The rise of the QR code in Europe: how will it play out?

Two weeks ago, the QR code ordering app Sunday (a startup that didn’t exist just a few months ago) raised a $100 million Series A funding round – a clear show of support from VC’s for the future of QR codes in the West. QR (‘Quick Response’) codes aren’t exactly new. They started to show up pre-pandemic in Europe, mostly for presenting information on billboards and bus stops or ordering in airport restaurants where time is of the essence and expedited user journeys are welcome. The way they work is very straightforward: they consist of a number of black squares and dots which represent certain pieces of information e.g. a URL. And when scanned with a smartphone, the QR code can initiate an action on the device e.g. direct the user to a website or payment app.

Through the pandemic the use of QR codes for quick service digital ordering in restaurants has exploded, driven by the need to order and pay with minimum face-to-face interaction and enable customers to avoid handling terminals.

As you may be aware, Europe is relatively late to the game when it comes to QR code popularity and adoption. In Asia, WeChat Pay and Alipay’s QR code payments took off in the early- to mid-2010’s. As they don’t require hardware or POS terminals, it meant street vendors without plugs could support the growing digital payment demand using only a smartphone, or even a printed QR code on paper.

Differing use cases

But how these codes are used differs between regions. In Asia, they are commonly associated with ‘super-apps’, where the QR is the actual payment method. In Europe, they operate more as a vehicle for digital wallet or card payments. As such, the rise in popularity of QR codes in Europe doesn’t mean that they might replace current payment methods (or at least, this is very unlikely). Instead, it’s likely they will complement existing payment methods and enable merchants to tailor their checkout experience.

Saying that, it also doesn’t mean QR codes will never be used as a payment method in Europe. For example, WeChat Pay and Alipay are often accepted by merchants in Europe to attract Asian tourist footfall and secure larger basket sizes. These merchant benefits are often attributed to the security, comfort and confidence customers get from paying with a familiar payment method.

Burgeoning potential

Now that QR codes are rife in the hospitality industry, you’re probably wondering where we might see them next. Their explosion in popularity is tied to a number of factors; one of which is the evolution of the typical POS terminal. Previously, the lion's share of Europe’s POS terminals were controlled by a couple of major players; these were typical payment terminals with small screens and physical buttons. But more and more, merchants are adopting android-compatible hardware with much larger touchscreens. This visual display opens the door to providing the option for face-to-face QR code enabled payments and experiences (loyalty, feedback, subscriptions etc.). 

Using a smartphone, consumers can scan the QR code on the POS screen and be directed to their payment method of choice, whether it's card (for transactions above contactless limits), Alipay, PayPal or even through Open Banking. The latter option here, Open Banking, due to its low cost of acceptance, is increasingly becoming a popular choice, especially where the average transaction value is high e.g. car auctions, bill payments, household etc. Similarly, our(Global Payments) partnership with a leading Irish airline and their use of our PayLink QR solution has meant that their travellers can seamlessly pay for extra luggage at the gate and the airline no longer needs to worry about shipping terminals around the world or maintaining connectivity and battery power. 

This is all evidence to support the fact that QR codes are gaining traction across a multitude of sectors above and beyond just hospitality. I’m looking forward to working with more of our customers to help them establish how QR’s can help their business. Whether you're a Global Payments customer or not, if you would like to learn more – please do get in touch.