With QR codes changing the face of payments, it's a no brainer that QR codes should become an integral part of the banking and finance industry.
And the shift is visible.
Many banks across the globe are using QR codes in unique ways to enhance user experience. Some provide card-free ATM transactions, whereas some offer seamless interoperability.
Still, QR codes are far from coming into mainstream banking operations.
In this post, we'll talk about why banks and financial institutions should adopt QR codes.

Benefits of QR Code Payments
The use cases of QR codes in retail stores, hotels, restaurants, and movie theaters are not a mystery. Many small businesses use QR codes to facilitate digital payments and become technologically competent.
For years, QR codes remained to be a private thing, at least outside China. But now, with custom QR code payments coming to the mainstream, banks and financial institutions are also showing participation in the adoption of the technology.
Here's why the financial industry should embrace QR codes.
1. Instant Payments
QR codes enable instant payments. The buyer scans the code and confirms payment on his side. The payment gets completed within seconds, and the seller receives the amount in his wallet or bank account.
No other payment method comes closer to the speed of QR code payments. The process is completely contactless, which is a major advantage, keeping COVID-19 in mind.
2. Superior-Grade Security
Despite the absence of OTP or complex authentication, QR code payments are secure. The main reason for this high-end security is data encryption. All the data exchange taking place during a QR code transaction is encrypted. Hence, even if someone steals the data, he can't use it to pursue further crimes.
3. Improved Reliability
QR code payments have little or no risk of error or payment rejection. Each QR code pattern is unique, which eliminates the risk of confusion or mix-up. Moreover, every code is easy to scan. Even if a customer doesn't have a high-quality phone camera, he won't face any trouble scanning the code.
4. Seamless Set-Up
Setting up a QR code payment is easy. Sellers don't need any infrastructure or high-end technology. They can generate a custom QR code with a QR code generator app. The QR code plan price is affordable, so users don’t need to make hefty investments.

Similarly, scanning QR codes is also easy. Buyers don't need a specific scanning machine to scan the codes. Any modern-day camera comes with QR code scanning capabilities.

Why QR Code Payments Require the Inclusion of Banks and Financial Institutions

With the pace at which QR codes boomed when they were initially launched, everyone thought they'll reshape the banking industry. While they've managed to make their way to banks in several countries, they still have a long way to travel.

After a headstart, the growth of the QR code technology suddenly halted. It became a prevalent concept in Asia but was far from being popular in the west.
Now, as contactless payments become the new normal, banks and financial institutions should rethink implementing QR code payments.

Here's why the banking industry should embrace QR code payments.
1. Easy Scalability of Acceptance Networks

QR code transactions are seamless for both merchants and acquirers. For acquirers, it reduces the operational costs as they don't need to have a POS terminal or other hardware to process merchant payments.
Retailers also don't need to incur the cost of a POS terminal. Retailers can scan the code with their smartphone to make the payment.

A popular example of this implementation is PayTM, an India-based mobile wallet app. Paytm allows users to scan QR codes and make payments directly in the form of bank transfer. As of 2018, PayTM had more than 10 million merchants accepting QR codes.
2. Solution to Card Distribution

Delivering debit cards has always been a hurdle for banks. They have to send the card and PIN through separate mailers, which increases cost and complexity.
Moreover, many low-income consumers don't have a proper permanent address. This makes the distribution process tedious.
No delivery is required in the case of QR codes. When a customer makes a QR code payment, his phone acts as a card. As a result, any complex delivery process is eliminated.

3. Cash-Like User Experience, or Even Better

QR codes are arguable the easiest payment method to use. All a customer needs to do is open the wallet app, scan the code, and enter the PIN. Within seconds, the transaction is completed.

When a transaction is completed, the user receives a payment confirmation notification. If by chance, the payment is canceled, the user gets an error notification. Therefore, there's no confusion.

Another major benefit of QR code payments is payment protection. If the amount was deducted from the buyer's account, but the payment wasn't successfully processed, the entire amount would be refunded back to the buyer's account.
Lastly, QR code payments don't have any transaction charge. The only cost possible is when the seller transfers the amount from the app wallet to the bank account.

QR Codes in Action in the Finance Industry
Though QR code payments are far from coming to the mainstream, banks and financial institutions in many countries have adopted the QR code technology.
Let's take a look at the use cases of QR codes in the finance industry.

1. Quick and Secure Payments
As discussed, quick and secure payments are one of the key features of QR code payments. In China, WeChat QR Code and Alipay QR Code are the two main platforms that offer QR code payments. Buyers can scan the merchant's QR code and pay with AliPay wallet or WeChat Pay.

India took the concept of QR code interoperability to the next level by launching Bharat QR in 2014. Merchants can use the BHIM app to generate their QR codes. Customers can scan these codes with any supported wallet app to make the payment.
A similar innovation was witnessed in Kenya when mVisa was launched in 2016. The QR code-based mobile app would allow consumers to scan the QR code and pay using nine supported banks.

2. Marketing and Branding
Gone are the days when banks were looked upon as non-profits and semi-government organizations. Banking is a business, and banks need to ensure high-quality marketing to secure more customers.

Banks worldwide use QR codes for marketing and advertising. TD Bank, a US-based bank, puts up QR codes on billboards and display ads.

Users can scan the code and access several marketing materials to get better information about the bank.

AXA Bank, a Belgium-based bank, used over 3,000 tin cans to make a giant 3D QR code. Upon scanning, the users would reach a mobile application and get details about AXA Bank's solutions and services.

3. Security and Multi-Level Authentication
Tracking frauds and providing superior grade security is a major concern for financial institutions. Banks are using QR codes to provide end-to-end encryption and secure transactions.

An obvious example is the Singapore-based OCBC Bank, which has introduced QR codes as a replacement to debit cards.
Instead of swiping the card and entering the PIN, the user can scan the code and confirm the transaction with biometric verification.

This serves two benefits. First, it eliminates the need for cards. Users don't need to juggle between multiple cards when in need of cash. Second, there's no need to remember the ATM PIN. It may sound surprising, but forgetting the ATM PIN is a major issue among debit card users.

With QR code-based cash withdrawal, the need for remembering the PIN is diminished.

4. Improved Operational Efficiency
Apart from enhancing customer experience, banks can also use QR codes to improve their operational efficiency.
One way is to eliminate ID cards. Employees can simply scan a QR code to clock-in and clock-out. This would eliminate the need for carrying identity cards.

The innovative use of cases of QR codes in the financial industry doesn't end here. The First Bank, a Colorado-based bank, has put up QR codes to provide users with seamless entertainment. Users can scan the code and download puzzles, books, and games to keep themselves entertained.

Wrapping Up
Payments using QR codes have many benefits, not only for buyers and sellers but for banks too. QR codes can help banks ensure quick payments, enhance security, and streamline their marketing efforts. QR codes can play a pivotal role in helping banks and financial institutions go digital.
And with the pace at which QR code payments are surging, it's safe to assume that QR codes will make their way to the banking industry.

Author's Bio: 

Apoorva Hegde is a Content Marketer at MobStac.