The Different Paths Driving QR Payments Adoption

January 2021

Fintech & Payments

Nick Maynard

VP of Fintech Market Research

The adoption of QR payments is now a very noticeable trend, particularly in China and India, where digital wallets utilising QR codes have become dominant mobile payment mechanisms. Questions now remain as to what their prospects for adoption outside of these key countries are and how they will fare, versus other mobile payment mechanisms, such as contactless (NFC) payments.

The QR payment market is a highly regional one, with China being the strongest single market by some margin. However, the Indian Subcontinent and Rest of Asia Pacific are emerging as QR payment hotspots. The prospects for QR payments in developed markets are much less lucrative. While there will be some usage in markets such as West Europe and North America, this is limited to country-specific solutions. Vendors such as PayPal have introduced payments via their apps in developed markets, but these markets will largely remain dominated by contactless payments.
 

While national schemes might seem a strong way to foster innovation, the Chinese model has actually been successfully driven by third parties. This shows that there is not necessarily a one-size-fits-all approach for QR payments.

The Chinese success story with QR payments is well known, but this has led to the assumption that QR payments are an exclusive Chinese phenomenon. This is no longer the case, with rapid expansion of QR schemes outside of China. Though this expansion has so far been limited to certain markets, national schemes are playing a big role in fostering this growth.
 
Vendors such as Visa, Mastercard and American Express are also increasingly supporting QR payment methods, but so far there is no evidence pointing to the fact that this support is actually having an impact on their business models. Indeed, where QR codes have succeeded, they do not seem to be driven by traditional payments companies. While the involvement of payments companies is beneficial because of the security credentials they bring including tokenisation, it does not appear that traditional payments companies will drive QR use.

We therefore recommend that national regulators make QR schemes a priority, to ensure widespread digital payments adoption and interoperability of payment methods.