June 25, 2019

The Re-Emergence of QR Codes in Europe

Continuing the theme of QR code comeback in the world, this post discusses the recent rise in their use in Europe. While QR codes are extremely commonplace in Asia already, the western hemisphere is only catching up now.

While this change is happening slowly and subtly, it looks like QR codes are about to become a part of daily life in Europe.

Standing for Quick Response, a QR code can now be used as a quick and painless form of payment. Shoppers simply need to scan a code with their mobile phone and money is immediately transferred from one account to the next.

QR codes, also known as matrix barcodes or two-dimensional barcodes, were actually invented for the Japanese auto industry in 1994. Since then, their use has expanded. In addition to payment capture, QR codes are now used in product and document tracking, time tracking, item identification, and even marketing.

The two-dimensional barcode is far more useful than the traditional barcode because it can convey a wealth of data. Where a traditional barcode is one-dimensional, giving information just horizontally — the QR code goes both horizontal and vertical. This seemingly simple difference allows the two-dimensional QR code to transfer hundreds of times more data.

QR codes are how Asia pays

Like I mentioned in the blog post New EU Regulations Require QR Codes on Medicinal Packaging, using QR codes for payments is very popular especially in China and South Korea thanks to companies like Apipay and Tencent. While over here in the western hemisphere, we’ve been using QR codes to download apps and sign up for loyalty programs, their use in Asia has exploded.

In South Korea, back in the 2010s, supermarket company Tesco launched virtual grocery stores in Seoul subways. These stores were essentially wall-sized advertisements that looked exactly like the shelves of the grocery store — but each item had a QR code beneath. Commuters could scan the QR codes of their groceries while they waited for their train, pay through their phone, and their groceries would be delivered to their home at their chosen time and date.  

By the end of that year, the app became the most downloaded in South Korea and Tesco became one of the largest retailers in the country.

After Tesco’s success, Chinese fintech companies, Tencent and Alipay, recently launched payment systems based on QR codes — to great success. Chinese citizens went on to spend over 15 trillion in 2017 through their mobile wallets.

Simplicity leads to success

To accept payment, a merchant only needs their code on display — this can be as simple as having it printed on a piece of paper. In this manner, Tencent and Alipay have removed the need to obtain expensive point-of-sale technology.

The simplicity of QR codes allows for countless possibilities, including mobile payments.

Through Tencent and Alipay, merchants are also able to directly advertise to people near their store. They can even give customers a discount while they are shopping, increasing their sales. All the customer needs to do is download the app and carry their phone with them, as they would anyway.

QR codes in Europe

QR codes as a trend have recently landed in Europe as well, following Chinese tourists.

In China, cash is becoming almost non-existent — for example you can now only get a bottle of water out of a machine by paying with your phone.

By accepting QR code payment from Chinese tourists, European merchants are increasing their income. In 2016, Alipay partnered with ePassi in Finland to allow Chinese travellers to pay with their mobile wallets.

550,000 Chinese tourists visit Finland each year, usually spending about €940 per person. After Alipay’s partnership with ePassi, that increased to about €2820 spent on average. These benefits extended to thousands of Finnish merchants.

QR codes were also recently employed in the UK. In an initiative supported by Oxford University, homeless people are given a QR code to wear around their neck, which can then be scanned by anyone who wishes to make a donation.

The money is transferred to an account managed by a caseworker, who makes sure the that it’s spent on things that will benefit the homeless person (like a new passport or a rental deposit). The idea came about because the UK is becoming a cashless society as well through credit cards and mobile payment systems.

Tracking packages and industry monitoring as potential uses

Due to the wealth of data they can convey, QR codes are increasingly being used to track shipments and even individual products.

Recently, the EU released new regulations for tobacco products. Wholesalers and distributors must now keep track of each individual pack of cigarettes. This includes knowing when each pack was received and following it through the shipping process.

While this would have been a major undertaking 20 years ago, today QR codes make it possible. Tobacco distributors can scan the codes with a smart device and the information is immediately uploaded to a cloud.

It is possible that the QR code could expand to tracking everything from pharmaceuticals and medical products to food. In 2017, European regulators considered requiring pharmaceutical companies to include a QR code on medicine packaging. As of February 2019, in an attempt to regulate the pharmaceutical industry, medicine packaging is now required to carry a unique identifier and mobile tracking technology, such as a QR code. These regulations come in an attempt to guarantee pharmaceutical product authenticity and prevent any tampering.

As this system of using mobile technology to track pharmaceutical products is new to the EU, many manufacturers are still working to comply. It appears that mobile tracking technology, such as a two-dimensional code, is required to appear on either the product packaging or the product leaflet. These codes will link to a platform in order to provide statutory information, as well as potential additional information to further assist the doctor and patient.

These codes would link to a website where information about the medicine would be displayed. This could include product information and risk minimization material for the patient.

As concerns about our food’s sustainability and traceability become more prevalent, QR codes also find more use.

In 2018, the United States Department of Agriculture proposed the use of QR codes on food packaging, mainly to label genetically modified foods. The QR code would link to a website that would inform shoppers if the items were genetically modified or not.

Bumble Bee Foods, a shelf-stable seafood company in the United States, has very recently adopted the use of QR codes on its packaging. The codes are now being used to track yellowfin tuna (ahi) from the fishing village in Indonesia to the processing centre, all the way to the shelves of US grocery stores. Working with SAP, a cloud-based blockchain platform, Bumble Bee Foods can now reassure its customers; not only about the freshness of the food, but also about whether the fish is sustainable and fair trade.

As concerns about the planet mount, this is a very important use of the two-dimensional codes. A traditional barcode is not capable of providing this amount of information, and as a bonus QR code information is quickly uploaded to a cloud — allowing almost real-time data analysis.

How far will it go?

As the world moves online, the use of QR codes seems to be spreading to every aspect of our lives. However, there may be a few barricades to success.

As with anything, scammers are quick to game the system. For example, one hacker in China altered codes on hireable bikes — as most of these bikes are often left unattended and are rarely checked.

When a person wanting to ride would scan the QR code, their money was transferred directly to his account. This hacker raked in about €124,000 before he was caught. Obviously, like in all online operations, the necessary steps for security need to be taken to minimize the such opportunities for breaches.

The potential for fraud has banks scrambling to keep up. In 2017, China’s central bank announced that it would begin regulating payments made through scannable codes. Purchases through QR code were to be capped at 500 yuan (€67).

Beyond that hard rule, the central bank mainly asked the industry to being regulating itself.

Furthermore, in Europe, many mobile pay apps only work within specific cities or countries. Whereas Alipay was able to extend the range for Chinese travellers to over 6,000 kilometres.

While this app is currently used by mainly Chinese citizens, it appears that Alipay could easily take over the European mobile payment industry by creating a multilingual interface. This would dramatically affect local banks and revenue from point-of-sale systems.

In the United States, the use of QR codes may be much slower to take hold. Use of two-dimensional codes has been largely shunned and relegated to apps like Snapchat or Spotify. In some areas, cell coverage is weak and many people are unfamiliar with what a QR code even is.

As the world progressively moves onto the internet, QR codes will likely become dominant — despite these drawbacks. We can expect governments to require two-dimensional codes more and more, in order to track all kinds of products. Despite Americans being unfamiliar, many people in Europe are already comfortable paying through their phone, as well.

Unique QR codes are easily created by anyone, from massive corporations to a corner shop. These codes are also more reliable than the traditional bar code. The Quick Response code will still work even if it is damaged or soiled (a tremendous advantage for the shipping industry).

If you liked this post, I recommend taking a look at Logmore Feature: Dynamic QR Codes and New EU Regulations Require QR Codes on Medicinal Packaging, to which I referred earlier.