What are QR code payment services?
QR code payment services enable their users to pay for goods and services by scanning a barcode or QR code of a store with their smartphones. Users either scan a code provided by a merchant or vice versa (merchant presented mode and consumer presented mode). No additional devices, such as payment terminals, are required to implement the service, making it an attractive option for small retailers. QR code payment services can be directly tied to a bank account or credit card, but consumers also have the option of using them as a prepaid means of payment. Some providers also enable peer-to-peer money transfers, a service that saw significant growth in the past years.With a transaction value of almost 15 trillion Japanese yen, QR code payments make up a growing share of cashless payments in Japan. In 2022, they overtook electronic money, which is based on NFC technology, as the second-most used payment method.
QR code payment services’ quick rise
LINE Pay, which was launched in 2014, was one of the first QR code payment services in Japan. The acceptance of QR code payments started to increase significantly in 2019, one year after PayPay and d Barai started their services. The expansion of QR code services was supported by a large-scale cashless reward program by the government in 2019, which was introduced alongside an increase in consumption tax. In addition, new payment providers pushed for market share with aggressive reward campaigns and an initial phase of zero merchant fees. At the same time, merchants began to offer QR code payment options from overseas, such as Alipay and WeChat pay, to attract inbound tourists. Between 2018 and 2023, the number of monthly active QR code payment service users increased from 3.55 million to 75.8 million. With 56.6 million registered users, PayPay is among the largest QR code payment providers, next to Rakuten Pay, and d Barai.In 2019, Japan introduced a standardized QR code called JPQR to enable the use of one single QR code for all participating payment providers. Japan also wants to make its system compatible with that of a number of Southeast Asian countries by 2025.
