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QR CODE PAYMENT: MONEY IN BLACK AND WHITE DOTS

The Chinese people can easily make you feel foreign, if not alienated. I realized that well enough during my visit to the Chinese industrial city Guangzhou last year.

While I was carrying Yuan—the Chinese currency—and was struggling to communicate with vendors, shopkeepers and restaurateurs in making payments, people around me were taking out their smartphones and were summoning to the screen a payment app with a QR code.

Even for paying to a street side fruit vendor, they have resorted to those black and white dots which “surprisingly” represent money.

A QR code is a two-dimensional barcode with a random pattern of tiny black squares against a white background, capable of holding 300 times more data than a traditional one-dimensional code.

China has adopted paying with QR code faster than any other nation in the world. There even restaurants have pinned barcode tags to the chests of waiters, waitresses and even chefs. Customers can scan the code to leave a tip if they are satisfied with service.

Last year, a bridesmaid wore the code tag to collect gift money from guests at a wedding ceremony in Beijing, triggering a verbal fight between the bride and her red-faced, soon-to-be mother-in-law, China Youth Daily and other Chinese media outlets reported.

After watching the Chinese people’s frenzy with QR code payment system last year, I was wondering when this would enter in Bangladesh’s payment system, which is known for being late in adopting digital mode of payment.

To my surprise, QR code payment system has created its inroads in Bangladeshi market this year.

T QR CODE PAYMENT IN BANGLADESH

United Commercial Bank Limited (UCB) first launched ‘Upay’— a state of the art digital banking platform— which has the provision for QR Code payment.

Managing Director and CEO of UCB AE Abdul Muhaimen said Upay for the first time has been using the most advanced and reliable technologies like Blockchain and QR or Quick Response Code to secure all financial transactions.

“Upay customers will not be required to carry cash to make payments. Using smart mobile phone as a digital wallet or personal computer connected to the internet, Upay customers will have the convenience of accessing any of their UCB accounts and perform all banking transactions,” he said.

The UCB CEO said Upay will cater to all consumers, corporate and govt. payments like merchant shopping, bill payment, fund transfer, loan repayment, inward remittance, insurance premium, salary disbursement, e-commerce etc.

“Moreover, purchase of digital cheque for gifts, redemption of voucher and reward points, balance inquiry, mini statement etc. can also be performed, “ he added.

After UCB, Bank Asia Limited and City Bank limited joined the QR Code payment system bandwagon.

Arfan Ali, managing director of Bank Asia Ltd said they always wanted to introduce a new and more secure payment system.

Ali said their system was being developed by Kona Software Ltd, a Korea–Bangladesh joint venture company— which specializes in developing high-end financial software.

Minaoar Hossain Tanzil, managinghe director of Kona Software Lab Ltd. said they have developed KonaPay, one of the most popular mobile payment platforms used in South Korea.

“KonaPay is used by over one million people in Korea. So when we were approached to develoep a QR code-based payment platform for Bangladeshi financial organisations, we jumped at the opportunity,” he added.

Tanzil said the financial transaction market is changing globally. ”The effect of that change is gradually being felt in Bangladesh. The mobile app doing financial transactions is not like any other app. The most important part of such an app is its security,” he added.

He also said that for developing a QR code payment system, one needs to explore the research and development approach. “You need to create a foolproof system. If you leave any hole, the the system will be compromised through that anomaly,” he added.

QR code growth in other markets

Outside of China, usage of QR codes for payments had grown slowly. In the US, for instance, market-wide solutions such as MCX have lagged, and even the purchase of MCX by JP Morgan Chase recently has not propelled QR code acceptance rapidly.

Two banks in Singapore, DBS and OCBC, have rolled out their own proprietary QR code acceptance solutions. Momentum is, however, beginning to grow. Along with the rollouts announce for Africa and other markets, MasterCard, UnionPay and Visa recently introduced an interoperable QR code payments platform in Thailand.

With other launches by Visa and MasterCard already announced, and with interoperability growing, a wave of new QR code payments program rollouts seem far more likely than it did just a few short months ago.

Once banks do decide to launch interoperable QR code payments, the process is straightforward. Banks have developed QR code payment solutions and integrated them into their existing bank apps, then rolled it out to consumers and merchants with a slew of announcements and straightforward guides for implementation.

With so many individuals using apps and even using QR codes for shopping or payments in other channels, many consumers and merchants have intuitively adopted QR code for payments quite quickly.

 STRATEGIC IMPLICATIONS OF QR CODES

The rapid expansion of usage of QR codes for payments has a multitude of implications for banks and card schemes as well as for other industry players. Companies will need to decide how to play and develop new strategies quickly to stay in the game. One impact is the shift towards interoperability.

Whereas Alipay and Tenpay in China as well as the initial versions of mVisa used proprietary QR codes, usage of interoperable QR code payments is growing. These interoperable solutions bring tremendous efficiency to merchants and better scalability for banks.

Card schemes as well as wallets such as Alipay and WeChat Pay that have proprietary QR code payments services will need to decide whether to shift towards full interoperability so that they can offer a seamless payment experience globally or continue to try to preserve their turf by offering proprietary solutions.

Another key impact of QR codes could be their effect on near field communication (NFC)payments. While Apple Pay and Samsung Pay as well as other “Pay” solutions have launched with great fanfare, actual usage of NFC contactless services has often been low.

Moreover, merchants usually need to install a contactless card reader or upgrade their POS terminal to accept NFC payments. Industry players may need to rethink their payments strategy in light of the new QR code options, and handset manufacturers may need to consider what to do with NFC if QR code usage begins to expand faster.

More broadly, QR codes could have a tremendous impact on financial inclusion and bank liability products. One of the difficulties for consumers in remote areas has been using digital money, even if they have a plastic card or a phone.

POS terminals were often too expensive to install in sufficient numbers to make card or even mobile payments viable. Now, QR codes give merchants a cheap and easy way to accept digital payments. Once QR code payment acceptance becomes more broadly available, it will be easier for consumers to use money they store on their phone.

Whatever happens, QR codes have opened up more options for more payments more quickly than many people expected, and banks as well as other payments industry players will need to review their strategies quickly to take full advantage of this rapidly-emerging payments alternative. ■

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