QR codes are a simple solution to payment access everywhere in the world, except for one problem: multiple formats. In contrast to card payments, which long ago set up a universal ISO standard (initially ISO 8583; now ISO 20002 for unified corporate payments, QR codes do not follow one set standard.
Today’s read talks about the Japanese market is creating a unifying standard. The driving force is low card transaction volume in Japan. Unlike markets such as the US and Europe, where non-cash payments cover about two-thirds of all transactions, Japan only has 20% card usage. What is behind low usage is that Japan and many other economies rely on cash, which creates opportunities for tax avoidance.
As part of efforts to encourage the use of cashless payments for goods and services, the three megabanks have agreed to unify their standards for QR codes, which customers can use to make payments without cash through their smartphones.
Their aim is to reduce the costs associated with handling cash, and increase convenience.
The unified QR code standards are provisionally named “BankPay.” Apps and bank accounts will be linked through the system, enabling consumers to make purchases simply by scanning a QR code. The banks aim to have it up and running in fiscal 2019.
The agreement comes amid a growing sense of urgency over the slow spread of cashless payments in Japan.
QR codes can enable payments anywhere, without the need for a point of sale terminal; this technology allows you to transact at a low cost, reliable environment. Imagine the scenario: you are a fishmonger in remote Japan and sell at a public wharf. There are no high speed, secure lines even close to where you offer your goods, but you have a cell phone. When the consumer comes, the entire transaction can initiate and settle through internet URLs with your phone beaming to the merchant.
No swipe, No card insert, No fuss.
Three large Japanese banks are working on the standardization. If all goes well, it might drive a global standard.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group