Mauro Tozzi
QR Code payment technology has been around since the early 1990s. However, until recently, it was not widely used in the Brazilian market. The COVID-19 pandemic has significantly changed this scenario, driving demand for new contactless payment models. According to consultancy PwC, the number of transactions with payment methods other than cash will grow by 52% by 2025 in Latin America, and then by 48% by 2030.
Here, QR codes are helping to further democratize digital payments, as they are accessible to the vast majority of consumers and merchants. They also make it possible for those who have smartphones without NFC technology to be able to make a digital payment and participate in this ecosystem. At the same time, QR Code payments add interoperability and cost savings to merchants, and can be received remotely.
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The “new” technology provides the payment industry with a basic interoperable QR solution accessible to all participants in the ecosystem, which prevents the emergence of multiple QR code models that operate based on their own concepts and security mechanisms.
For the consumer, the payment experience is the same – as a contactless payment transaction carried out with the card in a physical store – while, for the merchant, it offers a virtual, easy-to-use and that leverages the existing payment infrastructure.
Issuing banks benefit, as the solution allows the activation of more consumers, improving customer engagement and loyalty as well as acquirers, as they expand acceptance to new segments that were not served before.
Purchasing through devices such as digital wallets is increasingly convenient not only for young consumers, but for other profiles. In a scenario where customers buy products from any device and at any time and place, always expecting their experiences to be fast, secure and easy, card tokenization adds an important security factor in digital payments, since which replaces the card number with an alternative number, the token. In Latin America, 9.2% of transactions are rejected on suspicion of fraud, more than triple the rate in the United States.
Tokenized payments allow users to make card payments without the card itself. Also, many people do not want to carry their wallets or purses with them, preferring digital wallets. These wallets are on smartphones, along with all the other essential services that users need on a daily basis, such as internet, messaging services, maps and email, among others.
With new services fully cloud-based, financial institutions are already re-evaluating their solutions, since the expectation in the coming years is that this type of model will impact other traditional means of payment in addition to the cards themselves, such as bank slips, checks and DOC/ TED. However, I do not believe in the disruption of traditional bank cards or cash, but rather the coexistence of several options. Better for those who pay and those who receive.
Mauro Tozzi is Global Head of Sales at HST Card Technology, specializing in security solutions for the payment ecosystem.
