Globally, digital payments are expected to reach an annual transaction value of $4.4 trillion in 2020, with 17% CAGR through 2024.* With growth rates like this, it is not surprising that merchant payments, such as QR code payments, have captured the interest of many stakeholders, including mobile money providers (MMPs).
According to a new GSMA report by Accourt, QR code payments are enjoying significant but fragmented global growth, often competing with long-established payment methods, such as card payments. There are a number of QR schemes around the world, but none more successful than the two primary Chinese players, Alipay and WeChat Pay.
In 2019, 640 million Alipay customers regularly transacted in two or more Alibaba Group ecosystem product/service categories. Another 190 million regularly transact in five or more categories. While the report does not advocate a “copycat” approach of the Chinese market and its players, it does point out that one can learn much from events in China and many other schemes around the world, whether newly emerging, rapidly growing or somewhere in between.
In recent years, QR (Quick Response) codes are being adopted by a growing number of players to facilitate retail payments. Originally a tool for tracking automobile machine parts, the rise of QR in payments was enabled by the widespread adoption of digital wallets. Uptake has been high in China, and their relatively inexpensive form factor and ease of use has helped make QR codes popular in other parts of the world. Today, prominent QR merchant payments deployments are evident around the globe.
In emerging markets especially, mobile money providers are at the forefront of using QR codes, but face several challenges. Chief among these is the need for adopting technical standards that enable interoperability between different QR code deployments.
The report provides a comprehensive deep dive into QR code merchant payments and is intended as a resource for providers that wish to adopt and/or grow their QR code merchant payments ecosystems.
It starts from a product flow perspective, identifying nine interdependent elements that must come together to produce any QR code solution. Each element has several options under it to choose from, and three broad product flows are possible for QR code merchant payment solutions depending on how elements are grouped and the transaction characteristics. In turn, each product flow results in a distinct experience for the payer and payee of a QR code solution.
The report then turns to the technical specifications of QR solutions. Any QR payment scheme has an underlying technical specification that governs all its aspects, and this specification can be proprietary or common. It provides a summary comparison of different QR specifications (including Alipay, WeChat Pay, EMV, JPQR, Bharat QR, HKQR, SGQR, QRIS, Prompt Pay, Mercado Pago and Pix, among others) across their constituent components, revealing that they share many overlaps but also significant points of divergence.
Bringing the two perspectives together, the report then considers various options for QR code deployments to be interoperable. As QR code merchant payments schemes evolve, two primary dimensions of interoperability are typically encountered: domestic and cross-border.
Further, there are two primary approaches to QR code merchant payments interoperability: harmonisation of QR code specifications and harmonisation via API and/or back-end integration. The specific market and players involved will determine which approach is the best one in a particular context.