Many people may have seen Quick Response Codes signs on various platforms such as supermarkets, advertisements and restaurants but might not know what it is for. Quick Response Code, abbreviated QR is a type of matrix barcode. It usually has a pattern of criss-cross or web black lines arranged methodically inside a square like a puzzle on a white background. It can be seen on bank or shop buildings or advertisements. A barcode is a machine-readable optical label that contains information about the item to which it is attached.
Imaging devices such as smartphone cameras are usually used to read these QR Codes. It is simply an advanced payment technology which is used in many markets around the world. In many economies, the system complements POS, ATMs and mobile banking systems.
QR Code is not readily prevalent in Nigeria for transactions but as a technology fast adoption country and with the embrace of other forms of digital banking transactions, Nigerians will easily catch up with QR Code when promoted and made easily available.
Around 11 million households in the US alone were expected to scan a QR code in the year 2020. This number is way more than 9.76 million scans which were recorded in the year 2018, says NikunjGundaniya inDigipay Website.
“US is not the only country where QR Codes are widely used. Countries like France, Australia, Malaysia, Singapore, Switzerland, Thailand, Indonesia, and Canada are not far behind in the race. Furthermore, QR code is also witnessing a surge in Africa and the Middle East region where its total usage jumped from 12% in 2017 to 18% in 2018”, according to Gundaniya.
In China, it is said that people have used QR codes for payments for a long time. It is reported that Chinese payment app Alipay was the world’s most used app in 2018 outside of social networking apps. “15 million small-business merchants accept Alipay’s QR code payments in China.
“QR codes have, for a while, been a popular way to transact in quite a few other countries too. In India, 9 million merchants use the digital wallet Paytm, which processes QR payments. In African countries, restaurants print QR codes on receipts so customers can pay on their own.
“In these and other countries, QR codes continue to be an excellent way for merchants to accept payments without a card machine or other expensive setup, and the customer doesn’t even have to own a payment card”, experts say.
How does it work?
To use it for the purpose of payment, Gundaniya said a buyer needs to scan the QR code with a barcode reader that has the capability to scan QR codes. This is either Tablet or a smartphone with an inbuilt camera.
“Nowadays, there are also many QR code scan apps available that allow users to scan the QR codes with the utmost ease. All the user has to do is open the camera and place it towards the QR code; this will immediately identify it and subsequently open a push notification. The user then just has to tap on it to finish the operation. There are also some payment and banking apps that can process QR codes for the purpose of bank transfers and payments”.
When a QR code is scanned, the horizontal and vertical patterns of the matrix are decoded by the software on your smartphone and converted into a string of characters. “Both iPhones and Android smartphones can scan QR codes directly from the main camera app, as long as it is using the latest iOS or Android software”, those knowledgeable with the payment system said.
Explaining further on the usage, Gundaniya said in “Scanning recipient’s QR code with a smartphone, the user has to open the phone camera or the relevant QR code scan app. After-wards, they have to scan the code that is displayed on an individual product, paper bill, or at a store’s checkout. Various offers and loyalty points might also be applied via the application in case it’s a store specific application.
“Retailers scanning QR code on user’s phone screen: In the QR code payment process, the user opens the payment app once the total transaction amount is set in the POS system of the retailer. The QR code payment app displays a QR code that identifies with the user’s card details. The retailer then scans the QR code with a scanner thus concluding the transaction”.
QR Code as financial inclusion enabler
It is noteworthy that Nigeria’s Central Bank has in the last 8 years embarked on remarkable moves to deepen financial inclusion which was abysmally low. Its primary objective is to ensure that vast majority of Nigerians have access to financial services.
Data from the apex bank revealed that in 2008, about 53.0% of adults (half of the population) were excluded from financial services. This figure of exclusion rate reduced from 53.0 % in 2008 to 46.3 % in 2010 due to global pursuit of financial inclusion as a vehicle for economic development.
Encouraged by the positive development, the Central Bank of Nigeria in collaboration with stakeholders launched the National Financial Inclusion Strategy in October, 2012 aimed at further reducing the exclusion rate to 20% by 2020 and deepening financial inclusion.
Since then, the Central Bank under Godwin Emefiele as governor had adopted enablers and various strategies to achieve higher percentage of financial inclusion. This includes licencing of agent banks, ATMs, POS and mobile banking/mobile payments systems.
Though Nigeria may not have yet achieved 80% financial inclusion by 2020 as promised by Central Bank of Nigeria as the rate stands at about 65% butthe gradual increase on the rate is an indication that the Central Bank’s programmes are catching with Nigerians towards financial technology. With introduction of POS, agent banks and mobile payments, banking transactions are simplified and this has enhanced the achievement of CBN objectives.
The embrace of these payment systems are partly enabled by the penetration of mobile phones. It is reported that there are around 170 million mobile subscribers out of about 200 million population in Nigeria. This means,that 90 percent of citizens can execute transactions on their phones. “There is little excuse, then, for Nigeria’s low level of financial inclusion”, according to authoritieswho understand process of increasing financial inclusion in a market
With increasing knowledge about POS and mobile banking, it is therefore expected that introduction and embrace of more payment platforms which are deployed in other markets such as Quick Response Code, QR Code into the Nigerian market will further boost CBN policies and augment the financial inclusion drive.
The complementarity of other payment platforms by QR Code is expected to be another trigger for the much-needed financial Inclusion promoted by Central Bank of Nigeria. Basically, financial inclusion guarantees that all income levels both businesses and individuals have access to right financial services. Access to basic financial services, according to experts is critical in reducing poverty and promoting economic development
While usage of QR Code cannot replace other forms of digital payments, Gundaniya said one of the biggest advantages of using QR codes is that it facilitates instant payment. “Making payment via QR codes is extremely quick as compared to other modes of payment. All that a user has to do is simply open the QR code scan app, scan the QR code, and confirm to process the payment. Within a few seconds, the payments are made.
“Making payments via QR codes is very secure. It’s because the QR code is nothing but just a tool that is used to exchange information. Any data which is transferred via QR codes is encrypted thus making the payment fool-proof secure”.
Introduction of QR Code as a payment platform will not only enhance the social distancing life-styles occasioned by Covid-19, but it will also provide convenience, security and boost the financial inclusion of Central Bank of Nigeria towards driving economic growth of Nigeria which is struggling at 0.11 growth after recession.
