QR Codes are Back and They are Spreading Outside China
Imagine an average day anywhere in the world. You wake up, buy breakfast with cash or a bank card; get on the subway swiping your transport pass; rub a piece of plastic with your objectively terrible photograph against a card reader to open the office door; add new people to your social networks by typing their names in the search bar; and scour your wallet for change to tip a particularly talented busker.
Now if you were in China, you could do all that with your phone alone. Paying for food? Scan a QR code. Entering the subway? Scan the code. Want to befriend a person on social media? Scan his code. Want to tip a busker or, what the hell, give money to a beggar? Just scan the damn thing.
True, these uninviting angular black and white boxes might look like something out of the previous century, as in, why are we getting stuck with the old bar code system, if we could move forward. But bear with us here, the codes are amazing, and it will take some time until they grow on you, but once they do, you will never go back.
QR codes in China
QR codes, as promising as they seemed 10 years ago, flopped pretty much everywhere in the world but China. And there’s never been a shortage of brains trying to process this oddball dynamic. Some say QR codes owe their success in China to the fact that there was virtually no cash-free payment alternative when they emerged. In the beginning of 2000s, China was an extremely cash-dependent society, bank cards were not popular with the public, not to mention that getting a terminal to process such payments was too much of a hassle for the hordes of small-time entrepreneurs driving China’s economy back then.
As China kept scudding towards the digital age, a new mode of payment quickly made it onto the agenda but going back to promoting bank cards would be considered regressive. Carrying on with cash would not work either. The biggest banknote in China is RMB100 (around 16 dollars), people were tired of the stacks of colorful paper crumpling up in their pockets. QR codes were an easy and convenient solution, especially for merchants, who could just print out their code and have people scan it to pay for goods and services. On top of that, Inspiry, the pioneer of QR technologies in China, seized the opportunity and created the so-called “white box”, a terminal that can scan QR codes and process payments, that costs way cheaper than a traditional bank card payment system. That was enough to win over China’s consumers.
However, some argue that the context behind the surge of QR codes is more psychological. For the Chinese code-scanning is a God-given alternative to typing Latin letters. Rather than type someone’s name on social media, struggling to match the right character with the right pinyin transcription, now you can simply scan the person’s phone, and you’re officially friends. Same goes for other online links, URLs, logins and passwords. For instance, to log into the desktop version of WeChat you only need (yes, you guessed right) to scan the code. Other messaging apps are already catching up, even WhatsApp is currently using the same login system.
Going even deeper, others have drawn a parallel between the boxy QR codes and traditional Chinese chops, that have been of special significance to the people of the Middle Kingdom for over two millennia, being perceived as symbols of power and authority. A beautiful theory, that, however, probably comes from the same place as feeding to everyone the romanticized story of how you met your partner, instead of admitting that you matched on Tinder.
QR Codes outside China
Not only do the Chinese hold QR codes dear to their hearts, but they are also pretty successful at convincing the rest of the world that their new-found love is not just a one-time fling. It’s meaningful, reasonable and is going to last. The best ambassadors for Chinese tech trends are Chinese tourists, who now outnumber any other tourist demographic in the world. On top of that, they love to spend money. The figures that Chinese travelers leave behind make up 21% of overall tourism spending in the world. Naturally, businesses are eager to make spending even easier for the Chinese by offering them payment options to which they are used to.
Chinese tech giants are also quite aware of the consumption habits of their fellow compatriots abroad. Alipay has been pushing hard to establish relationships with the US merchants catering to Chinese tourists and is currently working with a major merchant processor First Data Corp. Alipay’s network already includes over 175, 000 merchant locations, where Chinese tourists can feel at home, making purchases through QR code payments.
The tourists are a huge market for both Alipay and WeChat Pay. Only in 2016, almost 3 million Chinese visited the US, a number that’s been growing every year, as well as the number of Chinese students who strive to go abroad. And with China’s growing influence on all fronts, the QR code is looming over our heads like a film that you refuse to watch until everyone else watches it and you feel left out of their conversations.
QR codes are not alien invaders, they are not going to land on our turf and somehow seize control of the planet overnight by just looking creepy and out-of-this-worldly. It is going to be a lengthy process. As Windsor Holden, researcher of mobile payment technologies, puts it, “The first market will be Chinese tourists, the second market will be overseas workers and Chinese immigrants, then U.S. residents of Chinese extraction, then from that point you get to a wider demographic.”
Asia is already succumbing to QR Codes. WeChat Pay made its foray into the Singaporean market and the dynamic merchant community is expected to push the codes throughout all of Southeast Asia. India has its own QR champions like Alibaba-backed Paytm that are acting on the trend in the South. Japan and South Korea are not trailing behind either, introducing QR Code payment systems through the biggest local social media app LINE and collaborating with Alipay to cash in on the masses of Chinese tourists.
There’s been heaps of speculations about the potential mobile payment apps have to render banks obsolete. Bloomberg estimates that apps like WeChat Pay and Alipay could bite off almost $40 billion in revenues from major banks, which, no doubt, Wall Street would not allow, not in the near future. Yet, QR Codes are not only about money, they are also about convenience. You might have not even noticed, but there is probably a QR code generating function in your go-to social media app, used for adding new friends and accessing the apps from desktops. Snapchat has the Snapcode; Instagram added Nametags; Facebook, WhatsApp and even the biggest Russian social network VK, all make use of QR codes. Spotify now uses barcodes called Spotify Code to let people play songs, albums and playlist. Amazon has SmileCodes to make it easier for consumers to jump from magazine advertisements to their website. Even Starbucks is big on QR codes using them for payments through their widely praised mobile app. Apple yielded too and added a scanning option into the iPhone’s camera in order not to lose its foothold in China. So if until now you were brushing off QR codes for being useless and rudimentary, just remember the nerdy loser kid from your high school, who grew up to be hot and successful and drives a drop-top.
Featured photo credit to internet
