When QR code payments first surfaced in the global payment arena, no one really paid much attention.
Based on barcode technology developed in the 1990s, industry experts thought QR code payments would not be widely adopted in the long run.
However, the popularity of this payment method across Asia means QR codes are actually steering the world into two separate payment universes: NFC and QR. Meanwhile the influence of QR codes on the Asian payment space is squeezing out opportunities for payment card networks.
After Alipay and WeChat Pay popularized QR code payments in China, other markets and competitors in Asia embraced the same concept. In Singapore there were so many QR payment providers that SGQR was able to consolidate around 30 schemes under a single QR code network. Across the ASEAN member countries, QR code payments have been embraced as the standard for mobile payments and are seeing exponential growth in consumer adoption.
The main reason QR-based payments are thriving in Asia is due to the fact that the majority of the market consists of cash-based economies, meaning they are still open to the “next big thing” in payments. In addition, across the region there is a very large base of micro merchants who benefit from cashless payments – and especially the much lower fees that QR-based payments offer.
Growing adoption among smaller merchants in Asia prompted larger merchants that traditionally focused on payment cards to also start accepting QR payments. And tourism is also a key factor. Around 7.5 million Chinese tourists visit Japan each year, and their frequent use of QR payments resulted in providers seriously promoting QR code payments in the country. Domestic brands such as PayPay (with strong backing from SoftBank, the world’s largest tech venture firm), LINE Pay, and J-Coin Pay (a collaboration of 60 Japanese financial institutions) are a clear sign that the market has adopted QR codes as the standard for mobile payments.
The success of QR code payments is having an impact on the payment card segment. While the majority of consumers in Asia once relied on cash as their only form of payment, QR codes are helping them bypass payment cards in favour of mobile payments. This means it will be more difficult for schemes such as Visa and Mastercard to operate in Asia Pacific in the future.