QR code payments for UK businesses: A simple guide

Can UK businesses take payments from customers using QR codes? Absolutely, and there are a number of advantages to doing so. Here we cover some of the best QR code payment solutions available today, and how you can ensure QR codes can provide a slick payment experience for your customers and a cost-effective solution for your business.

How QR code payments work

A QR code is a simple, square, bar code-type image that can be scanned using almost any smartphone camera. In most cases, QR codes link to a particular web page, instantly opening in the user's mobile browser.

Since the Coronavirus pandemic, contactless technologies such as QR codes have become more widely adopted, and this includes QR codes that allow consumers to make payments for products and services.

Why use QR codes to receive payments?

In short, QR codes can provide an extremely convenient way for customers to pay in lots of different situations. They usually require little investment from merchants because no additional hardware is needed, and they are extremely flexible in how they can be presented (printed on physical surfaces or documents or displayed on a screen). Qr codes also allow merchants to offer highly popular and convenient mobile-based payment technologies such as instant bank payments and digital wallets.

Also worth noting, the instant bank payments mentioned above allow merchants to slash transaction fees on sales, by eliminating credit / debit cards (and the fees associated with them) - more on that below!

Examples of QR code payments in action

In-person sales

Merchants are now using QR codes to accept online payments from customers in face-to-face transactions. Instead of having to purchase and maintain additional hardware such as cash registers or credit / debit card readers, a seller can now present a QR code using their own mobile device, or print QR codes onto individual products/services, ready for their customer to scan and then complete payment on their device.

An art gallery might display QR-codes on individual pieces for sale, providing an extremely convenient way to pay when that hard-earned sale is made. A second-hand car dealer, might generate a QR code for a substantial purchase, so that their customer can scan and make an instant, secure bank transfer (whilst eliminating card processing fees for the merchant).

Remote invoicing / payment requests

Because QR codes are essentially unique image files, they can quite easily be added to specific invoices sent to customers. If a customer is viewing an invoice on a desktop computer or in paper format, they can quickly scan the QR code to complete payment for that invoice. Most QR code payment providers also provide secure links to take payments, which can be provided as an accompaniment to QR codes - in case the customer is already on a mobile device.

General payment collections and queue-busting

In any situation where a business needs to take payments of a specific amount from passing customers, or perhaps those watching a presentation or webinar, a QR code payment flow can be a fantastic and convenient option. Similarly, in market stall or restaurant-type interactions, QR codes are being used on banner displays or printed on tables so that customers can avoid asking for a bill or queuing to pay.

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The main QR code payment mechanisms

These are the main ways businesses can use QR codes to take payments:

• Merchants generating permanent, reusable QR codes for specific amounts, which any customer scan and pay instantly.
• Merchants adding particular products / services to a digital 'basket', and then presenting a QR code to the customer to complete the purchase.
• 'Scan to shop' QR codes: Where customers scan first, and then add products or services to their order before paying through their mobile device.
• 'App-to-app' QR payments: Where the customer pays by opening a particular app (such as Pay Pal) and scanning a merchant's QR code (also generated in the same app).

QR code payment apps for UK businesses - a quick round-up

One

The One app, from Wonderful Payments, allows customers to scan a QR code, select their bank, and then authorise an instant transfer to the seller's account. There's no manual data entry and credit / debit cards aren't involved, leading to substantial savings on transaction fees! Merchants can generate and present QR codes, or share secure payment links through messaging apps, emails and other channels. Find out more.

Fees: £9.99 / month including 1,000 transactions. (1p per transaction within and outside the bundle.)

PayPal

With PayPal's solution, the customer needs to have Pay Pal installed on their device. As long as they have the app, they can simply open it and scan the seller's PayPal Qr code. Their preferred payment methods in the PayPal wallet are then ready to be used. Find out more.

Fees: 1.5% + £0.10 per transaction over £10.00, and lower fees for transactions £10.00 and under.

Square

Square is an all-in-one style Point of Sale system with a number of QR code features. QR codes for different amounts can be quickly generated and shared online or printed. Square charges up to 2.5% on some payment methods, but is a great option for restaurants or shops wanting to allow customers to scan and then browse products, add to basket, and pay, all from their mobile device. Find out more.

Fees: 1.4% - 2.5% per transaction. Additional 25p per transaction for UK card payments.

Industries that maximise the benefits of QR code payments

A wide spectrum of industries have leveraged the advantages of QR pay not just to facilitate payments but also to use it for marketing purposes. Let’s consider the use cases across multiple sectors:

Retail and e-commerce

●     Providing a smooth and fast checkout: A critical factor in reducing cart abandonment, QR code payments streamline the checkout process and enhance the overall consumer experience. Brick-and-mortar shops can integrate QR payment methods with their POS systems (point-of-sale) to facilitate seamless transactions.

●     Augmenting marketing communication: Apart from facilitating payments, QR codes are also used to direct customers towards promotional offers, personalised discounts, or product information.

Hospitality and dine-outs

●     Contactless ordering and payment solutions: Restaurants can accept contactless payments and QR-coded menus for hygiene and convenience. Customers can view the menu, order, and pay without touching a multi-user device by scanning a QR code. Additional advantages: This simple card or cashless payment also allows customers to split bills. An ideal feature for youngsters going to a group dinner.

Travel and transportation

●     QR code payments for tickets: Passengers commuting on public transport can purchase tickets using QR pay and validate them through their smartphones. This can speed up the boarding process.

●     Travel apps integration: Tourism enterprises can integrate QR code payments into their apps, allowing clients to easily book and pay for services such as flights, hotels, and car rentals.

Healthcare services

●     Insurance processing and invoicing: Following a medical crisis, the last thing you want is to spend unnecessary time at the billing counter. QR code payments provide you with a simplified payment platform that benefits both the patient and the healthcare facility.

●     Pre and post-consultation convenience: QR pay enables patients to access medical records, schedule appointments, and make payments, thereby improving their overall healthcare experience.

QR code payments vs. other contactless payments

You may wonder, with other contactless payments coming up, why does QR pay retain its popularity? Let’s understand the comparative advantage of QR code payments.

●     Edge over NFC payments: NFC (Near Field Communication) payments involve specialised hardware, whereas QR code payments can be processed using any smartphone with a camera. This increases the accessibility of QR payments.

●     Cost-effectiveness: Since there are minimal hardware requirements, the cost of implementing QR pay is often significantly less than NFC alternatives.

●     Increasing consumer acceptance: The ease and convenience of QR codes have made them a popular payment method among consumers. A trend that has grown since Covid-19.

Fraud prevention and security measures in QR Pay

Despite their numerous benefits, QR code payments come with their own set of security challenges.

Common fraud and prevention tactics

●     Fake QR codes: Hackers can generate fake QR codes to redirect payments to an unknown third-party account and syphon off your funds. QR code phishing fraudsters can create seemingly original QR codes that may redirect you to a fake website to collect vital information or trigger a malware download on your device upon clicking a link.

You must exercise caution while interacting with a QR code payment link. Ensure the source is authentic and doesn’t require unnecessary information for processing the payment.

●     Superimposed QR codes: A new way to misdirect users is to superimpose a duplicate QR code on top of an original one. Parking tickets, meal boxes, and certain marketing collaterals are susceptible to such fraudulent action.

While organisations should be vigilant that their communication materials are not getting tampered with, consumers should use reputable QR code scanners to detect malicious activities.

Regulatory compliances

●     Payment security regulations: To safeguard their customers, payment service companies in the UK are required to follow stringent security laws, such as the Payment Services Regulations 2017.

●     GDPR and PCI DSS: Businesses must comply with the General Data Protection Regulation (GDPR) and Payment Card Industry Data Security Standard (PCI DSS) to safeguard customer’s private data.

Security measures taken by QR code payment providers

●     Encryption and tokenisation: These are the most commonly used technologies to prevent fraud. Tokenisation replaces sensitive information with a unique identifier, thereby reducing the risk of data breaches, while encryption ensures the security of data transmitted between the buyer and the merchant.

●     Dynamic QR codes: This technology is at the forefront of QR code malpractice prevention. By using code that changes randomly with each transaction, businesses can add an extra layer of protection.

Market sentiments and future trends

Market size

Innovations in technology and heightened consumer acceptability are driving the QR code payment market. Research suggests that approximately 44.6% have used a QR code at least once, a data point that’s expected to cross 80% by 2024. Valued at around $2.9 billion in 2023, the global QR pay market is estimated to touch $4.8 billion by 2028, recording an impressive 59% growth.

Future trends

●     Advanced analytics: You can use QR codes to collect data and curate customised marketing campaigns.

●     AR and VR integrations: QR codes are compatible with AR for interactive shopping and VR for in-app purchases.

●     Blending with blockchain: New age QR code payments, in conjunction with the latest blockchain technology, can enhance security and transparency of transaction data.

●     Cryptocurrency payments: Businesses in the UK are exploring QR pay as a means of conducting secure and efficient cryptocurrency transactions.

●     Technological breakthroughs: Future-ready technologies like AI, IoT, and 5G are going to revolutionise QR code payments.

FAQ

What is the maximum payment limit for QR code payments?

This can depend on a number of factors, such as the payment method used as well as limits set by the customer's bank or card provider. If you're looking to take large QR code payments from customers, instant bank payments (powered by Open Banking) are a great option, as most UK banks support payments of up to £20,000 or more, and merchants can save big on transaction fees.

Why are QR code transactions cheaper?

In general, QR code transactions are cheaper for sellers because providers don't have to supply any substantial hardware (such as point of sale terminals / card readers). These savings can then be passed onto sellers by reducing transaction fees. If you're looking to cut costs, it's certainly worth considering Qr code payment providers, especially those that support bank payments, sometimes known as 'Account-to-account payments'.

How do I generate QR codes for my business payments?

To start making use of QR code payments, businesses can use an authorised payment providers (such as those mentioned above). Alternatively, it is possible to build your own solution using a QR code library, but this would require additional software engineering resources.

Can I integrate QR pay with my existing payment system?

It is possible to merge QR code payments into your current point-of-sale system. Software updates or integration with third-party payment processors are common examples of this. It's important to make sure everything works together and may need some technical modifications, but there are several service providers, like Wonderful, that seamlessly implement this process.

Are QR code payments popular in the UK?

QR code payments are one of the most in-demand contactless payment methods in the UK. The COVID-19 outbreak spurred their growth as companies and consumers sought safer, touch-free payment options. Retail, hospitality, and transportation have witnessed large-scale adoption of QR pay due to their convenience and compatibility.

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