China’s love affair with the QR Code

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These small black and white squares are now part of a vast ecommerce network that is valued in trillions. We take a look under the hood and see what they do, where they work well, and what we can expect to see from them in the future.

WeChat and Alipay are the two dominate payment systems in China making up 40% of the market.  Source

WeChat and Alipay are the two dominate payment systems in China making up 40% of the market. Source

The Chinese way

Millions of purchases each day are made in China using the now ubiquitous “Little White Boxes” ( 小白盒) which are dotted around the city in every conceivable location. From restaurants taking payments, train stations issuing tickets, and even beggars looking to collect money, QR-Codes have really taken off. So much so, that it now largely underpins a total transaction value of more than USD $1.65 trillion, accounting for about a third of all mobile payments in China.

The technology is heavily utilised by China’s tech behemoths through their own app ecosystems of Tencent’s WeChat Pay and Alibaba’s Alipay, which coincidentally are the two dominant forms of mobile payments in the world’s largest mobile payments market.

For the average small business in China it’s a fast and hassle-free solution to accept transactions without large fees or burden on the consumer. Customers simply grab their phone; take a shot of the QR code they want to send money to and press send. In a matter of seconds customers are making digital cash payments.

Switch back the United States or Europe, the tiny black and white squares never quite took off. Instead, they have been reserved for social media apps and for quirky guerrilla advertising campaigns, making them more for a novelty item – well almost.

After Snap’s CEO Evan Spiegel visited China in 2014, he added Snapcode to the app for users unlock new filters. Apple iPhones are now also able to scan and read the codes without having a specific app to do so, making them even more convenient to use from a consumer journey perspective.

While some regions are slower on QR code uptake the general direction is upwards.  Source

While some regions are slower on QR code uptake the general direction is upwards. Source

QR-Code origins

Originally developed in 1994, by a Japanese automaker, the discreet stickers were designed to be standardised, robust, and easily tracked at any angle. Each code is able to contain a variety of data, from long encrypted text, images, and URLs to videos online. Parts of the data is repeated every so often, so even if the code damaged, because the paper is torn, or is obscured, as a result of grim or dirt, the code can still be resolved to reveal the message.

According to  GlobalWebIndex , maturer technologies like NFC are partly responsible for holding back QR Code adoption.

According to GlobalWebIndex, maturer technologies like NFC are partly responsible for holding back QR Code adoption.

The future of QR codes

From its humble beginnings, the QR code has seen its ups and downs. Where it has seen mass adoption in the APAC region, more developed markets are seeing a much slower uptake in the technology. The need to survive in a time of digital transformation, especially in retail, is seeing brands use the technology to create novelty experiences that attempt to either personalise, create on-brand messaging, or ideas for new products and services.

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