Payments companies have been working for months against a backdrop of consumer fears induced by the new coronavirus, and on Wednesday Shift4 Payments Inc. launched a contactless-payment capability with a twist: it relies on Quick Response codes rather than the much more common near-field communication technology found in major-brand credit and debit cards and mobile phones.
The new service, called QR Pay, requires no app on the consumer’s phone and allows merchants to accept contactless payments via a channel in addition to NFC. Shift4, which went public earlier this month, has installed QR Pay at test sites and intends to offer the service at no charge to merchants generally, according to Nate Hirshberg, vice president of marketing for the Allentown, Pa.-based merchant-services provider. “We actually developed this solution directly in response to the shifting consumer preferences and merchant demands brought about by Covid,” Hirshberg says.
The technology allows customers to pay by scanning a QR code on a receipt or payment-terminal screen, and then to complete the transaction on their phone. QR Pay is also fitted for use in restaurants, a major merchant category for Shift4. “The QR code is printed on the guest check. This provides the most contactless experience possible for a guest to pay,” says Mike Russo, the company’s chief technology officer.
QR codes are popular for mobile payments in China and in other Asian markets but in the U.S. market have generally been limited to deployments by specific chains, such as Starbucks and Dunkin. Also, Walmart Stores Inc.’s proprietary Walmart Pay mobile wallet relies on QR codes. By contrast, general-purpose contactless cards and mobile-payments services like Apple Pay rely on NFC technology.
“The card networks have put their bets on NFC,” says Thad Peterson, a senior analyst at Aite Group, a financial-services consultancy based in Boston. That gives NFC an edge, he adds, since “you’re immediately increasing the potential for card payments” by installing the technology, which relies on very short-range radio signals.
But Shift4’s development of QR Pay, Peterson says, is timely. “It’s an appropriate use of QR where QR is not a standard of payment,” he notes. “It could be a powerful tool to get merchants to pick up Shift4.” That’s especially the case with consumers fearful of touching surfaces like keypads in stores, Peterson says.
Since QR Pay relies on a mobile phone’s native functionality, it could win broader adoption by merchants who would otherwise fear the limiting factor of a specialized app. “If [consumers] needed an app for it, then I don’t think it would be nearly as successful,” says Peterson.
But that doesn’t mean Shift4 isn’t spreading its bets. “All of our PIN pads do also support NFC as well, so this is just another contactless option that may be preferred in different payment environments,” says Hirshberg.