Consumer use of the QR code — those square scannable barcodes — may have reached a tipping point during Coinbase’s 2022 Super Bowl ad featuring just a Pong-like display of a QR code. So many millions of people rushed to snap a picture of it on their televisions screens that it crashed Coinbase’s site.
Sure part of it was the offer of $15 worth of Bitcoin, but the fact is, millions of people didn’t scratch their heads when they saw the square code, they knew exactly what do with it. This was the culmination of two years increased of usage of QR codes during the pandemic.
The QR code was actually invented in Japan in 1994, and while it has seen increasing use over the decades since then, it has never become a full part of everyday life for most people.
“The QR code is very versatile, and just like anything digital, it got a big boost during the pandemic,” says Rutger van Faassen, an analyst specializing in innovation and new markets for Curinos, in an interview with The Financial Brand. “Think about how we now use it to pull up menus. And then you think about the Coinbase Super Bowl ad. It has gone a bit mainstream, now most people know what to do with a QR code.”
Number of U.S. and U.K. consumers who increased their use of QR codes since the start of the pandemic, per Diebold Nixdorf survey data
“QR codes are everywhere: at restaurants; in magazines, sending us to the latest workouts and recipes; on food packages, on direct mail and now even at the ATM,” writes Jeff Grace, a UX Designer with Diebold Nixdorf, in Fintech Futures.
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One Use Case for QR Codes: Payments
So, does all this mean banks and credit unions should incorporate QR codes more into their digital functionality and user experience?
There are some areas where it could be beneficial, says Van Faassen.
One obvious one is in payments. Van Faassen notes that using QR codes for payments is much more popular in other parts of the world, especially Asia, whereas “the U.S. is still very card heavy.”
Not only might digital habits developed during the pandemic potentially spur QR-based payments, but health habits as well, as more people are interested in no-contact transactions, he adds. While QR codes are notably used by Venmo, and Chase offers them in its P2P payments as well, most U.S. banks do not implement them in this regard.
QR codes could also be a safer alternative to one-time credit card numbers that are instantly generated and linked to an existing credit card account, and are often used on e-commerce sites, Van Faassen states.
Van Faassen also cites the recently announced move by Apple to allow iPhones to accept payments from contactless cards or other iPhones, saying that QR code-based payments can be appealing for consumers that either don’t use Apple devices or won’t have the latest phones that come with the contactless technology.
“That could take a while to catch on,” he says, of Apple’s contactless plans. “And in the meantime, using a QR code is a perfect alternative to that.”
Fraud is an issue that should be carefully considered, however, particularly for payment applications of QR codes, as Van Faassen and others explain further down.
Other Uses: Customized Marketing & Contactless ATMs
Another prime potential use case for banks to use QR codes is in the area of limited-time or customized offers. For example, a bank that is sponsoring a sporting event may want to offer a promotion to attendees of that event. Sending a QR code with a link to an offer is an easy way to do that, and more cost effective than creating a new page on its website or app to display the offer. QR codes can also be used to drive customized offers to a certain segment of customers.
QR codes can be beneficial in delivering limited-time or hyper-targeted offers to a subset of customers.
“So, when you do have these special occasions or events, the bank can easily drive information relating to this. It doesn’t require you to update your whole website,” van Faassen points out. “It can be very good for micro-personalization.”
In addition, a Diebold Nixdorf survey notes how QR codes can be used increasingly at ATMs.
“The study presented several key findings — one being that most participant’s ATM habits have changed,” writes Diebold Nixdorf’s Grace. “Their frequency of ATM visits decreased, and many had concerns with touching the device, leaving them to take sanitary precautions, such as wiping the buttons and screen. The vast majority of participants interviewed welcomed the adoption of a contactless technology and preferred the QR code above NFC.”
Lingering Security Concerns
Of course, like all digital technologies, QR codes can be exploited by criminals, particularly for payment applications.
For example, fraudsters can create new QR codes linking to fraudulent websites or manipulate and attack existing ones, giving them access to sensitive financial information at the point of payment, Zilvinas Bareisis, head of retail banking at Celent, states in Bank Automation News.
“Many QR codes don’t initiate the payment directly, but instead take the customer to a checkout site where they present their payment details,” Bareisis says. “Intercepting those payment details for subsequent fraudulent use is the main concern, along with installing malware on consumer devices.”
Beware of Scams:
While QR codes have a wide utility to reach customers, they can also be manipulated by fraudsters
In a typical scenario, outlined in a Wall Street Journal article, criminals will post a notice — often posing as a business or other organization that people recognize and trust — that includes a QR code.
“When scanned with a camera or app, the code leads to a webpage that might ask unsuspecting users to enter personal information such as a credit card, which is then stolen, or it may install malware to gain access to victims’ devices in perpetuity,” the article states.
Van Faassen recalls one occasion walking in Manhattan and seeing a person put stickers with QR codes near one terminal where New York’s ubiquitous Citi Bikes are stationed. It could have been a simple case of guerilla marketing — for example someone in a band sharing a QR code that leads back to the band’s website. However, in such instances there is also a high probability that a scam is being perpetrated.
“Unfortunately, every upside has its downside,” says van Faassen.