The Rise Of QR Code Payments: Benefits For Your Ecommerce Store (2024)

Businesses of all sizes use QR codes to provide information about a product, showcase a portfolio, guide diners to a menu, or process digital payments. To do this, businesses provide a code that a customer scans via a smartphone camera. The code navigates to a payment page where customers can complete the transaction using their preferred payment method.

Whether you operate a stand at your local farmers market or want to provide more payment options at your brick-and-mortar store, it’s wise to accept QR code payments. Here’s an overview of how QR codes work and how they can benefit your business.

What is a QR code?

A QR code, or quick response code, is a scannable image composed of black and white squares arranged as a matrix barcode. When you scan a QR code with a tablet or smartphone camera, it triggers the device’s QR code scanning software to take a specific action, like opening a website URL that takes you to a landing page or launching a customer’s payment app on their mobile device. QR codes can also hold other information, like someone’s contact information.

Ultimately, QR codes work much like traditional barcodes, but their intricate layouts can store far more information than a standard barcode can.

How do QR code payments work?

1. A customer scans a QR code
2. A linked app triggers the payment process
3. The customer approves the QR code payment
4. The payment app receives payment authorization
5. The money transfers

Now that you can simply scan QR codes to complete transactions, many businesses have embraced the codes as a way to accept payments. Here’s how the QR code payment process works:

1. A customer scans a QR code

A QR code payment begins when customers scan a code using their phone camera and accompanying camera app. There are two types of QR codes you might encounter: static QR codes and dynamic QR codes.

• Static QR code: This is a fixed QR code that doesn’t change and directs all customers to the same place; a business may print it out and display it at a checkout counter, for instance, to direct customers to its online store.

• Dynamic QR code: Dynamic codes are unique and correspond to specific transactions; a digital point-of-sale (POS) system can generate a unique QR code, for instance, that appears on the screen during checkout so a customer can scan it and complete their order on their phone.

2. A linked app triggers the payment process

Payment apps—such as PayPal or CashApp—then interpret the code and facilitate the transaction by pulling up a checkout page where customers can enter their payment information, including contact details and method of payment.

3. The customer approves the QR code payment

The payment app will ask customers to confirm their total transaction amount. The customer may have the option to adjust the final amount of money on their bill—by adding a tip, for example.

4. The payment app receives payment authorization

At this point, the payment app will request authorization from the customer’s bank or payment service. Customers can pay using a variety of methods such as credit cards, debit cards, and payment platforms like Apple Pay and Google Pay. Different banks have different ways of authorizing purchases. In many cases, users can use passwords, pins, and biometrics like facial recognition or fingerprint scans.

5. The money transfers

With the payment approved, money transfers from a customer’s account to the business’s merchant account. Payment processors will collect fees from the merchants to facilitate the transfer, but these fees aren’t linked to the use of QR codes; they’re the standard fees that the processors always charge to businesses for using the processor, and most fall between 2% and 3% of the purchase price.

Sometimes QR payment fees are lower than the fees the processors attach to credit card payments. For instance, in the US, PayPal charges 2.99% of the transaction plus a 49¢ fee for standard credit and debit card payments, but it only charges 2.29% plus 9¢ per transaction for QR code transactions.

Benefits of using QR codes for payments

QR code payments are a big part of doing business today. They’ve become a popular method of making payments because they’re secure and allow customers to buy things without carrying cash around. They’ve also become a preferred alternative payment method with merchants. Here are some reasons why:

Affordability

You don’t need an expensive POS system to use QR codes. Smartphones and tablets can handle all the computing needed to process payments with QR codes. What’s more, some QR code payment providers charge lower transaction fees than traditional card processors.

Security

While it’s true that a QR code stores information, that info does not include account numbers or banking details. And because QR codes facilitate contactless payments, there are fewer opportunities for hackers to intercept customer data.

Convenience

QR codes simplify the customer journey, creating a frictionless path to checkout. Dynamic QR codes contain payment links so customers don’t need to click through multiple pages to get to the payment page, and facilitate payment methods from digital wallets to credit cards. This makes QR codes as convenient as cash for consumers.

For retailers, a free QR code generator makes the QR creation process simple and cost-effective.

Data collection and analysis

You can use QR codes to collect information about your customers and the transactions they’re making. This includes their names, addresses, purchase amounts, and payment methods. This can help you plot future marketing campaigns, project revenue, and boost customer engagement. For instance, you may learn that your average transaction amount is $87. Using this information, you could attempt to boost sales by offering free shipping on orders over $100.