statement:
First, the only way to build a mobile payment solution with a point of sale acceptance that works the same on iOS and Android is to use QR codes. This is due to the way Apple locked down the NFC experience on a device to only allow Apple Pay to access the payment credentials. So although Apple solidified NFC as the payment technology of choice a few years ago, they are now inadvertently causing deviations from the technology by not allowing banks and merchants to build their own unique payment experiences on iOS devices.
While Apple’s tight grip on NFC payments has definitely led to innovation in mobile wallets, it’s unlikely that most merchants will want to alienate Android-loyal customers, and banks are equally as unlikely to appreciate those restrictions. Consumers, meanwhile, seem to appreciate the simplicity of the QR code, as the popularity of certain retail payment apps like Starbucks mobile, as well as Chinese payment giants Alipay and WeChat, suggests.
The rise of the gig economy may also be a factor, as more and more consumers across the globe become “self-employed.” For markets outside of the U.S., mobile is already becoming the primary tool of business. Although the deployment of NFC technology is widespread in certain markets, other markets (like those in Asia and Africa) are finding that it’s easier to deploy a payment solution that does not require traditional merchant acquirer relationships and hardware.
QR codes enable anyone with a phone to receive payments as a business, and this works especially well in markets with population growth that the infrastructure has not kept up with. Aside from the popularity, simplicity, and universality of the method, there’s an additional reason financial services might be exploring QR: data.
There are technical limitations as to the amount of data that can be transmitted in an NFC transaction, and this limits the value-added services a wallet can build around payment without requiring multiple taps or leveraging proprietary technology like the Softcard smart tap (now owned by Google).
Since QR codes are often just identifying the device/account for use in a cloud-based transaction, the information that can be exchanged in a single QR scan is much broader. This allows for unique experiences to be created.