A new study from Juniper Research, the foremost experts in fintech & payment markets, has found the value of QR code payments in the transportation market will increase by 176% over the next five years, with China, India, and Malaysia being market leaders. Transportation Spend Via QR Codes
This growth is being catalyzed by governments’ use of QR payments to foster financial inclusivity, enabling widespread QR code payment acceptance, which is critical for growth.
Operator Interoperability Is the biggest challenge
The benefits of QR-based payments for transportation are numerous, but the greatest obstacle is the lack of interoperability between transport operators. The most successful markets are those with national QR standards or extensive cultural integration of QR-based payments. The report recommends that this model be adopted in other markets, creating coalitions between payment providers and transit authorities and enabling services like tap-in and out QR codes.
Card Vendors in QR Code Payments
Digital payments have increased globally in recent years, not only in terms of demand but also prevalence. QR code payments, while massively popular in China since 2011, have been rapidly expanding as the preferred contactless payment method for many in both developing and developed markets. Although NFC payments are the favourite contactless payment method for many in western markets in West Europe and North America, the likes of Visa, Mastercard, and American Express have made concentrated efforts to breach beyond NFC for contact-free payments and entered into the QR code payment foray.
Visa has offered QR code payment capabilities since 2017 as a means to facilitate contactless payments globally efficiently for consumers, merchants, and payment partners. The Visa QR code allows Visa debit or credit card accounts to send directly to merchants and businesses using mobile devices. All transmitted funds are completed through the user’s selected financial institution that Visa provides the data processing service for. To use Visa QR, customers open their mobile banking application of choice, select Visa QR Payments, and then scan the merchant QR code.
Mastercard has been offering QR code payments since 2016, enabling retail shoppers to pay for their purchases using their mobile phones. Mastercard’s QR offering is MPM and CPM-based, where merchant banks generate Mastercard QR
codes for merchants, which in turn are presented to consumers. This is available through Mastercard’s device SDKs. Additionally, the Mastercard QR code programme
provided server APIs, used by consumer banks and digital wallets to create QR payment transfers. The generated QR codes can either be dynamic or static and can be used for in-store signage, invoices, ticket machines, and more.
Like Visa and Mastercard, American Express offers both MPM and CPM to allow flexible payment choices for card members. Within the MPM offering, businesses can generate static and dynamic QR codes. Amex Pay is the mobile payment solution that allows card members to make QR code payments. Payments using Amex Pay require users to scan the QR code and authenticate the payment using the device’s lock password or biometrics. Additionally, tokenization is used to further encrypt secure information, and members are covered by American Express’ Fraud Protection Guarantee. As a result, consumers are not held accountable for confirmed fraudulent charges within reason, providing many layers of security.
Can the West replicate this success? Transportation Spend Via QR Codes
QR-based payments are sparse across the West relative to the rest of the world, especially in transportation. However, Stockholm’s public transport agency has accepted QR-based payments across the city’s transport services since 2021, alongside NFC contactless, as Sweden shifts towards a cashless society.
The adoption of QR payments in the West remains low. However, the area of QR P2P bank transfers has gained significant traction since 2022, with Belgium’s Payconiq and Spain’s Bizum being used by a significant proportion of users.
Furthermore, Revolut and Vipps MobilePay have been promoting P2P and business-based QR solutions across Europe through reduced transaction fees. To maximize adoption, payment providers should focus on offering competitive pricing versus established local payment methods.
Despite NFC’s success in western markets, QR codes are used as tickets for transport across many other countries, so there is potential, especially for transport operators that wish to accommodate tourists that primarily use QR-based payments. QR payment vendors in the West should partner with transit operators to foster acceptance for QR payments, emphasizing the ease of integration and the potential of value-added services like transport discounts through digital wallets, not possible through NFC.