How Merchants Can Do QR Code Payments Right
In today’s competitive e-commerce market, consumers are decreasingly willing to accept any friction in their transactions. This reduction in patience has been matched by the growth in alternative payment methods that make buying easier, from digital wallets to bank transfers and beyond.
One of the quickest options is QR code payments, in which a buyer simply uses their device’s camera to read what looks like a simple square symbol that redirects the user to a predetermined location on the Internet.
QR, or quick response, codes were originally developed in 1994 by a Japanese company called Denso Wave as a solution for easily labeling and distinguishing auto parts. A more sophisticated and opportunistic option than standard bar codes, the QR code uses a proprietary encoding method that embeds different types of information in distinct areas of the image, including positioning markers, timing markers, and data and error correction keys. Today, QR codes are becoming an increasingly fundamental tool in commerce
In commerce applications, QR codes generally direct the scanning user to a particular location on the Internet:
- Restaurants, for instance, may guide guests to online menus and ordering applications.
- Advertisers may guide web browsers to special offers.
The special genius of the QR code is that it acts very similarly to a simple clickable link on a website, allowing the publisher to direct the user to a dynamic page, which may collect a broad array of information from the user the moment they choose to follow the link. And because the QR code directs the user to a particular online location, that location can, itself, be updated over time to respond to consumer behavior, allowing it to be tuned for maximum effectiveness.
Merchants and QR Code Payments
Indeed, for anyone who has bought Girl Scout cookies in 2025 from charming children outside the local supermarket, the likelihood is good that a Venmo QR code was offered as a simple way to pay!
QR code payments work like this:
- Merchant generates QR code: This code can be static, meaning it’s the same for all payments, or dynamic, meaning a unique code is used for each transaction.
- Customer scans QR code: Smartphone or payment app camera is used.
- Customer is directed to the payment page: This page is hosted by the PSP (payment service provider) or merchant.
- Payment is completed: Payment method is selected and transaction is authorized.
- Merchant receives funds: Transactions settle according to the PSPs terms, typically business days not weeks.
Consumers have become increasingly comfortable with QR codes that direct them to payment interfaces owing to apps like Square and Venmo. The simplicity of having another individual simply scan a graphic to send payments has increased the availability of digital payments for sellers of all kinds.
The QR code has essentially evolved to become the natural next-generation short URL. Where once a merchant might have suggested an easy-to-type URL to get consumers to a particular location, today, merchants ask the buyer to scan a code with their smartphone camera to be properly directed.
The removal of the need to type anything—with all the attendant risks of misspellings and eros-driven frustration—has smoothed the process of getting a user where a merchant wants them. This could be using a static QR code for all transactions, or a dynamic QR code for specific circumstances. For example, a coffee shop using a static QR code for tips, and a freelancer using a dynamic QR code for invoices.
Optimizing Your System for QR Code Access
While the QR code is, to all intents and purposes, simply a visual way to communicate a URL, it can nonetheless carry significant information. A range of slightly different QR codes can direct consumers to a single page that offers personalized options based on query strings (the details included on a URL after the question mark). In addition, the summoned page can pick up from the consumer request key information, such as location, operating system, and browser, and potentially even device-stored data from cookies or device IDs.
Some payment requests are simple, based on a single payment services provider (PSP) system, such as the Venmo links that have become ubiquitous in open-air markets and even hotel tipping systems. PayPal, Stripe, and Square are other PSPs offering merchants QR payment support.
While these may have the benefit of transporting the consumer to a comfortable and familiar app or interface, they carry the disadvantage of being tied to that PSP, fixing the processing fees owed by the merchant, and likely requiring the payer to have an existing account with the featured PSP.
By contrast, more dynamic QR code payment systems will direct the consumer to a payments page hosted by the merchant, which can dynamically reshape based on information supplied in the request. For instance, the range of payment methods presented on a page can be adjusted based on the customer's location so that the most popular options are listed first. Or, so that more expensive options are omitted from the list to control merchant processing costs.
Getting the Most From QR Code Payments
Merchants may enter the world of QR code payments by using dedicated platforms associated with smartphone apps. However, as volume increases, they may find that the fee schedules for these services start to eat into their margins: Venmo, for instance, will charge the merchant somewhere between 1.9% + $0.10 and 2.29% + %0.10 on all payments and will not refund those fees in the case of refunds or customer disputes.
By contrast, merchants can control their costs by contracting with a range of payment processors that offer specialized services. Some will offer lower fees on debit cards, for instance, or may be located in the geographies where international customers reside, eliminating cross-border fees.
To best take advantage of these opportunities, merchants should consider:
- Using a programmable payments vault, which can securely collect, store, and make available customer payment data, which can then be directed to the merchant’s preferred PSP.
- Setting up dynamic payment pages, which customers can reach through QR codes, and route transactions to preferred PSPs based on logic managed by the merchant.
- Monitoring performance and tuning the PSP selection engine to deliver the best customer experience, highest transaction success rate, and lowest processing cost.
Security is crucial in QR code payments. Merchants should use tokenization to store payment details securely and ensure PCI compliance when handling payment data. QR codes can make payments seamless, but merchants need to pair them with tokenization and dynamic routing to maximize the efficiency and security of this payment method.
Explore more about how a programmable payments vault can optimize QR code transactions.
