What is payment by QR code and how does it work? This is one of the latest ways of cashless payment, an alternative to payments by bank cards or electronic money. Using the example of My Fin here is some useful material that will serve as a great cheat sheet if you decide to open your own business.
The QR code can encrypt your bank details, as well as information about a particular purchase.
The merchant shows the QR code to the buyer in an electronic or printed out form, and the latter reads the code using his bank’s mobile app. After that the sum of the purchase is deducted from the buyer’s account, which is credited to the merchant’s account in some seconds.
To set the payment by QR code in your point of sales or in the online store you have to contact the bank. All major American banks are already connected to the Quick Pay System (QPS), through which QR payments can be made. If the bank where you have your current account is a member of QPS, you will be able to accept QR-code payments from clients of any banks that have joined QPS.
Some banks are developing their own QR-code payment services. But restrictions may be imposed on payments made through these services. For example, it is possible to accept payments only from clients of the same bank or introduce additional commissions for payments from accounts of other banks.
In QPS the maximum amount of commissions, which the bank may charge from the seller, is limited by the Central Bank of America. And the banks in their own services can set the rates at their own discretion.
Why do I need to pay by QR code?
To begin with, let’s be clear: it’s not necessary. Merchants are free to decide how they want to pay their customers. Unconditionally accept card payments only for companies with revenue of 1 million dollars a year.
Compared to paying by card, QR technology has several advantages:
- It’s more profitable. It’s cheaper than accepting payments with bank cards. The commission that banks charge for acquiring sometimes exceeds 3% of the purchase amount. The commission for QR-payments is usually lower, even if the bank conducts it through its own service. And payments through QPS will cost you a maximum of 0.7% of the purchase amount.
- Faster. Once the buyer confirms the payment, the money is credited to your account in a matter of seconds. You will receive a notification from the bank when the money has been credited – for example, a push notification or SMS text message. In addition, the information will immediately appear in your online and mobile bank. Bank card payments come into your account much later, usually within a few days.
- Simpler. You do not need to use special equipment to accept QR-code payments. You can simply stick a QR-code, which the bank will generate for you, by the cash register.
- More convenient for buyers. The customer doesn’t need a bank card or contactless payment phone to pay. It’s enough to have a bank app installed on his smartphone and a camera built in. The phone instantly reads the QR code, the money transfer will be done in seconds. This is faster than transferring money by account number or card number.
What are QR codes?
Static and dynamic. The difference between them is that in the first case the customer will have to enter the amount of the purchase manually, and in the second – no, because the code already contains this information:
Static code – QR sticker
It is a reusable code: it can be used for all purchases in your location. Only your details are encrypted in it, and the amount of the purchase will have to be entered manually by the buyer in his banking app.
Banks offer different ways to get this code. Some will generate it and send it electronically in the mail or print it out right in front of you at the branch. Others will let you create your own code in the bank app or in your personal account on the bank’s website. You can print it out and place it near the cash register.
A static QR code is suitable if you have a small sales outlet and not too many customers. It will be enough to obtain and print the QR code once, and then use it for all sales.
True, you will have to check each time whether the amount entered by the customer is correct. But it is not difficult: the payment is made in a few seconds, the cash register equipment generates a receipt – and you can immediately verify that the payment is all right. If the customer makes a mistake, you can make a refund right away. In the case of QPS payments, the money will be returned to him in just a second.
In addition, you can usually set up instant push notifications in the banking app for account replenishments.
Dynamic QR code
This is a one-time code that is assigned to each specific purchase. The dynamic code contains not only your details, but also the amount to be paid.
Many banks offer entrepreneurs to set up the easiest way to pay by dynamic code. All you need to do is download a special business banking app to your smartphone or tablet. If it is already installed, it is enough just to activate the function of generation of dynamic QR codes on it. Clarify the setting procedure in your bank.
In the application you will be able to form a dynamic QR-code online and display it on the screen of your gadget. And the customer will read this code from your screen. Bank employees will tell you how to use the application in detail.
The bank may also offer to reprogram or replace your payment terminals so that they generate dynamic codes after scanning the goods at the cash register. The code can be displayed on the terminal screen or printed on the receipt and presented to the customer. But it may cost a fee to reconfigure the terminal.
Dynamic code is convenient for large businesses with a large flow of customers. Such a code already includes the amount payable, so the client does not have to enter it manually and the cashier does not have to check it. This saves time.
If you have an online store, the bank will help you build a dynamic QR code into the payment page of your website. The customer can read it directly from the computer screen. You can send the code to a customer’s personal account on your website or by e-mail. In any case, payment will take less time than entering the card or wallet details.
You can choose which type of code suits your business. But you need to make sure that your bank provides this service. The type of QR code does not affect the amount of commission you will have to pay to the bank for each purchase.