The Accredited Standards Committee X9 Inc. (X9) announced that it will develop a new QR code payments standard. The new standard will establish the content of a QR code for payments, emphasizing interoperability, in order to process a payment digitally, and will include both merchant-presented and customer-presented QR Codes. Encoded in a payment QR code will be all the information necessary to execute a payment without the customer or merchant having to share financial account details. Work will begin in August, and participants are sought.
The QR Code Payment Standard is needed to accelerate the adoption of instant payments, which in the United States lags far behind many other countries. For example, there are over 12 billion instant payments per month in India and more than five billion per month in Brazil, while in the United States there are only 30 million instant payments each month.
Technically, QR codes, from a back-office perspective, look like a string of alphanumeric characters. The fields of information in that string must be used in the same way by every financial institution, so that when banks generate unique QR codes for payment at U.S. merchants, consumers who bank with other financial institutions can open their mobile apps, scan those QR codes and their banks will know how to process them. But at present, there is no way for a consumer to pay a merchant or biller instantly without sharing sensitive bank account information.
Automating payments through the use of QR codes could deliver billions in savings to U.S. businesses and would likely yield lower costs for consumers. QR code payments will also be less risky overall, as consumers must authorize the amounts to be sent from their bank accounts.
“The payments infrastructure can’t be modernized without technology like QR code payments, but the technology alone won’t drive adoption of instant payments,” said Carlos Netto, co-founder and CEO of Matera, a banking software provider whose personnel are involved in the new X9 initiative. “A standard is needed so that every financial institution generating and decoding QR codes for payments uses this technology in the same way. A QR code payment standard will create a network effect so that every bank or merchant mobile app with a QR code capability can be used to make payments with anyone.”
(Note that URL QR codes are not included in this effort. That type of QR Code is scanned by the camera app on a mobile device, and it redirects the user to a landing page with more information. The proposed standard for a payment QR code will include much more secure technology than a simple URL QR Code.)
X9 is seeking additional participants for this initiative, especially representatives of the primary stakeholders — financial institutions, merchants and billers — and their service providers. Interested parties can indicate their desire for involvement at the X9 website.
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