QR Code Merchant Payments - A growth opportunity for mobile money providers - GSMA
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QR Code Merchant Payments
A growth opportunity for mobile money providers
In partnership with
The GSMA represents the interests of Accourt is a specialist, IP-led global NTT DATA is a leading IT services
mobile operators worldwide, uniting payments consultancy, providing strategic provider and global innovation partner AUTHORS
more than 750 operators with nearly and operational payments consultancy headquartered in Tokyo, with business
400 companies in the broader mobile services worldwide. Its consultants are operations in over 50 countries. Our
ecosystem, including handset and device experienced practitioners with front line emphasis is on long-term commitment,
GSMA
makers, software companies, equipment P&L experience, combining unrivalled combining global reach with local intimacy
Anant Nautiyal, Senior Manager,
providers and internet companies, as strategic expertise with operational to provide premier professional services
Inclusive Tech Lab
well as organisations in adjacent industry know-how. From defining and setting varying from consulting and systems
Bart-Jan Pors, Director,
sectors. The GSMA also produces the strategy, implementation, through to final development to outsourcing. Inclusive Fintech Mobile Money
industry-leading MWC events held annually delivery, Accourt is dedicated to minimising
Bruno Martins, Technology Lead,
in Barcelona, Los Angeles and Shanghai, operational risk and ensuring a successful For more information, visit Inclusive Tech Lab
as well as the Mobile 360 Series of regional outcome for its clients. Accourt has a www.nttdata.com
conferences. passion for delivering real and lasting value
Accourt
and brings focused, world-class expertise
Vaughan Collie, Managing Partner
For more information, please visit to complement client teams.
the GSMA corporate website at
NTT Data
www.gsma.com For more information about Accourt,
Akihiro Ishizuka, Global Head of Payments
please visit www.accourt.com
Jannen Vamadeva, Head of Fintech
Follow the GSMA on Twitter: @GSMA
Research contributors:
Ryo Hoshino, Manager, Security
THE MOBILE MONEY PROGRAMME IS SUPPORTED BY THE BILL & MELINDA GATES FOUNDATION Engineering Department; Yoneda Ayaka,
QR Code Technology R&D; Taguchi
Hirotomo, QR Code Technology R&D; Takita
Mika, QR Code Technology R&D; Foong Lye
Mun, Payments Marketing Manager
Contents
Section 4: T
echnical specifications of leading
Executive summary 4 26
QR code payment schemes
Section 5: C
harting a course for interoperable
Section 1: Rationale for this report 8 33
QR code merchant payments
Section 2: The rise of QR codes in payments 12 Section 6: Key trends, findings and call to action 40
Section 3: Three primary QR code merchant
19 Appendices 48
payments flows
Executive summary
Executive summary 5
Mobile money providers (MMPs) are key players In 2019, 640 million Alipay customers regularly 10
USD trillion
in the provision of financial services in emerging transacted in two or more Alibaba Group
markets. MMPs now see QR code merchant ecosystem product/service categories. Another
payments as a potential adjacent opportunity to 190 million regularly transact in five or more
8
expand their products and services and target categories.
potential incremental revenue streams.
While this report does not advocate a “copycat”
Globally, digital payments are expected to reach approach of the Chinese market and its players,
6
an annual transaction value of USD 4.4 trillion we can learn much from events in China and
in 2020, with 17 per cent CAGR through 2024.* many other schemes around the world, whether
With growth rates like this, it is not surprising newly emerging, rapidly growing or somewhere
that merchant payments have captured the in between. 4
interest of many stakeholders, including MMPs.
QR code payments are enjoying significant but
fragmented global growth, often competing 2
with long-established payment methods, such
as card payments. There are a number of QR
code schemes around the world, but none more
0
successful than the two primary Chinese players, 2017 2018 2019 f2020 f2021 f2022 f2023 f2024
Alipay and WeChat Pay.
Digital commerce Mobile POS payments
Executive summary 6
To facilitate this, the report provides an insight The interoperability journey
into a wide range of QR code deployments and
Maturity and sophistication
specifications globally – including the Chinese DOMESTIC CROSS-BORDER
giants (Alipay, WeChat Pay) of course, but also Government/regulator-led
other QR code specifications like EMV, JPQR, multilateral cross-border
interoperability
Bharat QR, HKQR, SGQR, QRIS, Prompt Pay,
Mercado Pago and Pix, among others.
QR code merchant payments present a
significant, but potentially complex opportunity Government/regulator-led
bilateral cross-border
for MMPs, and the challenges and strategic interoperability
Government/regulator-led
benefits must be considered carefully. domestic interoperability
Bilateral outbound/
In particular, interoperability is a crucial inbound interoperability
requirement for the industry to achieve a
harmonised customer experience for QR code
merchant payments, driving customer adoption, Closed loop outbound/
inbound interoperability
transaction volumes and overall profitability. Provider
consolidation
Joint venture/consortium
limited open loop scheme
Proprietary, closed
loop scheme
Elapsed time
Executive summary 7
Key lessons
• MMPs with large and active USSD • QR code merchant payments • Regulatory approaches and
customer bases will need to carefully have several key enablers and interventions differ between
consider the best course of action interdependencies, most of geographies, for example, African
to avoid excluding these customers which must be addressed to and Chinese regulators have played
from the QR code payments journey, increase chances of success. For a limited role until now (although this
while also recognising and addressing example: device affordability, is changing), while Southeast Asian
practical challenges, such as device internet connectivity, wallet/bank and Indian regulators have played an
affordability and connectivity. account penetration and merchant extremely active role in QR schemes
distribution. from the outset.
• Having a core ecosystem of products
and services that continues to drive • Market dynamics and nuances are • On its own, a QR code merchant
high levels of customer engagement important. While developing markets payments P&L is unlikely to be
is crucial. (Payments should support in Asia tend to have high smartphone compelling. Rather, value will
these ecosystems; they are not the and internet penetration, developing be derived from data. However,
ecosystem). markets in Africa tend to have low QR codes have the potential to
smartphone and internet penetration. significantly accelerate digitisation
These call for fundamentally different of economic activity in emerging
approaches. markets, paving the way for additional
tailored services to be provided to
customers, leading to further revenue
streams.• QR codes are an increasingly ubiquitous
Rationale for payment channel around the world.
• In emerging markets, mobile money
this report providers are at the forefront of using QR
codes, but face several challenges.
• This report is intended as a resource for
mobile money providers that wish to adopt
and/or grow their QR code merchant
payments ecosystems.QR codes are an increasingly ubiquitous payment channel 9
around the world
In 2018, Chinese consumer and business mobile The rapid growth of mobile and digital payments Consumer digital payments
payment volumes reached USD 41 trillion,* about around the world offers mobile money providers Top five countries, volumes (f2020)
30 per cent ($13 trillion) of which were QR code (MMPs) an opportunity to expand their mobile
payments, primarily through Alipay (founded in money ecosystems to provide mobile payment China 44%
2004) and WeChat Pay (founded in 2011). services to consumers and merchants.
1,921
Other countries, such as Denmark, India, South Currently, the mobile payments market is
Korea and Sweden, also have high mobile being served by MMPs, fintechs, smartphone United States 20%
payments adoption rates, with the US, Canada, providers, e-commerce providers and banks. 896
Norway and Japan not far behind. Within mobile payments, QR code merchant
payments are growing rapidly across Asia, Africa Japan 4%
Global mobile payments** adoption is
and Latin America.
expected to grow by about 27 per cent 165
(CAGR, 2020–2025). QR code merchant payments offer a
United Kingdom 4%
significant opportunity for MMPs, but they are
As a subset of mobile payments, consumer
not without challenges. 164
digital payments volumes are expected to top
$4.4 trillion in 2020.*** The top five countries South Korea 2%
account for almost 75 per cent of the total, but
all of Africa contributes just 1.8 per cent of the 114
total. Rest of World 26%
* All values are in US dollars 1,147
** This includes mobile-based NFC payments
*** Statista, 2020 (adjusting for expected effects of COVID-19)
US$ billionsIn developing markets mobile money providers are at the forefront 10
of using QR codes, but face several challenges
Developing markets, such as those on the MMPs in developing markets are seeking especially as few users will tolerate having many
African continent and Indian sub-continent, to expand their mobile money ecosystems wallets.
have for a long time been exploring the mobile into merchant payments by building on core
The approach that MMPs take to understanding
money opportunity from different perspectives, strengths established through their mobile
and addressing these and other issues will
typically to support basic use cases, such money initiatives.
define the nature and degree of their success in
as mobile top-ups or person-to-person
While QR code merchant payments are the QR code merchant payments ecosystem.
remittances.
considered an attractive opportunity, many
Many of these initiatives have been successful existing challenges remain and some new
despite many barriers. In these markets, challenges have emerged. For example:
adoption has been limited by, for example:
• Deep penetration of feature phones that rely
• high unbanked populations; upon USSD transaction dialogues and do not
• fragmented and unreliable mobile internet support scanning of QR codes;
connectivity; and • Many divergent views and specifications that
• lack of affordable devices. have been developed globally as part of the core
QR code ecosystem design.
Some markets, such as India, have managed to
overcome many of these challenges, typically With concentration around two key players,
with concerted and sustained government-led China is relatively unique. This is seldom the
initiatives. For example, India now has enviably case in other territories, and competition will
high levels of bank account penetration across therefore be aggressive, but consolidation will
the entire population. likely result in only the most successful surviving,This report is intended as a resource for mobile money providers 11
that wish to adopt and/or grow their QR code merchant payments
ecosystems
Since MMPs will be at different stages The objective of this report is to examine the opportunities and
challenges of QR code merchant payments by:
in their QR code merchant payments
journeys, this report is intentionally • sharing insights on the QR code merchant payments ecosystem and
various initiatives around the world;
broad to support MMPs regardless
of their current focus, whether it be • describing QR code merchant payments in the context of a journey to
help MMPs identify where they are in their respective journey;
basic QR code merchant payments
acceptance, more sophisticated • highlighting key lessons that can be elicited from various initiatives
ecosystem interoperability or stages in around the world;
between. • sharing insights and perspectives on some of the fundamental technical
considerations of QR code merchant payments, and
• sharing insights and perspectives on the impacts and implications of
some of the major trends in QR code merchant payments.
All the above will be synthesised into a proposed call to action for
MMPs as they move forward with their respective QR code initiatives.• Originally a tool for tracking automobile
The rise of machine parts, the rise of QR codes in
payments was enabled by the widespread
QR codes in adoption of digital wallets.
• Uptake has been high in China, and their
payments relatively inexpensive form factor and ease
of use has helped make QR codes popular in
other parts of the world.
• Today, prominent QR code merchant
payments deployments are evident around
the globe.Originally a tool for tracking automobile machine parts, the rise of 13
QR codes in payments was enabled by the widespread adoption of
digital wallets
Types of QR codes Origins and history of QR codes The evolution of QR code payments
A QR code is similar to a bar code except it can One of the core enablers of QR code payments
store a larger amount of information per unit has been the mobile wallet. Principally, mobile
Model 2 Micro QR iQR code SQRC FrameQR area. It is a two-dimensional code that is capable wallets can operate as:
of 360-degree (omni-directional) high-speed
• A link to a primary value store, such as a
reading.
customer card/bank account. Transactions
Invented by Denso Wave in Japan Initially used in the automotive industry for debit the value from the primary account via the
in 1994, the use of Quick Response production, tracking and shipping, QR codes wallet. No preloading of the wallet is required.
(QR) code has grown in popularity expanded beyond the automotive industry
from its origins in the automotive into identification and marketing use cases and
manufacturing industry through finally payments.
to today’s merchant payments
China has played a crucial role in the rapid
ecosystems.
growth of QR code mobile payment services,
enabling businesses to accept digital payments
without investing in any hardware, such as point • A virtual store of value, such as digital/virtual/
of sale (POS) terminals. mobile money that is preloaded into the wallet.
Transactions debit the value from the wallet
balance.
Note: some wallets offer both modelsRelatively inexpensive and easy to use, QR code payments 14
are becoming popular in other parts of the world
QR code merchant payments Person-to-person (P2P) payments
In merchant payments, QR codes have been • Static QR codes: Typically printed stickers found QR codes can be used for P2P payments.
used to replace or complement traditional POS at merchant check-out locations or displayed
devices and interact almost seamlessly with on customer device screens. They hold specific
Biometric payments
compatible ecosystem mobile wallets. data elements and do not change.
Fingerprint and facial biometrics are enjoying
The form factor and presentation of a QR code • Dynamic QR codes: Dynamically generated
a great deal of attention in payments and
differ depending on the merchant/transaction at the time of the transaction and require a
could ultimately replace QR code payments in
context, but the following are the primary merchant or customer screen to display. They
certain circumstances. The scenario considered
dimensions to consider: are typically valid for a short period and contain
here extends beyond using a biometric to
several contextually unique data elements.
• QR code model: Model 2 is available on a authenticate/authorise a card or QR code
free-to-use licence from Denso. It has sufficient • Merchant-presented mode (MPM): The MPM transaction.
data payload capabilities to effectively support transaction journey requires a customer to scan
For example, the facial recognition biometric
payments transactions, and is therefore the the merchant’s static or dynamic QR code to
becomes the payment token and, apart from
most common form factor in QR code payments initiate a transaction.
the merchant’s biometric scanner, no device
currently. Other models of QR codes are
• Customer-presented mode (CPM): The CPM (e.g. smartphone), card or QR code are required.
available from Denso, but are typically subject
transaction journey requires the merchant to Please see Appendix A for further insights.
to a licence fee and often require specialised
scan the customer’s static or dynamic QR code
scanners.
to initiate a payment transaction.15
Not just a Chinese phenomenon
There is significant focus on QR code Around the world, initiatives tend to Developing Asian markets, such as
merchant payments around the world, be either proprietary or government/ Indonesia, Thailand and other Southeast
across developing and developed regulator-led, and each market has Asian countries, are also heavily
markets alike. unique opportunities and challenges. regulator-led, with some seeking to
avoid card payments entirely.
Adoption remains fragmented and, in MMPs in Africa continue to explore QR
some markets, typically Europe, the UK code merchant payments in addition to India’s high levels of bank account
and North America, incumbent card- their existing mobile money offerings. penetration have enabled the regulator
based merchant payments continue to to pursue an ambitious, multi- faceted
In mature Asian markets, such as China,
dominate. merchant payments strategy with QR
Japan, Korea and Taiwan, regulators
codes and card payments operating
The primary drivers of adoption vary have ultimately taken the lead in
side by side.
between markets, but with most pursuing domestic interoperability
developing markets focused on and, in some cases, cross-border
reducing the use of cash, improving interoperability.
financial inclusion and providing a
relatively low-cost, non-cash merchant
payments option.Today, QR code deployments are evident around the globe – 1 of 3 16
some prominent regional examples
Asia and Middle East
$1,920.5bn 16.4% 902M $16.4bn 10.7% 5.2M $113.5bn 14.9% 37M $165.2bn 16.0% 88M Expected total annual digital payments*
transaction value in USD (f2020)
CHINA HONG KONG SOUTH KOREA JAPAN
Alipay Standard: Faster Standard: ZeroPay Standard: JPQR Expected total annual digital payments
WeChat Pay Payment System KakaoPay Paypay transaction growth rate (CAGR, 2020–2024)
Wechat Pay HK NaverPay LinePay
Alipay HK RakutenPay Number of digital payments users (f2020)
dPayment
Transaction value for digital payments (f2020)
$6.0bn 19.2% 72M $2.19bn 9.0% 11M
$1,001bn–$2,000bn
PAKISTAN TAIWAN
Easypaisa Standard: TaiwanPay $101bn–$1,000bn
JazzCash JAPAN JKOPAY
$50bn–$100bn
Kenuu Wallet CHINA $165bn LinePay*
$1,921bnToday, QR code deployments are evident around the globe – 2 of 3 17
some prominent regional examples
Africa
$2.8bn 16.0% 12M $8.1bn 25.6% 41M Expected total annual digital payments*
transaction value in USD (f2020)
MOROCCO EGYPT
inwi money mVisa** Expected total annual digital payments
Masterpass** transaction growth rate (CAGR, 2020–2024)
$2.2bn 32.1% 6.6M Number of digital payments users (f2020)
$1.2bn 34.3% 7.6M
GHANA UGANDA
mVisa** MTN** Transaction value for digital payments (f2020)
MTN* $8.1bn–$10.0bn
Airtel*
$2.9bn 31.0% 16M
$4.1bn–$8.0bn
KENYA
mVisa** $1.0bn–$4.0bn
$9.3bn 17.9% 65M
M-PesaToday, QR code deployments are evident around the globe – 3 of 3 18
some prominent regional examples
Latin America
$32.0bn 18.8% 51M Expected total annual digital payments*
MEXICO transaction value in USD (f2020)
MEXICO $32.0bn VENEZUELA
Mercado Pago** Mercado Pago** Expected total annual digital payments
CoDi transaction growth rate (CAGR, 2020–2024)
Number of digital payments users (f2020)
$8.2bn 12.6% 22M $51.4bn 33.2% 105M
Transaction value for digital payments (f2020)
COLOMBIA BRAZIL $41bn–$52bn
Mercado Pago** Standard: PIX***
Mercado Pago** $21bn–$40bn
$10bn–$20bnThree primary • From a product flow perspective, a QR
code payment solution can be understood
QR code as a combination of nine interdependent
elements.
merchant • Each element has several options under it to
choose from.
payments • Three broad product flows are possible
for QR code merchant payment solutions
flows depending on how elements are grouped and
the transaction characteristics.
• Each product flow results in a distinct
experience for the payer and payee of a
QR code solution.From a product flow perspective, a QR code payment solution can 20
be understood as a combination of nine interdependent elements
Communication channel EC
Transaction channel
The network and communication channel F2F
In-store/face-to-face
the customer/merchant device uses or remote
Device Transaction authentication
Smartphone, smart feature phone, Method the customer uses to
feature phone authenticate for the transaction
(PIN/password/biometric)
QR code presentation Customer connectivity
Whether the QR code is Is the customer connected to
presented by the merchant the communication channel or
or the customer not (typically the internet)
Payment type PUSH
Merchant connectivity
Push payments are typically PULL Is the merchant connected to the
initiated by the customer, communication channel or not
pull payments are are initiated (typically the internet)
by the merchant
QR code type
Static or dynamically generated
QR codeEach element is underpinned by several interdependent options 21
QR codes harness several key, QR code merchant payments require Comms Internet connectivity USSD connectivity
channel
interdependent elements to support these key elements to work together as Feature phone, Smartphone,
Device Smartphone, feature phone
successful, wide-reaching merchant seamlessly as possible. The extent to which Smart feature phone
payments. The adjacent diagram this is achieved will have a fundamental QR code
1
Merchant Presented Mode (MPM)
2
Customer Presented Mode (CPM)
3
Merchant Presented Mode (MPM)
presentment
illustrates the top-down dependencies, impact on factors such as: (customer scans QR code) (merchant scans QR code) (customer manual keyed entry)
Push payments (RTP),
with communication channels and device Payment type Push payments
Pull payments
Push payments
• the customer and merchant payment
capabilities being the most fundamental QR code
type
Static
QR code
Dynamic
QR code
Static
QR code
Dynamic
QR code
Static
QR code**
Dynamic
QR code**
types accepted;
elements to unlock the various modalities Merchant
connectivity
Merchant Merchant
Merchant online Merchant online
offline online
of QR code merchant payments. • the customer and merchant payment Customer
connectivity
Customer online Customer offline, online Customer offline, online
acceptance rates;
For example, USSD connectivity will Transaction
authentication
PIN, password, biometric PIN, password, biometric PIN
take users along a route of manual data • the channels in which customers can Transaction
E-commerce, face-to-face E-commerce*, Face-to-face Face-to-face
channel face-to-face
capture that typically excludes QR codes transact; and
from this type of transaction.
• the overall merchant/customer transaction
Conversely, a smartphone coupled experience.
with internet connectivity enables
both customer-scanned (i.e. merchant- The following sections will delve into
presented mode) and merchant-scanned how these components work together
(i.e. customer-presented mode) QR code to create various types of QR code
transactions. Additional options then merchant payment transaction flows and
appear depending on whether a static or capabilities.
dynamically generated QR code is used
in the transaction.Three broad product flows are possible for QR code merchant payment 22
solutions depending on how elements are grouped and the transaction
characteristics
There are three primary interaction options
between customers and merchants that have Comms Internet connectivity USSD connectivity
enabled QR code payments: channel
Feature phone, Smartphone,
• Merchant-presented mode (MPM) Device Smartphone, feature phone
Smart feature phone
• Customer-presented mode (CPM) 1 2 3
QR code Merchant Presented Mode (MPM) Customer Presented Mode (CPM) Merchant Presented Mode (MPM)
• Merchant-presented USSD presentment (customer scans QR code) (merchant scans QR code) (customer manual keyed entry)
These three product flows are illustrated below Push payments (RTP),
Payment type Push payments Push payments
in the context of their interdependencies. Pull payments
The following pages will summarise the key QR code Static Dynamic Static Dynamic Static Dynamic
entities and steps during an in-store purchase type QR code QR code QR code QR code QR code** QR code**
transaction. Merchant Merchant Merchant
connectivity Merchant online Merchant online
offline online
Customer
connectivity
Customer online Customer offline, online Customer offline, online
Transaction
authentication
PIN, password, biometric PIN, password, biometric PIN
Transaction E-commerce*,
channel E-commerce, face-to-face Face-to-face Face-to-face
* Only possible when customer is online face-to-face
** Merchant identifier must be visible in human readable format,
to be keyed in by customer
*** Refer to Appendix A for a description of each element1 ach product flow results in a distinct experience for
E 23
the payer and payee of a QR code solution:
Merchant-presented QR code payment
QR code payment transaction type: MPM with a static QR code sticker is a typical implementation for micro-merchants where no/low payment Applies to:
acceptance costs are critical. These merchants are typically transitioning from cash-only acceptance.
• Merchant Presented (MPM)
MPM with dynamic QR codes is more typical of larger, more sophisticated merchants where they have the
• Static or Dynamic QR code
POS capability to generate and display a dynamically generated QR code
• Push payment
Smartphone Smart feature
phone
OFFLINE – NO DATA CONNECTIVITY REQUIRED ONLINE – DATA CONNECTIVITY REQUIRED
MERCHANT PRESENT 2a 3a
STATIC QR CODE
1 4 5 6
Customer scans merchant Customer inputs
static QR code sticker payments total.
Customer opens payment Customer authorises payment Customer receives Merchant receives payment
app with QR code scanner payment confirmation confirmation. Customer takes
on smartphone/ smart 2b 3b goods, merchant waits to
feature phone. receive settlement of funds.
TRANSACTION ASYNCHRONOUS
AUTHORISATION MESSAGE
MERCHANT PRESENT
DYNAMIC QR CODE
Customer scans Customer checks payment
dynamically generated details including amount
merchant QR code Provider system API Merchant system2 ach product flow results in a distinct experience for
E 24
the payer and payee of a QR code solution:
Customer-presented QR code payment
QR code payment transaction type: CPM with a static or dynamic customer QR code (on a smartphone or feature phone screen) relies on Applies to:
merchants having the capability to scan these QR codes at checkout.
• Customer Presented (CPM)
CPM can either initiate a push or pull payment. In the case of a pull payment the merchant will seek
• Static or Dynamic QR code
authorisation against customer funds. In the case of a push, the merchant will send a Request To Pay (RTP)
• Push (RTP) or Pull payment to the customer. The customer will then authorise this payment by initiating a push payment directly from a
Smartphone Smart feature
bank/wallet account. phone
OFFLINE – NO DATA CONNECTIVITY REQUIRED ONLINE – DATA CONNECTIVITY REQUIRED
4a Merchant scans QR. decodes
CUSTOMER PRESENT data, sends to POI system and
PULL PAYMENT METHOD authorisation system
1 2 3 6
Merchant scans QR, decodes data, Customer sent payment
sends to POI system and wraps details to authorise and
data payload into a Request to Pay then receives
(RTP) message payment confirmation
4b 5b
Merchant scans goods Customer opens payment Customer app displays QR code (static) Merchant receives payment
and enters transaction app with QR code payment on or generates a one-time confirmation. Customer takes
details on system smartphone / smart feature phone QR code (dynamic). Merchant goods, merchant waits to
scans customer’s QR code. receive settlement of funds.
CUSTOMER PRESENT
PUSH PAYMENT METHOD TRANSACTION
AUTHORISATION
ASYNCHRONOUS
MESSAGE
Merchant Provider API Merchant system
system system3 ach product flow results in a distinct experience for
E 25
the payer and payee of a QR code solution:
Merchant-presented QR code payment (USSD)
QR code payment transaction type: In this scenario, the customer uses a feature phone that cannot scan QR codes and is therefore required to Applies to:
manually key the number printed adjacent to the merchant’s QR code sticker (e.g. Merchant ID) to initiate a
• Merchant Presented (MPM)
USSD dialogue to complete the transaction.
• Static or Dynamic QR code*
This is not strictly a QR code payment transaction as the QR code is not scanned. This type of transaction
• USSD payment exists solely to enable feature phone payments within QR code payments schemes, i.e. backwards
Feature
compatibility in feature phone dominated markets. phone**
OFFLINE – NO DATA CONNECTIVITY REQUIRED. PAYMENT THROUGH USSD CHANNEL
1 2 3 4 5
Merchant rings up goods Customer opens payment app, USSD gateway asks customer USSD gateway asks for mobile Merchant receives payment
and enters transaction details. USSD gateway asks for merchant for transaction amount to be money banking PIN to be confirmation. Customer takes
ID number which customer enters. entered. entered to authorise transaction. goods, merchant waits to
receive settlement of funds.
Example QR
code sticker:
982309
USSD Provider USSD USSD Provider USSD USSD Provider API Merchant
gateway system gateway gateway system gateway gateway system system
* Irrespective of whether a static or dynamic code is presented, a unique, human readable number is required to uniquely identify the merchant transaction.
This number is typically the Merchant ID and is manually keyed into the feature phone by the customer to initiate a USSD dialogue.
** Technically possible on smartphones and smart feature phones, but unlikely to be provisioned as such apart from as an atypical fallback option.Technical • Any QR code payment scheme has an
underlying technical specification that
specifications
governs all its aspects.
• The technical specifications underpinning QR
of leading QR
code payment schemes can be proprietary or
common.
code payment
• A summary comparison of different QR
specifications across their constituent
components reveals many overlaps, but also
schemes significant points of divergence.
• Understanding the technical specifications of
QR code payment solutions is useful because
they represent one of two possible routes to
interoperable QR code merchant payments.Any QR code payment scheme has an underlying technical specification 27
that governs all its aspects
In addition to the payments components
covered under product flow (see the diagram
below), the technical specifications of a QR Communication channel Transaction channel
EC
code solution also encompass: The network and communication channel F2F
In-store/face-to-face
the customer/merchant device uses or remote
• Authentication approach: various customer
and merchant authentication approaches, Device Transaction authentication
Smartphone, smart feature phone, Method the customer uses to
from PINs and passwords to biometrics feature phone authenticate for the transaction
• Data payload scope: the scope of data (PIN/password/biometric)
elements embedded within the QR code
QR code presentation Customer connectivity
Whether the QR code is Is the customer connected to
presented by the merchant the communication channel or
or the customer not (typically the internet)
Payment type PUSH
Merchant connectivity
Push payments are typically PULL Is the merchant connected to the
initiated by the customer, communication channel or not
pull payments are are initiated (typically the internet)
by the merchant
QR code type
Static or dynamically generated
QR codeThe technical specifications underpinning the design of QR code 28
payment schemes can be proprietary or harmonised
At the highest level, The matrix below shows examples of major QR code Examples of major QR code ecosystem players that have
when designing a ecosystem players that have chosen to develop and chosen to develop and implement a more harmonised
QR code payments implement proprietary specifications, along with the QR code approach, some using EMVCo’s EMV specification for QR code
scheme, providers presentment modalities they support. payments:
can elect to adopt a
proprietary approach Proprietary specifications approach Harmonised specifications approach
or a more open,
Example schemes MPM CPM Example schemes MPM CPM
harmonised design
approach. Alipay Supported Supported EMV QR code specs Supported Supported
WeChat Pay Supported Supported Hong Kong Common QR Code (HKQR) Not
Supported
(Hong Kong Interbank Clearing Limited) supported
MTN Supported Not
supported
SGQR
Supported Supported
Not (Monetary Authority of Singapore)
M-Pesa Supported supported
JPQR
Not Supported Supported
Mercado Pago Supported supported (Payments Japan)
Kakao Pay Supported Supported Bharat QR
(National Payments Corporation of India Supported Supported
(NPCI))
Thai QR Payment/MyPromptQR Supported Supported
Quick Response Code Indonesian Standard
Supported Supported
(QRIS)A summary comparison of QR specifications across their 1 of 3 29
constituent components reveals many overlaps, but also
significant points of divergence
Summary: Core QR code payments components can be summarised across the example schemes as follows:
Specification Comms channel Device QR code presentment QR code type Txn channel
EMV
Smartphone MPM, CPM
JPQR
Bharat QR Smartphone, feature phone Dynamic, static
Harmonised
MPM Face-to-face
specifications
HKQR
SGQR Internet connectivity MPM, CPM
QRIS MPM Static
Smartphone
Alipay
MPM, CPM Face-to-face, remote
WeChat Pay Dynamic, static
Proprietary
Prompt Pay Face-to-face
specifications
MPM
M-Pesa USSD connectivity Smartphone, feature phone Static
Face-to-face, remote
Mercado Pago Internet connectivity Smartphone MPM, CPM Dynamic, staticA summary comparison of QR specifications across their 2 of 3 30
constituent components reveals many overlaps, but also
significant points of divergence
Summary: Authentication and authorisation approaches across the example schemes are as follows:
Specification Authentication approach When* Detail
EMV No mandatory requirements — EMVCo has not provided any mandatory requirements for authentication.
JPQR does not specify any mandatory requirements, so the authentiation varies by company.
JPQR No mandatory requirements —
JPQR recommends PIN, fingerprint or facial recognition
When a customer launches the app, they approve it with a username and password. There is no
Bharat QR Username and password 2) The app is launched
Harmonised other form of approval and the customer cannot choose.
specifications 1) The mobile device is *If the bill exceeds 1,000 yuan (~$150), the user will have to enter his password in the complete
HKQR Password or biometrics
unlocked transaction.
SGQR No mandatory requirements — SGQR has not provided any mandatory requirements for authentication.
QRIS No mandatory requirements x — QRIS has not provided any mandatory requirements for authentication.
The most common payment authentication methods have been passwords and fingerprints. Some
Alipay Password and biometrics 3) Before payment
devices support facial recognition that the user can choose.
WeChat Pay Password and biometrics 3) Before payment WeChat Pay requires the user to enter their payment password to confirm the transaction.
Proprietary Some companies let users use Face ID and fingerprints as an authentication method, but the
Prompt Pay Passwords 3) Before payment
specifications common authentication method is typing passwords before settlement.
The authentication method is typing a PIN before settlements. The user can change the
M-Pesa Passwords 3) Before payment
PIN on the M-Pesa app at any time.
Mercado Pago No mandatory requirements — Mercado Pago does not specify any mandatory requirements before or after settlement.
* Authentication is performed at 1) when the mobile device is unlocked, 2) when the app is launched, or 3) at the time of payment.A summary comparison of QR specifications across their 3 of 3 31
constituent components reveals many overlaps, but also
significant points of divergence
Summary: Analysis of the scope and coverage of the QR code data payload across the example specifications:
QR code data
Specification
Data for Merchant Presented Mode Data for Customer Presented Mode Data for linking up with different schemes*
EMV
Defined in the specification
JPQR Not defined in the specification
Defined in the specification
Bharat QR
Harmonised
Not defined in the specification
specifications
HKQR Defined in the specification
SGQR
QRIS
No published QR code data information
Alipay
WeChat Pay
Proprietary
Prompt Pay
specifications
M-Pesa Defined in the specification Not defined in the specification Not defined in the specification
Mercado Pago
* For a more detailed comparative analysis of different QR code technical specifications, refer to Appendix E.
** Columns of data are provided to work with each scheme, such as a “Reserve for EMVCo”A summary comparison of QR specifications across their 3 of 3 32
constituent components reveals many overlaps, but also
significant points of divergence
Summary: Analysis of the scope and coverage of the QR code data payload across the example specifications:
QR code data
Specification
Data for Merchant Presented Mode Data for Customer Presented Mode Data for linking up with different schemes*
Harmonised
specifications
Understanding the technical specifications of QR code
solutions is useful as they represent one of two possible
routes to interoperable QR code merchant payments.
Proprietary
specifications
* For a more detailed comparative analysis of different QR code technical specifications, refer to Appendix E.
** Columns of data are provided to work with each scheme, such as a “Reserve for EMVCo”Charting a
course for • There appears to be a clear path for most QR
code merchant payment schemes around the
interoperable
world.
• As QR code merchant payments schemes
QR code
evolve, two primary dimensions of
interoperability are typically encountered:
domestic and cross-border.
merchant • There are two primary approaches to QR
code merchant payments interoperability:
payments harmonisation of QR code specifications
and harmonisation via API and/or back-end
integration.There appears to be a clear path for most QR code merchant payment 34
schemes around the world
There are many QR code payments initiatives
Maturity and sophistication
around the world, many of which are in DOMESTIC CROSS-BORDER
different stages of development and maturity. Government/regulator-led
Regardless of the stage, there appears to multilateral cross-border
interoperability
be a clear path for most QR code payment
schemes, with an important focus on
interoperability:
• Almost all schemes start with a domestic Government/regulator-led
agenda. bilateral cross-border
Government/regulator-led interoperability
• Initiatives evolve differently and follow domestic interoperability
Bilateral outbound/
different paths, but there is a clear progression inbound interoperability
from domestic to cross-border interoperability
over time (see adjacent diagram).
• In many cases, initiatives will not only follow Closed loop outbound/
inbound interoperability
different paths, but also appear to double
Provider
back as priorities change. consolidation
Joint venture/consortium
limited open loop scheme
Proprietary, closed
loop scheme
Elapsed timeThere appears to be a clear path for most QR code merchant payment 35
schemes around the world
Examples of some primary drivers that could influence the path to interoperability are: Progress towards interoperability
is seldom linear and encompasses
various dimensions. These will be
Business case priorities, e.g. domestic Government/regulatory intervention examined in the following sections.
payments agenda at the outset, with some (domestic), e.g. Government or regulator
changing to a cross-border agenda over taking an early lead to establish national
time. QR code payments schemes, or becoming
involved later to bring about market
Scaling, e.g. seeking options to scale the harmonisation. Government/regulator
capability of existing QR code payments involvement tends to focus initially on
via partnership(s), e.g. joint venture/ a domestic agenda primarily due to
consortium, etc. obligations to the national population.
Market efficiencies, e.g. seeking options Government/regulatory cross-border
to consolidate offerings within domestic support, e.g. where a significant proportion
markets, across or even outside regions. of the population will be well served
by a joined-up approach to payments
in territories where there is a mutual
government-to-government interest, such
as a major outbound tourist destination.As QR code payments schemes evolve, two key dimensions of 36
interoperability are typically encountered: domestic and cross-border
interoperability
The diagram Geographic focus Domestic interoperability Cross-border interoperability
alongside illustrates
the key dimensions Directionality One way vs Dual interoperability Inbound vs Outbound interoperability
of interoperability National initiatives/ National vs Proprietary scheme interoperability
and how they lead to Agreement
Bilaterals Multilaterals
National scheme
structures Proprietary scheme to National National scheme to Proprietary
different outcomes scheme scheme
based on the
strategic ambitions Harmonised QR code
Integration approach
and objectives of a Back-end API
scheme.
The different dimensions of domestic interoperability The different dimensions of cross-border interoperability
• One-way vs dual interoperability • Inbound vs outbound interoperability between proprietary schemes
i. One-way interoperability (e.g. Scheme A customers can transact with i. Inbound: e.g. Scheme A (e.g. in Japan) enables Scheme B’s customers
Scheme B merhants) (e.g. from China) to transact with it in Japan
ii. Dual interoperability (e.g. Scheme A customers and Scheme B ii. Outbound: e.g. Scheme D (e.g. in China) enables its customers to
customers can transact with Scheme A and B merchants) transact with Scheme E merchants (e.g. in Indonesia)
• Agreement structures • National scheme interoperability vs proprietary scheme interoperability
i. Bilaterals (i.e. proprietary scheme to proprietary scheme) i. Inbound and/or outbound interoperability is enabled via interoperability
Viewpoint ii. Multi-lateral agreements (i.e. JVs/consortium appraoch between between National Scheme J (e.g. in Japan) and proprietary Scheme C
multiple proprietary schemes) (e.g. from China)
iii. National initiatives (i.e. National scheme) ii. Inbound and/or outbound interoperability is enabled via interoperability
between National Scheme P (e.g. in Indonesia) and National Scheme Q
(In Thailand)
Two primary integration approaches to interoperability
1. Harmonised QR code specifications (i.e. interoperability enabled via front-end harmonisation
2. Integrated APIs with differing/proprietary QR code specifications (i.e. interoperability enabled via back-end integration, typically APIs)As QR code payments schemes evolve, two key dimensions of 37
interoperability are typically encountered: domestic and cross-border
interoperability
As schemes evolve and gain How to achieve these objectives:
scale, strategic ambitions will
Agreement structures
typically fuel a desire to scale
even further through some form – Bilateral versus multilateral at
of interoperability. proprietary or national levels
There are various dimensions • Integration approach
of interoperability, which are – Harmonised QR code versus
generally grouped into the back-end integration (typically
objectives being sought and how API)
to achieve those objectives.
This document will now focus on
Objectives: the technical aspects of achieving
• Geographic focus: interoperability, citing prominent
examples of implementation
– Domestic interoperability versus
approaches.
cross-border interoperability
• Directionality of interactions
– Inbound versus outbound
interoperabilityThere are two primary approaches to QR code payments 38
interoperability: harmonisation of QR code specifications and
harmonisation via API and/or back-end integration
This diagram illustrates the two key
Merchant Payment routing
approaches to interoperability, highlighting the
Interoperability
differences between front-end (e.g. QR code) Proprietary
QR code processing
and back-end (API) harmonisation. It is harmonisation
important to note that: National switch(es)
• Interoperability schemes typically take Cross-border
Face-to-face switches
either a harmonised approach to QR code These examples implement the
EMV standard for MPM and CPM
specification OR involve some form of back- QR codes:
Interoperability
end integration via APIs.
API harmonisation
• Interoperability does not require both QR
Propietary
code harmonisation and API integration, QR codes
Online
i.e. interoperability can be achieved using only
one of these mechanisms.
Front-end Back-endThere are two primary approaches to QR code payments 39
interoperability: harmonisation of QR code specifications and
harmonisation via API and/or back-end integration
Harmonised QR code specifications API integrations
Proprietary Scheme A National Scheme A Proprietary Scheme A Proprietary Scheme A National Scheme A
Interoperability
approach Harmonised QR code Harmonised QR code A’s API or B’s API National Scheme B’s API NS A’s API or NS B’s API
Proprietary Scheme B National Scheme B Proprietary Scheme B National Scheme B National Scheme B
Harmonised QR code example: API example:
China UnionPay (CUP) customer travels to WeChat Pay customer travelling to Indonesia, using WeChat Pay to
Japan, using UnionPay at Japanese JPQR transact at QRIS enabled merchants in Indonesia.
merchants.
Proprietary Scheme A Proprietary Scheme A*
QRIS
Harmonised QR code National Scheme B’s API API
National Scheme B National Scheme B’s For more insights
Merchant acquirer
and examples of QR
National Scheme B QRIS code specification
merchants
harmonisation, see
Appendix D
* WeChat Pay in partnership with CIMB Niaga (using QRIS API). Similarly, Alipay has recently agreed to a deal with Indonesian state-owned banks, BRI and Bank MandiriKey trends, • There are many different approaches to the
adoption of QR code payments, and trends
and lessons can be drawn from existing
findings and deployments around the globe.
call to action
• Mobile money providers are actively
promoting the use of QR codes for
merchant payments in emerging markets,
but they must also lay the foundation for
interoperability.
• Call to action for mobile money providersTRENDS
As QR code merchant payments continue to grow in popularity, 1 of 2 41
it is important to recognise not only the material trends, but also
the impacts and implications of these trends
QR code merchant payments are not Government interest and intervention Smartphone penetration is increasing, but
new, and there is a significant body of is growing feature phone penetration remains high
global knowledge and experience from • Historically, governments and regulators have • Smartphones are essential to the success of
providers operating in this ecosystem shown little inclination to intervene in the QR code merchant payments. Smartphone
(with varying degrees of success). merchant payments segment. However, this penetration is high in many of the regions
Here, we examine some of the major appears to be changing around the world, where QR code merchant payments are
trends in QR code merchant payments particularly in developing regions where there popular (e.g. various Asian markets). However,
and their key impacts and implications. is a desire to reduce the use of cash and this is not the case in many other markets (e.g.
counterfeit. across Africa) where smartphone penetration
• Another key objective is to improve financial is growing, but very slowly, and feature phone
inclusion and literacy, which has fuelled efforts penetration remains high. In these regions, the
to increase the banked population. affordability of devices is a critical challenge.
Internet connectivity is required, but remains
a challenge for many • Regulators recognise that one way to achieve • Accelerating the penetration of affordable
these goals is to reduce the cost of non-cash smartphones is vital, and pursuing a ”bridge”
• Some form of internet connectivity is required smart feature phone platform in parallel, such
merchant payments to make digital payments
to support effective QR code merchant as KaiOS, may help mitigate this challenge.
more attractive.
payments. Although there continues to be a
keen interest in improving coverage, a number • States benefit from all of the above through
of regions still have limited or no coverage. enhanced money traceability and, therefore,
potentially higher tax revenues.TRENDS
As QR code merchant payments continue to grow in popularity, 2 of 2 42
it is important to recognise not only the material trends, but also
the impacts and implications of these trends
Interoperability is crucial at various stages • Alipay and WeChat Pay have also begun Biometric payments are becoming more
of the QR code merchant payments journey to open their ecosystem in China to those feasible
travelling to China, which could bolster their
• Various forms of interoperability become • Biometrics could ultimately replace QR codes
already dominant position.
crucial considerations at certain points in the (and other payment tokens).
QR code merchant payments journey. This Downward pressure on payment acceptance • Biometric payment methods are slowly
is rarely a consideration in the early stages, fees and costs gaining profile around the world. China leads
but becomes an important factor later. Late on this and could pave the way for biometrics,
consideration of this aspect can pose material • There is consistent downward pressure on such as fingerprint and/or facial recognition
challenges to scale and growth. the costs and fees associated with merchant
to replace payment tokens (e.g. QR codes)
payments acceptance, including POS
and their host devices (e.g. smartphones) for
Payment giants are continuing aggressive hardware. QR code merchant payments are
payments entirely.
global growth seen as a potential solution to this challenge,
particularly for micro-merchants. QR code merchant payments: an interim step
• Alipay and WeChat Pay continue to build on
their domestic success and are adopting a towards NFC payments?
Material difference in market approaches
flexible approach to cross-border acceptance • In some cases, QR code merchant payments
interoperability to ensure their customers are • There are existing and emerging material are seen as an interim step or bridge to NFC
supported when they travel. differences in market approaches to QR code
payments.
merchant payments across geographies
• This has effectively applied tacit pressure • Major international payments schemes see
(e.g. some are heavily regulator-led, others
on foreign bodies and value chain players the potential, but also recognise that this may
are fintech-led while others are MMP-led).
to enable interoperability in their domestic not be the path some (non-card dominated)
A one-size-fits-all approach is unlikely to be
markets for inbound Chinese travellers. regions will take.
successful.FINDINGS
Findings: there are many different approaches to adopting 1 of 2 43
QR code merchant payments, and lessons can be drawn from
deployments around the globe
The impact of these approaches will Key headline findings:
vary depending on where the provider
Crucial enablers and interdependencies Geographic nuances
is on its QR code merchant payments
journey. • Components of the ecosystem are heavily • A clear and deep knowledge of target
interdependent. As a crucial first step, it is markets is required, and a one-dimensional
important that target customers have easy, approach is unlikely to succeed. For example,
affordable access to appropriate devices, it is important to recognise that different
connectivity and bank accounts. However, it populations have different needs (e.g.
takes time for a market to shift from feature payments challenges in rural areas will be
phones to smartphones, as does convincing different from those experienced in cities) and
cash merchants to move to digital payments. markets with deep smartphone penetration
will behave differently from feature phone
Evolutionary journey markets.
• It has been demonstrated repeatedly that
Education and trust
there are key milestones along the QR code
merchant payments journey. These highlight • Ecosystem participants must have trust and
the evolving, non-linear nature of the journey, confidence in QR code ecosystems if they are
and may require backtracking to ultimately to thrive. Robust and continued education
gain forward momentum. of all stakeholders, especially merchants and
customers, is necessary to build and embed
trust. This can be achieved in a variety of
ways, such as promotions by large and trusted
retail brands, or enlisting government support
(where the government is a trusted entity).FINDINGS
Findings: there are many different approaches to adopting 2 of 2 44
QR code merchant payments, and lessons can be drawn from
deployments around the globe
Key headline findings cont.
Regulatory intervention Strategic objectives
• Increasing government and regulatory • Clear, concise and executable strategic • On their own, QR code merchant payments
appetite for intervention requires careful objectives are required throughout the journey, are typically a difficult financial proposition
consideration of their agenda and determining but these should be reviewed regularly and for providers. These payments should support
how to feasibly address these priorities in a recalibrated when required. For example, if the consumption of high-value products and
proposition. success is likely to depend on interoperability, services that are the core drivers of revenue
do not leave interoperability until the last and profitability.
Distribution minute.
• Distribution is key. Ubiquitous merchant and • One of the main perceived benefits of QR
customer uptake is essential to the success of code merchant payments is the potentially low
these types of payments initiatives. Providers cost of entry and participation for merchants
will need to resolve the “catch-22” challenge and customers. It is important not to lose
of merchants waiting for customer demand sight of this to ensure that QR code merchant
before moving to support this demand, while payments remain the most compelling option
customers wait for their favourite merchants for stakeholders that place high value on
to support the scheme before signing up for it. affordability.CALL TO ACTION
Mobile money providers are actively promoting the use of QR codes 45
for merchant payments in emerging markets, but they must also lay
the foundation for interoperability
QR code merchant payments QR code merchant payments
have already been widely adopted are a complex proposition with
in specific markets like China, many moving parts in terms of
but are still in an early part of their product flow and technical
their journey in other parts of specifications, as shown in this
the world, particularly emerging report. It is important the mobile
markets. industry aligns on the specific
aspects of a QR code merchant
Mobile money providers are key
payment solution to achieve
players in the provision of financial
a harmonised experience for
services in emerging markets and
customers across providers.
are actively promoting the use of
QR codes for merchant payments To enable this, the mobile money
there. industry may consider adopting
an existent harmonised QR code
They can leverage their leading
specification that meets its needs
position in these markets
or developing a bespoke new
to capture the opportunity
one that is tailor‑made to address
presented by QR code merchant
its requirements.
payments, but should adopt the
lessons emerging from other QR
code deployments globally.You can also read
