QR Codes or HCE?
There are myriad definitions of digital payments, depending on the nature of the payment, and what types of interfaces are involved in the payment process. In this blog post, we will define a digital payment as a cashless payment process that is executed through digital channels and digital devices. For example, using your mobile phone to pay in a physical or online store through an OEM Pay App, using a proprietary app on your mobile phone to transfer money to your friend — all of these can be considered as digital payments in this context.
Nowadays, there are many payment apps available for end-users to choose from and execute a payment. Those apps can be from your own banks, third-party fintech companies, or financial institutions. I will discuss two digital payment methods that are quite popular amongst users: QR code and Host Card Emulation (HCE) payments. If you want to learn more about the HCE ecosystem, you can read a previous blog post about that here.
The key advantage of QR-code mobile payments is its flexibility of not being constrained to certain types of mobile phones. As long as the handset has a built-in camera that can read/scan the QR-code to execute the payment. This technology will require the point-of-sale (POS) to display a QR code which users can scan to execute the payment or require the POS to scan or read a QR code that is displayed on the user’s payment app/handset. This means that building a vast merchant acceptance network within the QR-code payment ecosystem is a compulsory pre-requisite so that end-users will be able to use that form of payment app, otherwise, they will be limited in where they are able to use that QR-code mobile payment app to only certain POS. A few examples of QR-code mobile payment based apps are, Alipay, WeChat Pay, Seqr, Payconiq, and others.
In the case of Alipay, they have succeeded building their merchant acceptance network due to their strong customer base and easy integration to the cash register where the merchant can read the QR code or barcode displayed on the user’s mobile device, to authorize the payment. WeChat Pay is a good example of a successful and widely used QR-code mobile payment app.
However, the situation is different for other players. Seqr – a European mobile wallet launched in 2012 and currently active in 17 countries – as an example, started as a QR-code only mobile payment app that had been facing challenges to widen their payment acceptance network throughout the countries that they are active in. To enable Seqr in a POS, an integration is required. In case of a physical store, an integration with the cash register system, and setting up a unique QR code as an identifier of the cash register, are two crucial tasks for the merchant in cooperation with Seqr and the cash register supplier. This can sometimes be a tricky and long process.
In summer 2016, MeaWallet helped Seqr (now rebranded as Glase) launch an HCE payment solution that has enabled contactless EMV payments directly in the Seqr mobile app, meaning that Seqr users with Android mobile devices can pay anywhere in the world, as long as they pay at contactless enabled terminals. The HCE technology has helped Seqr solve a limitation with relation to the payment acceptance network. Seqr can now grow their user base by providing NFC payments in their payment app for Android users. Unfortunately, iPhone users are limited in that they can only use Apple Pay for contactless mobile payment.
Back to the question – QR code or HCE? We believe the answer will differ from one market to another depending on the maturity and degree of adoption, contactless terminal penetration, payment behavior, apps’ user base and many other factors. However, considering the convenience from the implementation side and the future of NFC-enabled terminals, my vote goes to HCE and OEM Pays, where MeaWallet has been instrumental in helping various banks and financial institutions globally implement the service both as a managed services and under license agreements.
Leveraging our MeaToken Platform, MeaWallet has delivered digital payments technology to banks and financial institutions around Europe providing a technical platform for card issuers to digitize and payment enable their cards in mobile wallets. Through our services, card issuers can enable payments in-store, in-app and online using their existing wallets or be part of OEM Pays (e.g., Apple Pay, Android Pay or Samsung Pay). MeaWallet is also a Mastercard Engage Gold partner, part of VTS Ready Program and an Amex GNS partner for Amex Pay.
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