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NFC or QR payment? The endless debate

Rising demand for contactless payments has led businesses to search for the best solution. And with that, one that fulfills customers’ need for convenience and security. QR codes and NFC tags are the most debated and discussed subjects in this regard. So who is the winner when it comes to your mobile wallet?

10/5/2021

In the earliest stages of mobile payments, there was much debate over whether to focus on using QR codes or to wait for more smartphones to support NFC. The biggest concern was betting on the wrong horse. So we decided to take a deep dive into the two options of mobile payments. 

Contactless Technology Europe
Contactless Technology Adoption in Europe.

The Most Prevalent Use Cases of NFC Payments

NFC is mostly used for point of sale terminal based purchases, from retail to vending and accessing public transport. Thanks to the innovation of banks and trust in ApplePay and GooglePay, mobile contactless payments have taken over card payments. 

NFC payments are very convenient, but as with everything, they have a few shortcomings.

Disadvantages of NFC Payments

Merchants need NFC enabled payment terminals which present a high investment cost. In addition, it also has many requirements from the consumer before they can make a payment, this includes having an NFC supported smartphone and downloading a digital wallet app such as Apple Pay or Samsung Pay

Luckily for merchants though, the new development of SoftPOS will enable micro merchants to accept NFC payments via a secure smartphone application. This will take away the barrier of the classical POS terminal costs. 

Additionally, in Europe and many other regions, there is a daily limit after which manually entering the pincode is required, which somewhat defeats the purpose of a contactless payment.

The Most Prevalent Use Cases of QR codes

On the other hand, QR code payments have also proven to be very valuable. It is increasingly being used in Europe for closed-loop solutions, including loyalty programs, such as scanning a membership card to access exclusive deals and perks.

While they are used to complement NFC payments in Europe, QR code payments are definitely the dominating method in the Chinese contactless payment market. 

85% of Chinese consumers used QR codes to make a payment in 2020.

QR codes are also picking up pace in India, which is most likely due to the low cost and low entry barriers it presents. As a merchant one would simply need a phone with internet connection and they’re good to go.

The rise of QR was certainly unanticipated by many experts. Especially when considering that QR payments were simply introduced as a bridging technology to mobile payments, yet it has never disappeared and attracted millions of consumers!

Disadvantages of QR Code Payments

  • The biggest concern associated with this payment method is security issues. QR codes can be misused for phishing and hacking. This requires both merchants and consumers to be extra vigilant when generating and scanning a QR code.
  • Another shortcoming of QR codes is that they require a stable internet connection and some tech knowledge from the consumer. Any error can cause frustration.
  • Unlike NFC payments, the lack of regulation on QR code payments in Europe certainly can decrease trust.

The Verdict

Having analyzed the use cases and security of NFC and QR payments, it becomes clear that despite its high investment cost, NFC will continue to be the most favourable payment method across Europe. QR codes will also continue to be complementary in closed loops as an addition to the widespread NFC payment system.

That being said, the common advantage of both methods is that they are capable of supporting an omnichannel experience. QR code technology is being embraced by the card schemes standardization company EMVco as well.  

Do you think that QR payments will ever become mainstream in Europe? Or will they continue to be an addition to NFC payments?

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