Comparing QR Codes vs NFC in the Battle for Your Mobile Wallet

Merchant Warehouse |

October 7, 2013

Comparing QR Codes vs NFC

Currently two forms of mobile technology are leading the charge in the race to for mobile wallet supremacy. The major players in the field are currently focused on leveraging either QR codes or NFC technology in their efforts to replace your current credit card, with their mobile payment application.

Merchant Warehouse recently worked with NowSourcing to provide a brief overview comparing these two competing technologies, looking at their main value adds as well as which technology seems to be gaining the most traction today.

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There are two fairly new technologies that are going toe to toe for control of your mobile wallet: Quick Response Codes and Near Field Communication. With assistance from NowSourcing, Merchant Warehouse compiled a variety of information on the two technologies, what the future holds for them, and which will most likely take the crown as the credit card processing solution of the future.

Quick Response Codes
QR codes are the little square codes that you occasionally see, most frequently on advertising and telling you to use them to find out more about a product or company. They are scanned by the camera in your smart phone, and they can be displayed at a register or printed on a receipt. Scanning this code enables individuals to complete a transaction, and a phone can also display one of these codes and allow a merchant to receive information about someone's credit or debit card. This technology can work on either iOS or Android platforms.

Near Field Communication
NFC systems are similar to Bluetooth, and they transfer data from one device to another, and this technology is also frequently used for keyless door entry. For a transaction to take place, the two devices involved have to be fairly close to each other, hence the "near" in the name. Data transfer can be done with a layer of security involved on top of the need to be within range of another piece of equipment. Currently, only Android supports these types of financial transactions.

NFC and QR Code Usage
One study indicates that between 2011 and 2016, NFC usage will grow by 38 percent, and by 2016, this market is expected to be worth $10 billion. It is also believed that by 2015, one quarter of all mobile devices will have NFC capability. 

QR code usage is also growing, but the percentage of smart phone owners who use this technology for financial transactions is declining. Between 2011 and 2014, the number of mobile barcode users went from 21.2 million to 38.5 million, with nearly 16 percent of the adult population using them today.

Apple: Betting Against The Industry
There are a number of theories as to why Apple has so far not made NFC available on their mobile devices. Some believe that it is because of possible security issues with NFC, which may be vulnerable to traditional wireless attacks. Another possible reason, according to a former system engineer, is that Apple often lags behind in adopting the newest technologies, and QR codes are already integrated into the OS. Cost is another reason Apple may have held off on incorporating NFC; installing NFC units to phones would add five dollars to the cost of every phone for a total of about $125 million in additional expenses. 

Mobile Players Leveraging QR Codes / NFC in the Battle for your Mobile Payments
 
Isis
This is a national mobile commerce venture that is backed by AT&T, T-Mobile and Verizon, but it is currently only available in a few places in Texas. It manages credit and debit cards as well as loyalty cards and special offers through an app. Payments can be made through an NFC terminal.

PayPal
The popular and established financial website allows individuals to pay through a mobile app or using an NFC terminal. People are also able to take credit card payments through a device that connects to their smart phone. 

Google Wallet
Another established player in the mobile financial market, payments are made through an NFC terminal, and a variety of debit and credit cards can be used as payment with the cloud-based version.

Paydiant
Pulse and Bank of America are both working with this mobile wallet and payment platform, and it uses QR codes to store credit and debit card information on a secure sever. The system works with both Android and iOS platforms.

LevelUp
This mobile payment system associates a debit or credit card with a QR code, and it works with iPhone, Android, Blackberry devices.