Sizzle/Fizzle

QR Codes Sizzle, While Wells Behind The Wheel Fizzles

Sizzle of The Week

As American rapper, actor, poet and pop icon LL Cool J famously said, “Don’t call it a comeback — I’ve been here for years.”

And, while it might be an out-of-the-box choice, we think after the week in specific and year in general  that QR codes have had, it might be fair to suggest that LL Cool J’s 1995 anthem should be the new theme song for the often under-appreciated technology.

Though QR has had a particularly sizzling week, it has, in fact, been around for years slightly longer than the song. The first QR codes were rolled out by Toyota in 1994 as an innovation meant to help streamline the manufacturing process. And, during a brief moment in the sun, they were much lauded as the future of the barcode and of information-sharing.

But, it never quite happened. Scanning a QR code became more of a punchline than a consumer habit, because QR codes never quite seemed to work in the ways the most earnest futurists had hoped they would.

For example, one shopper scanned a QR code on a Heinz Ketchup bottle and ended up on a site full of pornography. Entrepreneurial cemetery owners put QR codes on headstones so visitors could scan and learn more about the dead, but people found that more creepy than comforting. Silly uses and the social media logging of them soon became the thing for which QR codes became best known.

And, across hundreds of blogs and opinions pieces, a single consensus emerged: QR codes’ best use is to amuse with their misuse. Other than that, they seemed to be mostly useless, and consumers thought they would soon fade into oblivion.

“With augmented reality, NFC and photo recognition all on the cusp of becoming mainstream, I think we’ll see a drop in QR codes — but, until then, we have some great fodder to work with,” one QR blogger noted.

But some technologies have a way of coming back around again, and QR codes turned out to be not so much useless as merely mismatched to their times. As this week demonstrated, that problem seems to be working itself out.

QR codes are cool again, and this week, the hits just keep on coming.

EMVCo’s QR Thumbs Up

On Monday, EMVCo, the global technical body that manages EMV specifications, officially announced the release of two QR code payment specifications supporting merchant-presented QR code and consumer-presented QR code use cases.

“With the increasing deployment of QR code payment methods, it is important that the payments ecosystem provides a consistent experience for merchants and consumers,” said Cheryl Mish, EMVCo board of managers chair, in the news release. “Given the early stage of deployment of this emerging payment technology and growing adoption, now is the time to ensure the technology’s potential is not constrained in the future due to interoperability issues with the established payment infrastructure.”

The consumer-presented QR code mobile payment use case allows customers to display a QR code on their mobile devices that can then be scanned by a merchant optical scanner to read the code. The merchant-presented case allows consumers to use their phones to scan merchant codes displayed on a device.

EMVCo will also release a self-testing framework for the merchant-presented and consumer-presented specifications in early 2018. That framework will allow point of interaction(POI) implementers to evaluate whether their QR generation and interpretation are in compliance with specifications.

“The clarity provided by the specifications will enable merchants to accept QR code payment solutions from various providers in a standardized manner,” EMVCo noted in a news release. “Consumers will also benefit from a more uniform experience that offers greater convenience and familiarity.”

The Right Solution For The Right Problems

So, why are QR codes so cool again? If one wanted to give a single word answer, “China” would probably be it.

Over the course of the last five years, the QR code-based mobile payment has almost entirely displaced cash in the country, leapfrogging credit and debit cards in a single bound. There were $5.5 trillion worth of mobile payments made in China last year, the vast, vast majority of which are handled via QR code on the WeChat and Alipay apps.

But Visa’s senior vice president of digital products, Sam Shrauger, told PYMNTS’ Karen Webster in an interview earlier this week that the story gets richer. As nations worldwide have been working to push toward a cashless standard, QR has turned out to be a remarkable applicable technology to that end.

In November 2016, India accelerated its path toward becoming a cashless society by rapidly demonetizing and removing 86 percent of all cash from its economy. That led the country to the accompanying adoption of a QR code-focused payments scheme based on Visa’s mVisa standard.

In May, Visa, Mastercard and UnionPay International introduced a Standardized Quick Response (QR) Code for payments, accelerating Thailand’s transition to a cashless society.

“There is a broad trend — one that has certainly been accelerated with India’s demonetization — [in which] developing markets are really pushing electronification of payments,” Shrauger remarked. “At this point, 70 percent of the world has a smartphone mobile device of some sort, and what is needed is the ability to present something in a simple, technological way.”

And, though Visa’s been working on its QR mobile payments standards for the last several years, Shrauger told Webster, it wasn’t out of a burning fascination with a technology that most people thought was just kind of uninteresting at the time. It was because it was “better to have them on the shelf in case you need to use them.”

“We found, in a lot of cases, places where QR has a lot of applicability that no one thought of back when we initially did the work,” Shrauger said.

Not An Either/Or

In an interview with Webster, Ajay Bhalla, president of Mastercard’s global enterprise risk and security operations, said global standards come as Masterpass QR has gained traction — leveraging standards in Africa and India — and helps consumers move beyond cash to mobile and online payment options.

Bhalla noted Mastercard has been employing QR codes for “quite some time,” and that they keys to success are in building strong, robust security surrounding the online payments while keeping access relatively straightforward and simple.

And, he noted, as different markets have different needs, they pursue the transformation into digitizing cash along different paths.

Speaking to the scenario where the consumer generates the code, Bhalla said the move toward digital banking will boost adoption in developing markets.

But in the end, a choice between merchant-generated or consumer-generated will be the ultimate future of QR code adoption. Bhalla says it “is not an either/or” situation, because the choice may vary market-by-market due to local needs — hence the need to be specific. QR’s benefit, he noted, is that it has the ability to offer that level of tailoring in regions where systems are still be developed, now guided by standards.

QR codes, it seems, will be many things to many consumers depending on where they are in the world. And, while they may never quite catch on in the United States the way they have in China, it is safe to say the QR code is, at the very least, no longer a punchline in a joke about really bad ideas graveyard owners have had.

With EMVCo signing off officially, it seems QR codes are finally what they had always striven to be: totally legit. And that is good enough for a “sizzle of the week.”

Sizzle

Square: Remember when Square was just a card reader? Results show companies of all sizes getting traction in digital payments, and they are getting loans too. The second quarter clocked in above expectations on most metrics, as processing volume was up 32 percent year-over-year. Larger enterprises represent a larger slice of that business. Loans averaged $6,000 a piece across 49,000 loans. Additionally, Square Cash is also getting some notice, gathering fees from money transfers, as are cash cards, which are prepaid debit cards that can be linked to those accounts.

Amazon as small businesses’ top line lifeline: Two billion items were sold by smaller firms and entrepreneurs across Amazon’s site, which marks a record first half of any year. The reach was truly global, spanning 130 countries. Not a bad haul for six months of work.

Dow 22,000 and bank stocks:  Yes, the Dow has notched psychological threshold after psychological threshold. And yes, some may worry about valuations. The top gainers included names such as JPMorgan Chase and Citigroup. In fact, these names and others helped the S&P financial index hit more than 419 points, a level not seen since the end of 2007. The broad brush used to paint these names with optimism stems from regulations, and from expectations that rollbacks are in the offing. Fed nominee Randal Quarles said during his confirmation hearing that fewer financial restrictions should be in place for some of these financial heavyweights.

Fizzle

Teavana: Starbucks, along with many other retailers, said macro hurts right in the cash register. As a result, the company is shuttering all 379 Teavana retail operations in the United States. Those locations are mostly in malls, so it may also spell some dark days for mall operators, too. The closures are coming in the spring of next year.

Wells Fargo: Baby, you can drive my car — to the impound lot, and possibly illegally. The scandal du jour centers on the bank signing almost half a million customers up for auto insurance they did not want or need. Thousands of people were in default on payments they didn’t know they had, and even had vehicles repossessed. No one’s going to be happy about this one. Not the consumers, the watchdog groups or Wells Fargo — but, maybe the tow truck drivers…

U.K. firms in distress: Stiff upper lips can only go so far. When it comes to small businesses, those lips may be a-tremble. A recent report by Begbies Traynor found there’s been a 25 percent jump in the number of smaller firms navigating through “significant financial distress” in an uncertain economy following Brexit. Operating costs are also up, adding pressure to performance.

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