QR codes set to turbocharge SME real time payments

QR codes set to turbocharge SME real time payments

08 October 2020 - By Collaborative Media & Publishing

QR codes within Australia's real-time payment system Osko help to streamline the way small businesses accept payments, and the functionality is available now to those financial institutions that want to provide it to their customers.

The innovation comes as the RBA considers the future of QR code-based payment technology, which dominates across Asian markets such as China. By way of contrast, QR codes have played a minor role in Australia given widespread adoption of cards and payment terminals.

However, BPAY Group Product Analyst Pratik Venkatesh says there are many small businesses, such as tradies, that could benefit from the addition of QR codes to real-time payment service Osko.  

For example, a plumber completes a job and would then show the client a QR code, which they scan on their phone. The code contains all the information to pre-populate the payment fields in the client's mobile banking app and the payment is completed in minutes.

"It solves a lot of issues that SMEs face," Venkatesh says. "It's difficult to collect money on jobs that they've already done: they might give the client an invoice and leave or ask them to manually enter lengthy bank details," Venkatesh says.

"It's also a potentially cheaper method for an SME to accept digital payments because they don't need a merchant facility and its associated costs."

The end user demand was also tested through a number of focus groups.

A new form of cash

Cash usage has been in long-term decline for years although it remains relatively popular among some SMEs. The coronavirus pandemic is changing that situation as consumers remain wary of touching any surface, including cash, that may harbour viruses.

"If you look at the Australian economy, cash usage is in sharp decline," Venkatesh says. "We see Osko and QR codes playing a key role replacing cash in that space."

The Commonwealth Bank of Australia recently released a report that predicted Australia could become cashless by 2026, based on the trend revealed in the RBA’s Consumer Payment Methods survey.

Australians are increasingly using new payment services as a replacement but Osko may be the nearest to cash. Transfers are made in real time between bank accounts which are accessed using online or mobile banking apps.

QR codes could potentially make Osko payments even more seamless for SMEs, particularly given they also contain a reference field for invoice numbers and a description field that outlines the service in detail.

"When the business gets their data feed from their bank, they can fully reconcile it using the invoice number. They're no longer reliant on the payer entering the right information," says Venkatesh.

BPAY Group’s security framework also ensures the QR code is generated from a trusted source. The company also plans to include the Osko branding within the QR Code so customers’ expectations are met and there is a consistent customer experience when making a payment.

RBA considers overseas popularity

China's most popular payment mobile wallets, Alipay and WeChat Pay, both incorporate QR codes as an option for consumers and merchants. Australian Fintech NoahPay's Billax payment app allows Australian-based WeChat users, such as Chinese students living in Australia, to pay their Australian bills using WeChat Pay.

"The popularity of QR code payments in Asia is largely driven by its accessibility compared to physical payment terminals in some areas of the economy, especially within the micro and small business space. In addition to the success of popular apps like WeChat and Alipay, that have had scannable codes as an integral part of their product strategies, QR codes naturally became a wonderful middle ground way to make and accept payments in Asia," according to NoahPay Director and Co-founder Ryan Yan.

He says the NFC (Near Field Communication) smartphone technology that powers mobile wallets such as Apple Pay and Google Pay can sometimes provide a better check out experience when paying a merchant, although it comes down to individual user behaviours and preferences. QR codes do still have a role to play in Australia.

"QR codes are a proven way to reach different demographics, and if you're getting your payment information through paper or electronic documents, QR Codes still have a lot of room to play because it can be challenging to facilitate a NFC transaction through a paper bill," says Yan.

For example, businesses that send paper or PDF bills that incorporate BPAY as a payment method have the option to include a QR code, allowing customers to scan the code to simply prepopulate all payment fields. BPAY Group already has a QR Code generator via their Developer Portal for BPAY Payments and are exploring whether this functionality could be extended to Osko QR Codes. BPAY Group has also explored including a QR Code reader tool in the Developer Portal for Members of the Scheme to easily implement.

While the RBA's retail review acknowledged that QR codes are more popular in other jurisdictions, it also found that a number of Australian merchants are now accepting QR-code based payments.

Osko runs on the New Payments Platform (NPP), which recently published a QR code standard based on the global EMVCo QR code specification. Payments industry association AusPayNet is also considering incorporating the standard into broader industry rules that govern broader payment processes.

It may lead to a single QR code interface, similar to the Singapore QR (SGQR) code standard developed by the Monetary Authority of Singapore, which defines default field positions and the ordering of account information from payment schemes.

An Australian standard could lead to yet more local payment innovation using QR codes.

This article represents the views and opinions of the author and do not necessarily reflect the opinions of BPAY. Published by BPAY Pty Ltd.  BPAY is offered by over 150 Financial Institutions. Contact your Financial Institution to see if it offers BPAY and to get the terms and conditions. This is general advice – before using BPAY please review the terms and conditions and consider whether BPAY is appropriate for your personal circumstances.