Mercator Perspectives

2D Barcodes Don’t Suck, But Aren’t Perfect

Technology purists, especially those backing NFC, look askance at the lowly 2D barcode. How could something so simple compare favorably to a hardware-based scheme designed for such a wide range of applications as physical world navigation, payments security, physical access, identity and other services.

Well, from the looks of it, 2D barcodes should do pretty well.

With NFC taking so long to reach mass adoption in payments—and we now see 2015 and beyond as the point when majority adoption takes place—there is a wide window for other approaches to enter the market. 2D barcode-based schemes look attractive now that smartphone cameras and recognition software are getting faster. Beyond URLs, dynamic 2D barcodes can be generated for payments and coupon applications. They can be displayed on smartphone, tablet, ATM, and POS terminal screens as well as printed receipts. That kind of flexibility and the comparative handful of moving parts needed to deploy such a solution—NFC requires an ecosystem-wide build out—should be attractive to merchants and to the ISOs and acquiring partners serving them.

That said, a signal weakness of 2D barcodes is their insecurity at least with respect to URL access. A 2D barcode could, for example, point the user’s device to a website that injects malware onto the smartphone. While mobile operators actively do the best they can to scan for malware, this form of phishing could be a problem.

Ironically, NFC's inherent security for payments and other applications shares this same weakness when applied to smart tags. The URL encoded in the smart tag can point at a bad URL, too. Programming a smart tag is only slightly more difficult and costly than printing a single 2D barcode onto a sticker. The good news for the NFC variant, however, is that it cannot be distributed with anything close to the same ease as a 2D barcode. NFC tags are physical devices, not virtual images, so the impact of a malware-steering URL is limited to the unfortunate individuals who tap on the malevolent tag. 2D barcodes, on the other hand, can be distributed as images over the Internet to a theoretically global audience.

Despite that danger, expect 2D barcode approaches to flourish in the coming months and years. PayPal is leveraging 2D barcodes as major component of its commerce solution for merchants. Retailers are using them to deliver incentives designed to keep the weaponized shopper, a consumer armed with a smartphone, in the store and away from online competitors.

Merchants, consumers, and new technology approaches, mostly based on mobile devices, are wresting control from the older models of both advertising and payments. In this new world, flexibility is key and the lowly 2D barcode, enhanced by thoughtful programmers, has that attribute in abundance.

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