Card firms rushing to adopt QR code payment

A merchant scans a Quick Response (QR) code to approve a transaction. On Oct. 1, BC Card first introduced the QR code-based payment service. Courtesy of BC Card

By Lee Kyung-min

Credit card companies are rushing to adopt payment using Quick Response (QR) codes, a move accelerated by the government-led initiative to facilitate such a system to cut transaction fees for small-to medium-sized businesses (SMEs).

The fee, which SMEs claim is equal to around 30 percent of their operating profit, has long remained a substantial burden for them.

On Oct. 1, BC Card was the first to introduce the QR code-based payment service with 14,000 merchants equipped with a system able to read the code.

Under the system, a customer shows a QR code generated in a mobile phone to a merchant, who will use a scanner, or code reader, to approve the transaction.

This is different from the existing system whereby a consumer uses a mobile camera to scan the merchant-generated code.

It can be also used overseas with EMV _ short for Europay, Mastercard and Visa _ a global standard for cards equipped with computer chips and the technology used to authenticate chip-card transactions.

Following BC's move, Shinhan, KB Kookmin, and Lotte are pushing to adopt the convenient, simplified payment system in cooperation with the Credit Finance Association by the end of the year.

Discussions are underway to develop a program through which a consumer can scan a QR code shown by a merchant using a previously downloaded app.

The system is expected to enable customers to use the QR code-scanning app interchangeably through multiple card companies.

The QR system is among many mobile-based services offered by card companies.

In November, Shinhan is scheduled to introduce Shinhan pay FAN, a mobile platform designed to tailor financial services based on customers' spending patterns.

Real-time recommendations including shopping venues will be made to customers based on payment timelines and locations frequented in a more closely connected comprehensive service.

Meanwhile, what is set to become a new trend in the private sector comes amid the government's move to implement “Zero Pay,” a major campaign pledge of President Moon Jae-in and third-term Seoul Mayor Park Won-soon.

Under the system, a direct transaction system will be possible between consumers and merchants through money transfers approved immediately after the mobile phone of the former scans the QR code displayed by the latter.

The system seeks to reduce the amount of transaction fees taken by a network of three intermediaries including credit card companies, a value-added network (VAN) service provider and a Payment Gate (PG), all of which divide a fee per transaction in exchange for a real-time money wire.

A VAN service provider connects the credit card company and member stores to verify and approve transactions, following which the PG makes the payment.