The QR-Code ComebackAs payment processes become more streamlined and move to mobile, some experts believe these scannable codes have a bright future.
If you’ve read a magazine in the past several years or received promotional pieces in the mail, you’ve likely seen the funky, pixelated little square barcodes known as QR (Quick Response) codes. But what are they?
“It’s a very easy way of transmitting your information,” explained Suresh Dakshina, president of Chargeback Gurus, a company that helps manage and minimize credit card disputes for small and midsize businesses. When a QR code is scanned using a smartphone or other mobile device, “all of the information about your company, your products and services, can be transferred to your targeted audience in a matter of seconds.”
While eight years ago, QR codes were touted as the future of information sharing, they’ve really only taken off in marketing. Otherwise, the scannable code has remained somewhat stagnant.But that appears to be changing. Today, QR codes are seeing new growth and being applied in a variety of new business uses — from tracking packages and promoting events to redeeming loyalty rewards and even making payments.
Here’s the lowdown on how QR codes are making a comeback in the business world.
A brief history of QR codes
QR codes were invented in 1994 by Denso Wave, a Toyota subsidiary, to help optimize the car manufacturing process, said Dakshina. Instead of taking time to thumb through a large manual, workers could scan a QR code on the part and immediately access all the information needed to assemble the component.
The main difference between a QR code and a traditional barcode is the amount of data the image holds, Dakshina explained.
“With a [one-dimensional] barcode, all you are able to scan is one thing — which is the part number or the manufacturer number. But when it comes to the two-dimensional [QR] code, you can actually transmit 300 times more data than the barcode.”
In 2010, the first QR code scanner applications were developed for smartphones, and brands like Macy’s and Best Buy started using the codes in marketing campaigns. But as with any new technology, widespread adoption takes time, so it took a while for consumers to catch on to what companies were trying to do — and for brands to learn how to use QR codes more effectively with consumers.
Today, QR codes are more widely recognized by the public, but marketing is still the top application. Why? Because they can be programmed to perform very specific tasks for the consumer. Scanning a QR code on an item label can take the user to a personalized landing page with more detailed information about the product. It can even open up a pre-populated shopping cart on an e-commerce site, dial a number on your phone or log in to a store’s free Wi-Fi.
Redefining the payments process
Interestingly, QR codes are also making their way into other parts of the consumer experience — namely, at the cash register.
“QR codes are coming back in a big way, facilitating mobile payments for users around the globe,” said Dakshina. “All you have to do is scan it and payment gets transmitted to the merchant. The funds are delivered and the goods are handed over to you. It happens much faster. The three-step process was eliminated to a one-step process.”
According to Dakshina, there are two routes to QR-code payments for merchants. The one described above is the consumer-presented method, and the code is linked to a shopper’s credit card information through their mobile wallet application.
In the second option, called a merchant-presented QR code, shoppers scan items as they shop. A code is then presented at the register that the consumer scans in order for the transaction to take place.
“It all depends on how the merchant wants to accept the payments,” he said.
China leading the pack
According to Dakshina, QR-code payments are gaining public interest in the U.S. and other western countries because of widespread success in China.
“Almost 80 percent of the people in China are using smartphones right now, and they were constantly looking for new ways of streamlining payments,” he said. “Last year alone, China processed $5.5 trillion, just with QR codes. It’s a very streamlined payment, so now companies are trying to leverage the same technology here as well.”
“Last year alone, China processed $5.5 trillion, just with QR codes.” -Suresh Dakshina
Historically, there’s proof that streamlining the payment process boosts the economy. In the first two years after credit cards were introduced as an alternative to cash, transactions increased by 25 times, Dakshina said. He estimates that QR codes will increase total transactions by three or four times that of credit cards, simply because of how painless it makes the payment process for consumers.
Some point-of-sale systems in the U.S. — including NCR Silver — have already started experimenting with QR codes as a fast way for customers to redeem gift-card credit and more.
Shawn Hagist, product director at NCR Small Business said that merchants can scan a QR code to quickly link transactions to a loyalty account, as well as print codes directly on receipts, which “can direct the customer to their website to view the menu, make future reservations and view specials or upcoming events.”
As the technology continues to improve and become popular among Western consumers, the innovative ways small businesses can leverage this scannable tech will only increase.