QR Code Payments: Market Expansion and High-growth Areas

August 2023

Fintech & Payments

Matthew Purnell

Senior Research Analyst

As we discuss in our latest research, QR payments have maintained strong usage in China since 2011; becoming the most popular form of contactless payment due to efforts from the likes of Alipay and WeChat Pay.

No other country has seen as long a history of QR codes for payments, but that does not mean QR code payments are not developing at a similar rate that China experienced last decade. Whilst a move to cashless societies has been a significant factor in enabling QR code payments readily, countries which have been making efforts to improve financial inclusivity for merchants and individuals alike have seen higher growth. As a result, the format of QR code payment implementation has varied between mature and developing markets.

Asia

Countries across Asia represent the greatest adopters of QR codes for payments outside of China.

India is leading this adoption outside of China, with major digital wallet and payment facilitators implementing QR code payment functionality since 2016. India established the UPI (Unified Payments Interface) to facilitate and process digital payments more efficiently in the country, and QR code payments being the most accessible digital payments created a sudden growth of popularity for the payment method which is still seen today. The UPI even has interoperability and international use through cross-border agreements with 25 countries in addition to the EU.

As a whole, Asia is the region with the most development of QR code payments globally. Asia Pacific countries like Indonesia, Singapore, Malaysia, and Thailand are some of the stronger QR code payment markets, but they are just several of the many that utilise the payment method widely. As a result of this, interoperability between these markets and their respective QR codes has been a focus, enabling cross-border transactions through QR codes within the region.

Latin America

Latin America represents the major QR code payment region outside of Asian regions, with individual markets adopting both national and third-party schemes.

Brazil is the largest QR code payment market in Latin America, made possible through the release of its Pix system for instant payments. Whilst third-party digital wallets operate in Brazil such as Mercado Pago, payments through Pix do not have transaction fees, encouraging many merchants and users to adopt the use of Pix QR codes for payments.

National schemes are not necessary for a sharp growth in QR code payment adoption, as seen from Argentina. Argentina used digital wallets like Mercado Pago and Bitso for QR code payments following the introduction of a renewed instant payments system in the country, and their widespread use encouraged the government to consider a degree of standardisation in the future.

Despite this level of success, not all countries in Latin America share that level of success. Mexico has a hybrid model for QR code payments between third parties and the Bank of Mexico’s CoDi. Launched in 2019, uptake of CoDi has been low, even among the digital wallet landscape, with cash still being the preferred POS payment method for many. This variance across Latin America highlights that successful adoption of QR codes for payments is not as simple as incorporating regulations or schemes from government-led initiatives.

North America & West Europe

Unlike high-growth markets, North America and West Europe have an established contactless payment user base utilising NFC technology.

As a result, QR codes are not used as a default payment method for many, but are acting as a vehicle into which payments can occur via digital wallets like Apple Pay. Therefore, QR codes are unlikely to ever replace cards and NFC as the preferred contactless payment method, but rather coexist.

Outliers to this trend exist however; Scandinavian markets like Denmark, Finland, and Norway break the mould of most QR code payment adopters due to having established card infrastructure in place and a high concentration of individuals with bank accounts. Trends like a shift to cashless societies still remains a factor, but the versatility and popularity of digital wallets remains a driving force for these countries in their adoption of QR code payments.

However, P2P-based QR code payments are popular among certain markets, like Payconiq in Belgium; enabling QR code transactions between bank accounts. This signifies that many are not wholly against QR codes for payments, and there is a possibility that they could be the preferred use in P2P payments.