Why doesn’t Australia have QR codes to pay?

Quick Response (QR) codes are detailed barcodes, that can be used to convey lots of information, such as how to pay a payee.  For those who have visited Asia, you may have seen the plethora of wallets, that allow you to pay at stores: by tapping your phone, or scanning a QR code.

They add a level of convenience in a cashless world, and they are generally free (there is no surcharge). There are several advantages to using these methods to pay.

Why don’t we see them in Australia, you ask? Here are a number of reasons.

1. Regulation

Australia probably has some of the strictest financial services regulations in the world. In order to have a stored-value wallet, an organisation almost needs a banking license. There are some proposed relaxations on the way, but essentially till now, it has been difficult to establish a stored-value wallet. So most of our wallet systems tend to use the funds from a bank account, but they don’t have a good way to credit.

2. Open loop system dominance

A closed loop system is where one company offers the stored-value wallet, and only they can transact on it through their technology: apps and merchant acceptance. In Asia, closed loop systems target shopping malls: they have an exclusivity deal with the shops and this also allows the mall to track sales. 

Open loop systems are obviously more versatile.  In India, the UPI system has multiple interoperable wallets, like Paytm and Google 's GooglePay, but anyone can pay anyone, to participate, it works with any bank account for both the merchant and consumer, and it is perhaps the most successful system in the world. In China, WeChat Pay and Alipay are closed loop systems, but as they have real-time connectivity to banks, they are open-ended, making them just as accessible as UPI in India.

In Australia, PayPal attempted a solution, they are licensed, but it largely failed. They had an innovative “pay by face”. Using location, your picture came up on the merchant app. It did not integrate with POS systems, and PayPal’s point of sale was not so successful, so take-up was slow. Stripe , Square , PayPal, Tyro Payments , Revolut , Wpay (a Woolworths spin-off) and others have their embedded closed-loop solutions (the merchant and consumer both need to sign-on). No major closed-loop attempt in Australia has been successful as a recognised QR payment system.

3. Disparate QR Ordering/embedded solutions

Ordering online, at the table, or ordering ahead, is a popular use of QR codes.  During COVID, payment was often embedded. Merchants tend to push consumers to their own apps so there was no dominant cross-merchant provider that came out of this (all the major fast food outlets, and the delivery companies have their own app). In addition, after COVID, it looks like other than fast food, restaurants are returning to pay-after-dining.

4. Dominance of contactless card payments

Contactless card payments have done very well in Australia.  Australia was one of the leading geographies to support it, and Australians have adopted it ubiquitously across merchants.

Contactless uses an NFC protocol, and while it is possible to use independent wallets with NFC, just like QR, consumers are not generally ready to use NFC outside card payment situations.

Contactless (NFC) has not taken off as much in Asia.

So the convenience of contactless card payments in Australia has perhaps meant QR code payments are not really adding that much more convenience to the consumer.

5. No banks supporting open-loop solutions

Today a number of open-loop standards in Australia for QR codes that are available to banks:

• eftpos-QR  is from Australia’s domestic card scheme, eftpos Payments Australia . 
• EMV-QR is from the EMV consortium and is supported by Visa, Mastercard, Amex etc
• Beem (now a part of eftpos and the bank consortium, Australian Payments Plus ) tried a trial of QR codes with Subway – not much information about that now online. We can assume this has merged with eftpos-QR after the eftpos and Australian Payments Plus merger.
• NPP QR PayTo and PayID uses the EMV-QR standard - also from the banks consortium Australian Payments Plus

Few banks are supporting the standard, unfortunately, and as a small merchant, you may not have many options. The big challenge for merchants is they have one point of sale device, and need to be able to log the push payment at checkout. There are few, if any, consolidated merchant solutions (that aggregate and reconcile payments or integrate with points of sale). Perhaps banks don't provide solutions because there is no merchant demand?

QR Future

QR (and non-card QR) payments may slowly emerge, as there are some clear advantages, but a new solution will need to provide a better consumer proposition: zero surcharge, better merchant integration (electronic receipts, integrated rewards and coupons) as well as broad, open-loop support from the ecosystem: banks, merchants, payment providers, and consumers.