QR Code Merchant Payments

A growth opportunity for mobile money providers

In partnership with The GSMA represents the interests of Accourt is a specialist, IP-led global NTT DATA is a leading IT services mobile operators worldwide, uniting payments consultancy, providing strategic provider and global innovation partner AUTHORS more than 750 operators with nearly and operational payments consultancy headquartered in Tokyo, with business 400 companies in the broader mobile services worldwide. Its consultants are operations in over 50 countries. Our ecosystem, including handset and device experienced practitioners with front line emphasis is on long-term commitment, GSMA makers, software companies, equipment P&L experience, combining unrivalled combining global reach with local intimacy Anant Nautiyal, Senior Manager, providers and internet companies, as strategic expertise with operational to provide premier professional services Inclusive Tech Lab well as organisations in adjacent industry know-how. From defining and setting varying from consulting and systems Bart-Jan Pors, Director, sectors. The GSMA also produces the strategy, implementation, through to final development to outsourcing. Inclusive Fintech Mobile Money industry-leading MWC events held annually delivery, Accourt is dedicated to minimising Bruno Martins, Technology Lead, in Barcelona, Los Angeles and Shanghai, operational risk and ensuring a successful For more information, visit Inclusive Tech Lab as well as the Mobile 360 Series of regional outcome for its clients. Accourt has a www.nttdata.com conferences. passion for delivering real and lasting value Accourt and brings focused, world-class expertise Vaughan Collie, Managing Partner For more information, please visit to complement client teams. the GSMA corporate website at NTT Data www.gsma.com For more information about Accourt, Akihiro Ishizuka, Global Head of Payments please visit www.accourt.com Jannen Vamadeva, Head of Fintech Follow the GSMA on Twitter: @GSMA

Research contributors: Ryo Hoshino, Manager, Security THE MOBILE MONEY PROGRAMME IS SUPPORTED BY THE BILL & MELINDA GATES FOUNDATION Engineering Department; Yoneda Ayaka, QR Code Technology R&D; Taguchi Hirotomo, QR Code Technology R&D; Takita Mika, QR Code Technology R&D; Foong Lye Mun, Payments Marketing Manager Contents

Section 4: Technical specifications of leading Executive summary 4 26 QR code payment schemes

Section 5: Charting a course for interoperable Section 1: Rationale for this report 8 33 QR code merchant payments

Section 2: The rise of QR codes in payments 12 Section 6: Key trends, findings and call to action 40

Section 3: Three primary QR code merchant 19 Appendices 49 payments flows Executive summary Executive summary 5

Mobile money providers (MMPs) are key players In 2019, 640 million Alipay customers regularly 10 in the provision of financial services in emerging transacted in two or more Alibaba Group markets. MMPs now see QR code merchant ecosystem product/service categories. Another payments as a potential adjacent opportunity to 190 million regularly transact in five or more USD trillion 8 expand their products and services and target categories. potential incremental revenue streams. While this report does not advocate a “copycat” Globally, digital payments are expected to reach approach of the Chinese market and its players, 6 an annual transaction value of USD 4.4 trillion we can learn much from events in China and in 2020, with 17 per cent CAGR through 2024.* many other schemes around the world, whether With growth rates like this, it is not surprising newly emerging, rapidly growing or somewhere that merchant payments have captured the in between. 4 interest of many stakeholders, including MMPs.

QR code payments are enjoying significant but fragmented global growth, often competing 2 with long-established payment methods, such as card payments. There are a number of QR code schemes around the world, but none more successful than the two primary Chinese players, 0 2017 2018 2019 f2020 f2021 f2022 f2023 f2024 Alipay and WeChat Pay. Digital commerce Mobile POS payments Executive summary 6

To facilitate this, the report provides an insight The interoperability journey into a wide range of QR code deployments and specifications globally – including the Chinese DOMESTIC CROSS-BORDER giants (Alipay, WeChat Pay) of course, but also Government/regulator-led other QR code specifications like EMV, JPQR, multilateral cross-border interoperability Bharat QR, HKQR, SGQR, QRIS, Prompt Pay, Mercado Pago and Pix, among others.

QR code merchant payments present a and sophistication Maturity significant, but potentially complex opportunity Government/regulator-led for MMPs, and the challenges and strategic bilateral cross-border Government/regulator-led interoperability domestic interoperability benefits must be considered carefully. Bilateral outbound/ In particular, interoperability is a crucial inbound interoperability requirement for the industry to achieve a harmonised customer experience for QR code merchant payments, driving customer adoption, Closed loop outbound/ inbound interoperability transaction volumes and overall profitability. Provider consolidation Joint venture/consortium limited open loop scheme

Proprietary, closed loop scheme

Elapsed time Executive summary 7

Key lessons

• MMPs with large and active USSD • QR code merchant payments • Regulatory approaches and customer bases will need to carefully have several key enablers and interventions differ between consider the best course of action interdependencies, most of geographies, for example, African to avoid excluding these customers which must be addressed to and Chinese regulators have played from the QR code payments journey, increase chances of success. For a limited role until now (although this while also recognising and addressing example: device affordability, is changing), while Southeast Asian practical challenges, such as device internet connectivity, wallet/bank and Indian regulators have played an affordability and connectivity. account penetration and merchant extremely active role in QR schemes distribution. from the outset. • Having a core ecosystem of products and services that continues to drive • Market dynamics and nuances are • On its own, a QR code merchant high levels of customer engagement important. While developing markets payments P&L is unlikely to be is crucial. (Payments should support in Asia tend to have high smartphone compelling. Rather, value will these ecosystems; they are not the and internet penetration, developing be derived from data. However, ecosystem). markets in Africa tend to have low QR codes have the potential to smartphone and internet penetration. significantlyaccelerate digitisation These call for fundamentally different of economic activity in emerging approaches. markets, paving the way for additional tailored services to be provided to customers, leading to further revenue streams. • QR codes are an increasingly ubiquitous Rationale for payment channel around the world. • In emerging markets, mobile money providers are at the forefront of using QR this report codes, but face several challenges.

• This report is intended as a resource for mobile money providers that wish to adopt and/or grow their QR code merchant payments ecosystems. QR codes are an increasingly ubiquitous payment channel 9 around the world

In 2018, Chinese consumer and business mobile The rapid growth of mobile and digital payments Consumer digital payments payment volumes reached USD 41 trillion,* about around the world offers mobile money providers Top five countries, volumes (f2020) 30 per cent ($13 trillion) of which were QR code (MMPs) an opportunity to expand their mobile payments, primarily through Alipay (founded in money ecosystems to provide mobile payment China 44% 2004) and WeChat Pay (founded in 2011). services to consumers and merchants. 1,921 Other countries, such as Denmark, India, South Currently, the mobile payments market is Korea and Sweden, also have high mobile being served by MMPs, fintechs, smartphone United States 20% payments adoption rates, with the US, Canada, providers, e-commerce providers and banks. 896 Norway and Japan not far behind. Within mobile payments, QR code merchant payments are growing rapidly across Asia, Africa Japan 4% Global mobile payments** adoption is and Latin America. expected to grow by about 27 per cent 165 (CAGR, 2020–2025). QR code merchant payments offer a United Kingdom 4% significant opportunity for MMPs, but they are As a subset of mobile payments, consumer not without challenges. 164 digital payments volumes are expected to top

$4.4 trillion in 2020.*** The top five countries South Korea 2% account for almost 75 per cent of the total, but all of Africa contributes just 1.8 per cent of the 114 total. Rest of World 26% * All values are in US dollars 1,147 ** This includes mobile-based NFC payments *** Statista, 2020 (adjusting for expected effects of COVID-19) US$ billions In developing markets mobile money providers are at the forefront 10 of using QR codes, but face several challenges

Developing markets, such as those on the MMPs in developing markets are seeking especially as few users will tolerate having many African continent and Indian sub-continent, to expand their mobile money ecosystems wallets. have for a long time been exploring the mobile into merchant payments by building on core The approach that MMPs take to understanding money opportunity from different perspectives, strengths established through their mobile and addressing these and other issues will typically to support basic use cases, such money initiatives. define the nature and degree of their success in as mobile top-ups or person-to-person While QR code merchant payments are the QR code merchant payments ecosystem. remittances. considered an attractive opportunity, many Many of these initiatives have been successful existing challenges remain and some new despite many barriers. In these markets, challenges have emerged. For example: adoption has been limited by, for example: • Deep penetration of feature phones that rely • high unbanked populations; upon USSD transaction dialogues and do not • fragmented and unreliable mobile internet support scanning of QR codes; connectivity; and • Many divergent views and specifications that • lack of affordable devices. have been developed globally as part of the core QR code ecosystem design. Some markets, such as India, have managed to overcome many of these challenges, typically With concentration around two key players, with concerted and sustained government-led China is relatively unique. This is seldom the initiatives. For example, India now has enviably case in other territories, and competition will high levels of bank account penetration across therefore be aggressive, but consolidation will the entire population. likely result in only the most successful surviving, This report is intended as a resource for mobile money providers 11 that wish to adopt and/or grow their QR code merchant payments ecosystems

Since MMPs will be at different stages The objective of this report is to examine the opportunities and challenges of QR code merchant payments by: in their QR code merchant payments journeys, this report is intentionally • sharing insights on the QR code merchant payments ecosystem and various initiatives around the world; broad to support MMPs regardless of their current focus, whether it be • describing QR code merchant payments in the context of a journey to basic QR code merchant payments help MMPs identify where they are in their respective journey; acceptance, more sophisticated • highlighting key lessons that can be elicited from various initiatives ecosystem interoperability or stages in around the world; between. • sharing insights and perspectives on some of the fundamental technical considerations of QR code merchant payments, and

• sharing insights and perspectives on the impacts and implications of some of the major trends in QR code merchant payments.

All the above will be synthesised into a proposed call to action for MMPs as they move forward with their respective QR code initiatives. • Originally a tool for tracking automobile machine parts, the rise of QR codes in The rise of payments was enabled by the widespread adoption of digital wallets.

QR codes in • Uptake has been high in China, and their relatively inexpensive form factor and ease payments of use has helped make QR codes popular in other parts of the world.

• Today, prominent QR code merchant payments deployments are evident around the globe. Originally a tool for tracking automobile machine parts, the rise of 13 QR codes in payments was enabled by the widespread adoption of digital wallets

Types of QR codes Origins and history of QR codes The evolution of QR code payments

A QR code is similar to a bar code except it can One of the core enablers of QR code payments store a larger amount of information per unit has been the mobile wallet. Principally, mobile

Model 2 Micro QR iQR code SQRC FrameQR area. It is a two-dimensional code that is capable wallets can operate as: of 360-degree (omni-directional) high-speed • A link to a primary value store, such as a reading. customer card/bank account. Transactions Invented by Denso Wave in Japan Initially used in the automotive industry for debit the value from the primary account via the in 1994, the use of Quick Response production, tracking and shipping, QR codes wallet. No preloading of the wallet is required. (QR) code has grown in popularity expanded beyond the automotive industry from its origins in the automotive into identification and marketing use cases and manufacturing industry through finally payments. to today’s merchant payments China has played a crucial role in the rapid ecosystems. growth of QR code mobile payment services, enabling businesses to accept digital payments without investing in any hardware, such as point • A virtual store of value, such as digital/virtual/ of sale (POS) terminals. mobile money that is preloaded into the wallet. Transactions debit the value from the wallet balance.

Note: some wallets offer both models Relatively inexpensive and easy to use, QR code payments 14 are becoming popular in other parts of the world

QR code merchant payments Person-to-person (P2P) payments

In merchant payments, QR codes have been • Static QR codes: Typically printed stickers found QR codes can be used for P2P payments. used to replace or complement traditional POS at merchant check-out locations or displayed devices and interact almost seamlessly with on customer device screens. They hold specific Biometric payments compatible ecosystem mobile wallets. data elements and do not change. Fingerprint and facial biometrics are enjoying The form factor and presentation of a QR code • Dynamic QR codes: Dynamically generated a great deal of attention in payments and differ depending on the merchant/transaction at the time of the transaction and require a could ultimately replace QR code payments in context, but the following are the primary merchant or customer screen to display. They certain circumstances. The scenario considered dimensions to consider: are typically valid for a short period and contain here extends beyond using a biometric to several contextually unique data elements. • QR code model: Model 2 is available on a authenticate/authorise a card or QR code free-to-use licence from Denso. It has sufficient • Merchant-presented mode (MPM): The MPM transaction. data payload capabilities to effectively support transaction journey requires a customer to scan For example, the facial recognition biometric payments transactions, and is therefore the the merchant’s static or dynamic QR code to becomes the payment token and, apart from most common form factor in QR code payments initiate a transaction. the merchant’s biometric scanner, no device currently. Other models of QR codes are • Customer-presented mode (CPM): The CPM (e.g. smartphone), card or QR code are required. available from Denso, but are typically subject transaction journey requires the merchant to Please see Appendix A for further insights. to a licence fee and often require specialised scan the customer’s static or dynamic QR code scanners. to initiate a payment transaction. 15

Not just a Chinese phenomenon

There is significant focus on QR code Around the world, initiatives tend to Developing Asian markets, such as merchant payments around the world, be either proprietary or government/ Indonesia, Thailand and other Southeast across developing and developed regulator-led, and each market has Asian countries, are also heavily markets alike. unique opportunities and challenges. regulator-led, with some seeking to avoid card payments entirely. Adoption remains fragmented and, in MMPs in Africa continue to explore QR some markets, typically Europe, the UK code merchant payments in addition to India’s high levels of bank account and North America, incumbent card- their existing mobile money offerings. penetration have enabled the regulator based merchant payments continue to to pursue an ambitious, multi- faceted In mature Asian markets, such as China, dominate. merchant payments strategy with QR Japan, Korea and Taiwan, regulators codes and card payments operating The primary drivers of adoption vary have ultimately taken the lead in side by side. between markets, but with most pursuing domestic interoperability developing markets focused on and, in some cases, cross-border reducing the use of cash, improving interoperability. financial inclusion and providing a relatively low-cost, non-cash merchant payments option. Today, QR code deployments are evident around the globe – 1 of 3 16 some prominent regional examples

Asia and Middle East

$1,920.5bn 16.4% 902M $16.4bn 10.7% 5.2M $113.5bn 14.9% 37M $165.2bn 16.0% 88M Expected total annual digital payments* transaction value in USD (f2020) CHINA HONG KONG SOUTH KOREA JAPAN Alipay Standard: Faster Standard: ZeroPay Standard: JPQR Expected total annual digital payments WeChat Pay Payment System KakaoPay Paypay transaction growth rate (CAGR, 2020–2024) Wechat Pay HK NaverPay LinePay Alipay HK RakutenPay Number of digital payments users (f2020) dPayment Transaction value for digital payments (f2020) $6.0bn 19.2% 72M $2.19bn 9.0% 11M $1,001bn–$2,000bn PAKISTAN TAIWAN Easypaisa Standard: TaiwanPay $101bn–$1,000bn JazzCash JKOPAY JAPAN $50bn–$100bn Kenuu Wallet CHINA $165bn LinePay* $1,921bn <$50bn $10.0bn 19.0% 39M $15.4bn 24.2% 21M KOREA $114bn PHILIPPINES SAUDI ARABIA INDIA PayMaya STC Pay $69bn G Cash Halalah BayanPay $11.8bn 6.5% 13M MALAYSIA $69.3bn 24.2% 590M National: DuitNow INDIA Boost * The digital payments market segment is led by consumer Standard: Bharat QR Touch ‘n Go transactions and includes payments for products and services PayTM GrabPay** which are made over the internet as well as mobile payments at MobiKwik RazerPay point-of-sale (POS) via smartphone applications. Includes: Online processed payment transactions, mobile POS payments processed via smart devices at point of sale, digital consumer $9.0bn 16.0% 88M $8.1bn 19.6% 36M $34.6bn 16.5% 130M $14.6bn 12.4% 3.1M commerce transactions (e.g. credit card, online payment THAILAND VIETNAM INDONESIA SINGAPORE providers, etc.). Does not include mPOS solutions (dongle Standard: PromptPay/ThaiQR Momo Standard: QRIS Standard: SGQR payments) for card payments or mobile card readers, TrueMoney ZaloPay GoPay NETSPay business-to-business payments, electronic banking (eBanking), LinePay** ViettelPay OVO GrabPay provision fees from payment providers. VNPay Linkaja ** Providers where headquarters located in other country GrabPay** T-Cash Today, QR code deployments are evident around the globe – 2 of 3 17 some prominent regional examples

Africa

$2.8bn 16.0% 12M $8.1bn 25.6% 41M Expected total annual digital payments* transaction value in USD (f2020) MOROCCO EGYPT inwi money mVisa** Expected total annual digital payments Masterpass** transaction growth rate (CAGR, 2020–2024) Number of digital payments users (f2020) $2.2bn 32.1% 6.6M $1.2bn 34.3% 7.6M GHANA UGANDA mVisa** MTN** Transaction value for digital payments (f2020) MTN* $8.1bn–$10.0bn Airtel* $2.9bn 31.0% 16M $4.1bn–$8.0bn KENYA $1.0bn–$4.0bn $9.3bn 17.9% 65M mVisa** M-Pesa NIGERIA <$1.0bn mVisa** MTN* $0.7bn 38.2% 2.5M RWANDA mVisa** DEMOCRATIC M-Pesa REPUBLIC OF CONGO M-Pesa** $1.1bn 31.8% 6.6M TANZANIA M-Pesa** $0.5bn 34.5% 0.7M * The digital payments market segment is led by consumer Tigo Pesa transactions and includes payments for products and services BOTSWANA Airtel Money which are made over the internet as well as mobile payments at Ecocash** point-of-sale (POS) via smartphone applications. Includes: $1.5bn 36.9% 3.6M Online processed payment transactions, mobile POS payments processed via smart devices at point of sale, digital consumer ZAMBIA $8.1bn 23.7% 26M commerce transactions (e.g. credit card, online payment FNB SOUTH AFRICA providers, etc.). Does not include mPOS solutions (dongle MasterPass** payments) for card payments or mobile card readers, MTN MoMo $1.3bn 36.9% 3.6M business-to-business payments, electronic banking (eBanking), SnapScan ZIMBABWE provision fees from payment providers. Zapper Ecocash ** Providers where headquarters located in other country Today, QR code deployments are evident around the globe – 3 of 3 18 some prominent regional examples

Latin America

$32.0bn 18.8% 51M Expected total annual digital payments* MEXICO transaction value in USD (f2020) MEXICO $32.0bn VENEZUELA Mercado Pago** Mercado Pago** Expected total annual digital payments CoDi transaction growth rate (CAGR, 2020–2024) Number of digital payments users (f2020)

$51.4bn 33.2% 105M $8.2bn 12.6% 22M Transaction value for digital payments (f2020) COLOMBIA BRAZIL $41bn–$52bn Mercado Pago** Standard: PIX*** Mercado Pago** $21bn–$40bn $10bn–$20bn <$10bn

BRAZIL $8.5bn 19.8% 11M $51.4bn $1.9bn 52.4% 1.3m CHILE URUGUAY Mercado Pago** Mercado Pago** VALEpie** Todo Pago** Ualá* * The digital payments market segment is led by consumer transactions and includes payments for products and services which are made over the internet as well as mobile payments at point-of-sale (POS) via smartphone applications. Includes: Online processed payment transactions, mobile POS payments $15.4bn 28.7% 25M processed via smart devices at point of sale, digital consumer commerce transactions (e.g. credit card, online payment ARGENTINA providers, etc.). Does not include mPOS solutions (dongle Mercado Pago payments) for card payments or mobile card readers, VALEpie business-to-business payments, electronic banking (eBanking), Todo Pago provision fees from payment providers. Ualá ** Providers where headquarters located in other country • From a product flow perspective, a QR Three primary code payment solution can be understood as a combination of nine interdependent QR code elements. • Each element has several options under it to merchant choose from. • Three broad product flows are possible payments for QR code merchant payment solutions depending on how elements are grouped and flows the transaction characteristics. • Each product flow results in a distinct experience for the payer and payee of a QR code solution. From a product flow perspective, a QR code payment solution can 20 be understood as a combination of nine interdependent elements

Communication channel Transaction channel EC

The network and communication channel F2F In-store/face-to-face the customer/merchant device uses or remote

Device Transaction authentication Smartphone, smart feature phone, Method the customer uses to feature phone authenticate for the transaction (PIN/password/biometric)

QR code presentation Customer connectivity Whether the QR code is Is the customer connected to presented by the merchant the communication channel or or the customer not (typically the internet)

Payment type PUSH Merchant connectivity

Push payments are typically PULL Is the merchant connected to the initiated by the customer, communication channel or not pull payments are are initiated (typically the internet) by the merchant

QR code type Static or dynamically generated QR code Each element is underpinned by several interdependent options 21

QR codes harness several key, QR code merchant payments require Comms Internet connectivity USSD connectivity interdependent elements to support these key elements to work together as channel Feature phone, Smartphone, Device Smartphone, feature phone successful, wide-reaching merchant seamlessly as possible. The extent to which Smart feature phone 1 2 3 payments. The adjacent diagram this is achieved will have a fundamental QR code Merchant Presented Mode (MPM) Customer Presented Mode (CPM) Merchant Presented Mode (MPM) illustrates the top-down dependencies, impact on factors such as: presentment (customer scans QR code) (merchant scans QR code) (customer manual keyed entry) Push payments (RTP), Payment type Push payments Push payments with communication channels and device Pull payments • the customer and merchant payment capabilities being the most fundamental QR code Static Dynamic Static Dynamic Static Dynamic types accepted; type QR code QR code QR code QR code QR code** QR code** Merchant Merchant Merchant elements to unlock the various modalities Merchant online Merchant online connectivity oine online of QR code merchant payments. • the customer and merchant payment Customer Customer online Customer oine, online Customer oine, online connectivity acceptance rates; Transaction For example, USSD connectivity will PIN, password, biometric PIN, password, biometric PIN authentication take users along a route of manual data Transaction • the channels in which customers can E-commerce, face-to-face E-commerce*, Face-to-face Face-to-face channel face-to-face capture that typically excludes QR codes transact; and from this type of transaction. • the overall merchant/customer transaction Conversely, a smartphone coupled experience. with internet connectivity enables both customer-scanned (i.e. merchant- The following sections will delve into presented mode) and merchant-scanned how these components work together (i.e. customer-presented mode) QR code to create various types of QR code transactions. Additional options then merchant payment transaction flows and appear depending on whether a static or capabilities. dynamically generated QR code is used in the transaction. Three broad product flows are possible for QR code merchant payment 22 solutions depending on how elements are grouped and the transaction characteristics

There are three primary interaction options

between customers and merchants that have Comms Internet connectivity USSD connectivity enabled QR code payments: channel Feature phone, Smartphone, Device Smartphone, feature phone • Merchant-presented mode (MPM) Smart feature phone

• Customer-presented mode (CPM) 1 2 3 QR code Merchant Presented Mode (MPM) Customer Presented Mode (CPM) Merchant Presented Mode (MPM) • Merchant-presented USSD presentment (customer scans QR code) (merchant scans QR code) (customer manual keyed entry)

These three product flows are illustrated below Push payments (RTP), Payment type Push payments Push payments in the context of their interdependencies. Pull payments

The following pages will summarise the key QR code Static Dynamic Static Dynamic Static Dynamic entities and steps during an in-store purchase type QR code QR code QR code QR code QR code** QR code**

transaction. Merchant Merchant Merchant Merchant online Merchant online connectivity oine online

Customer Customer online Customer oine, online Customer oine, online connectivity

Transaction PIN, password, biometric PIN, password, biometric PIN authentication

Transaction E-commerce, face-to-face E-commerce*, Face-to-face Face-to-face channel * Only possible when customer is online face-to-face ** Merchant identifier must be visible in human readable format, to be keyed in by customer *** Refer to Appendix A for a description of each element 1 Each product flow results in a distinct experience for 23 the payer and payee of a QR code solution: Merchant-presented QR code payment

QR code payment transaction type: MPM with a static QR code sticker is a typical implementation for micro-merchants where no/low payment Applies to: acceptance costs are critical. These merchants are typically transitioning from cash-only acceptance. • Merchant Presented (MPM) MPM with dynamic QR codes is more typical of larger, more sophisticated merchants where they have the • Static or Dynamic QR code POS capability to generate and display a dynamically generated QR code • Push payment Smartphone Smart feature phone

OFFLINE – NO DATA CONNECTIVITY REQUIRED ONLINE – DATA CONNECTIVITY REQUIRED MERCHANT PRESENT 2a 3a STATIC QR CODE

1 4 5 6

Customer scans merchant Customer inputs static QR code sticker payments total.

Customer opens payment Customer authorises payment Customer receives Merchant receives payment app with QR code scanner payment conﬁrmation conﬁrmation. Customer takes on smartphone/ smart 2b 3b goods, merchant waits to feature phone. receive settlement of funds.

TRANSACTION ASYNCHRONOUS MERCHANT PRESENT AUTHORISATION MESSAGE DYNAMIC QR CODE Customer scans Customer checks payment dynamically generated details including amount merchant QR code Provider system API Merchant system 2 Each product flow results in a distinct experience for 24 the payer and payee of a QR code solution: Customer-presented QR code payment

QR code payment transaction type: CPM with a static or dynamic customer QR code (on a smartphone or feature phone screen) relies on Applies to: merchants having the capability to scan these QR codes at checkout. • Customer Presented (CPM) CPM can either initiate a push or pull payment. In the case of a pull payment the merchant will seek • Static or Dynamic QR code authorisation against customer funds. In the case of a push, the merchant will send a Request To Pay (RTP) • Push (RTP) or Pull payment to the customer. The customer will then authorise this payment by initiating a push payment directly from a Smartphone Smart feature bank/wallet account. phone

OFFLINE – NO DATA CONNECTIVITY REQUIRED ONLINE – DATA CONNECTIVITY REQUIRED 4a Merchant scans QR. decodes CUSTOMER PRESENT data, sends to POI system and PULL PAYMENT METHOD authorisation system 1 2 3 6

Merchant scans QR, decodes data, Customer sent payment sends to POI system and wraps details to authorise and data payload into a Request to Pay then receives (RTP) message payment conﬁrmation 4b 5b

Merchant scans goods Customer opens payment Customer app displays QR code (static) Merchant receives payment and enters transaction app with QR code payment on or generates a one-time conﬁrmation. Customer takes details on system smartphone / smart feature phone QR code (dynamic). Merchant goods, merchant waits to scans customer’s QR code. receive settlement of funds. CUSTOMER PRESENT PUSH PAYMENT METHOD TRANSACTION AUTHORISATION

ASYNCHRONOUS MESSAGE

Merchant Provider API Merchant system system system 3 Each product flow results in a distinct experience for 25 the payer and payee of a QR code solution: Merchant-presented QR code payment (USSD)

OFFLINE – NO DATA CONNECTIVITY REQUIRED. PAYMENT THROUGH USSD CHANNEL

1 2 3 4 5

Merchant rings up goods Customer opens payment app, USSD gateway asks customer USSD gateway asks for mobile Merchant receives payment and enters transaction details. USSD gateway asks for merchant for transaction amount to be money banking PIN to be conﬁrmation. Customer takes ID number which customer enters. entered. entered to authorise transaction. goods, merchant waits to receive settlement of funds.

Example QR code sticker:

982309 USSD Provider USSD USSD Provider USSD USSD Provider API Merchant gateway system gateway gateway system gateway gateway system system

* Irrespective of whether a static or dynamic code is presented, a unique, human readable number is required to uniquely identify the merchant transaction. This number is typically the Merchant ID and is manually keyed into the feature phone by the customer to initiate a USSD dialogue. ** Technically possible on smartphones and smart feature phones, but unlikely to be provisioned as such apart from as an atypical fallback option. • Any QR code payment scheme has an Technical underlying technical specification that governs all its aspects. specifications • The technical specifications underpinning QR code payment schemes can be proprietary or of leading QR common. • A summary comparison of different QR code payment specifications across their constituent components reveals many overlaps, but also schemes significant points of divergence. • Understanding the technical specifications of QR code payment solutions is useful because they represent one of two possible routes to interoperable QR code merchant payments. Any QR code payment scheme has an underlying technical specification 27 that governs all its aspects

In addition to the payments components covered under product flow (see the diagram below), the technical specifications of a QR Communication channel Transaction channel EC

code solution also encompass: The network and communication channel F2F In-store/face-to-face the customer/merchant device uses or remote • Authentication approach: various customer and merchant authentication approaches, Device Transaction authentication Smartphone, smart feature phone, Method the customer uses to from PINs and passwords to biometrics feature phone authenticate for the transaction • Data payload scope: the scope of data (PIN/password/biometric) elements embedded within the QR code

QR code presentation Customer connectivity Whether the QR code is Is the customer connected to presented by the merchant the communication channel or or the customer not (typically the internet)

Payment type PUSH Merchant connectivity

Push payments are typically PULL Is the merchant connected to the initiated by the customer, communication channel or not pull payments are are initiated (typically the internet) by the merchant

QR code type Static or dynamically generated QR code The technical specifications underpinning the design of QR code 28 payment schemes can be proprietary or harmonised

At the highest level, The matrix below shows examples of major QR code Examples of major QR code ecosystem players that have when designing a ecosystem players that have chosen to develop and chosen to develop and implement a more harmonised QR code payments implement proprietary specifications, along with the QR code approach, some using EMVCo’s EMV specification for QR code scheme, providers presentment modalities they support. payments: can elect to adopt a proprietary approach Proprietary specifications approach Harmonised specifications approach or a more open, Example schemes MPM CPM Example schemes MPM CPM harmonised design approach. Alipay Supported Supported EMV QR code specs Supported Supported

WeChat Pay Supported Supported Hong Kong Common QR Code (HKQR) Not Supported (Hong Kong Interbank Clearing Limited) supported Not MTN Supported supported SGQR Supported Supported Not (Monetary Authority of Singapore) M-Pesa Supported supported JPQR Not Supported Supported Mercado Pago Supported supported (Payments Japan)

Kakao Pay Supported Supported Bharat QR (National Payments Corporation of India Supported Supported (NPCI))

Thai QR Payment/MyPromptQR Supported Supported

Quick Response Code Indonesian Standard Supported Supported (QRIS) A summary comparison of QR specifications across their 1 of 3 29 constituent components reveals many overlaps, but also significant points of divergence

Summary: Core QR code payments components can be summarised across the example schemes as follows:

Specification Comms channel Device QR code presentment QR code type Txn channel

EMV Smartphone MPM, CPM JPQR

Bharat QR Smartphone, feature phone Dynamic, static Harmonised MPM Face-to-face specifications HKQR

SGQR Internet connectivity MPM, CPM

QRIS MPM Static Smartphone Alipay MPM, CPM Face-to-face, remote WeChat Pay Dynamic, static

Proprietary Prompt Pay Face-to-face specifications MPM M-Pesa USSD connectivity Smartphone, feature phone Static Face-to-face, remote Mercado Pago Internet connectivity Smartphone MPM, CPM Dynamic, static A summary comparison of QR specifications across their 2 of 3 30 constituent components reveals many overlaps, but also significant points of divergence

Summary: Authentication and authorisation approaches across the example schemes are as follows:

Specification Authentication approach When* Detail

EMV No mandatory requirements — EMVCo has not provided any mandatory requirements for authentication.

JPQR does not specify any mandatory requirements, so the authentiation varies by company. No mandatory requirements — JPQR JPQR recommends PIN, fingerprint or facial recognition When a customer launches the app, they approve it with a username and password. There is no Bharat QR Username and password 2) The app is launched Harmonised other form of approval and the customer cannot choose. specifications 1) The mobile device is *If the bill exceeds 1,000 yuan (~$150), the user will have to enter his password in the complete Password or biometrics HKQR unlocked transaction.

SGQR No mandatory requirements — SGQR has not provided any mandatory requirements for authentication.

QRIS No mandatory requirements x — QRIS has not provided any mandatory requirements for authentication.

The most common payment authentication methods have been passwords and fingerprints. Some Password and biometrics 3) Before payment Alipay devices support facial recognition that the user can choose.

WeChat Pay Password and biometrics 3) Before payment WeChat Pay requires the user to enter their payment password to confirm the transaction.

Proprietary Some companies let users use Face ID and fingerprints as an authentication method, but the Prompt Pay Passwords 3) Before payment specifications common authentication method is typing passwords before settlement. The authentication method is typing a PIN before settlements. The user can change the Passwords 3) Before payment M-Pesa PIN on the M-Pesa app at any time.

Mercado Pago No mandatory requirements — Mercado Pago does not specify any mandatory requirements before or after settlement.

* Authentication is performed at 1) when the mobile device is unlocked, 2) when the app is launched, or 3) at the time of payment. A summary comparison of QR specifications across their 3 of 3 31 constituent components reveals many overlaps, but also significant points of divergence

Summary: Analysis of the scope and coverage of the QR code data payload across the example specifications:

QR code data Specification Data for Merchant Presented Mode Data for Customer Presented Mode Data for linking up with different schemes*

EMV Defined in the specification JPQR Not defined in the specification Defined in the specification Bharat QR Harmonised Not defined in the specification specifications HKQR Defined in the specification

SGQR

QRIS No published QR code data information Alipay

WeChat Pay Proprietary Prompt Pay specifications M-Pesa Defined in the specification Not defined in the specification Not defined in the specification

Mercado Pago

* For a more detailed comparative analysis of different QR code technical specifications, refer to Appendix E. ** Columns of data are provided to work with each scheme, such as a “Reserve for EMVCo” A summary comparison of QR specifications across their 3 of 3 32 constituent components reveals many overlaps, but also significant points of divergence

Summary: Analysis of the scope and coverage of the QR code data payload across the example specifications:

QR code data Specification Data for Merchant Presented Mode Data for Customer Presented Mode Data for linking up with different schemes*

Harmonised specifications Understanding the technical specifications of QR code solutions is useful as they represent one of two possible routes to interoperable QR code merchant payments.

Proprietary specifications

* For a more detailed comparative analysis of different QR code technical specifications, refer to Appendix E. ** Columns of data are provided to work with each scheme, such as a “Reserve for EMVCo” Charting a • There appears to be a clear path for most QR course for code merchant payment schemes around the world. interoperable • As QR code merchant payments schemes evolve, two primary dimensions of QR code interoperability are typically encountered: domestic and cross-border. merchant • There are two primary approaches to QR code merchant payments interoperability: harmonisation of QR code specifications payments and harmonisation via API and/or back-end integration. There appears to be a clear path for most QR code merchant payment 34 schemes around the world

There are many QR code payments initiatives around the world, many of which are in DOMESTIC CROSS-BORDER different stages of development and maturity. Government/regulator-led Regardless of the stage, there appears to multilateral cross-border be a clear path for most QR code payment interoperability schemes, with an important focus on interoperability: • Almost all schemes start with a domestic Government/regulator-led agenda. bilateral cross-border interoperability Maturity and sophistication Maturity Government/regulator-led • Initiatives evolve differently and follow domestic interoperability Bilateral outbound/ different paths, but there is a clear progression inbound interoperability from domestic to cross-border interoperability over time (see adjacent diagram). • In many cases, initiatives will not only follow Closed loop outbound/ inbound interoperability different paths, but also appear to double Provider back as priorities change. consolidation Joint venture/consortium limited open loop scheme

Proprietary, closed loop scheme

Elapsed time There appears to be a clear path for most QR code merchant payment 35 schemes around the world

Examples of some primary drivers that could influence the path to interoperability are: Progress towards interoperability is seldom linear and encompasses various dimensions. These will be Business case priorities, e.g. domestic Government/regulatory intervention examined in the following sections. payments agenda at the outset, with some (domestic), e.g. Government or regulator changing to a cross-border agenda over taking an early lead to establish national time. QR code payments schemes, or becoming involved later to bring about market Scaling, e.g. seeking options to scale the harmonisation. Government/regulator capability of existing QR code payments involvement tends to focus initially on via partnership(s), e.g. joint venture/ a domestic agenda primarily due to consortium, etc. obligations to the national population.

Market efficiencies, e.g. seeking options Government/regulatory cross-border to consolidate offerings within domestic support, e.g. where a significant proportion markets, across or even outside regions. of the population will be well served by a joined-up approach to payments in territories where there is a mutual government-to-government interest, such as a major outbound tourist destination. As QR code payments schemes evolve, two key dimensions of 36 interoperability are typically encountered: domestic and cross-border interoperability

The diagram Geographic focus Domestic interoperability Cross-border interoperability alongside illustrates the key dimensions Directionality One way vs Dual interoperability Inbound vs Outbound interoperability of interoperability National initiatives/ National vs Proprietary scheme interoperability Agreement National scheme and how they lead to Bilaterals Multilaterals structures Proprietary scheme to National National scheme to Proprietary different outcomes scheme scheme based on the strategic ambitions Harmonised QR code Integration approach and objectives of a Back-end API scheme. The different dimensions ofdomestic interoperability The different dimensions ofcross-border interoperability • One-way vs dual interoperability • Inbound vs outbound interoperability between proprietary schemes i. One-way interoperability (e.g. Scheme A customers can transact with i. Inbound: e.g. Scheme A (e.g. in Japan) enables Scheme B’s customers Scheme B merhants) (e.g. from China) to transact with it in Japan ii. Dual interoperability (e.g. Scheme A customers and Scheme B ii. Outbound: e.g. Scheme D (e.g. in China) enables its customers to customers can transact with Scheme A and B merchants) transact with Scheme E merchants (e.g. in Indonesia) • Agreement structures • National scheme interoperability vs proprietary scheme interoperability i. Bilaterals (i.e. proprietary scheme to proprietary scheme) i. Inbound and/or outbound interoperability is enabled via interoperability Viewpoint ii. Multi-lateral agreements (i.e. JVs/consortium appraoch between between National Scheme J (e.g. in Japan) and proprietary Scheme C multiple proprietary schemes) (e.g. from China) iii. National initiatives (i.e. National scheme) ii. Inbound and/or outbound interoperability is enabled via interoperability between National Scheme P (e.g. in Indonesia) and National Scheme Q (In Thailand)

Two primary integration approaches to interoperability 1. Harmonised QR code specifications (i.e. interoperability enabled via front-end harmonisation 2. Integrated APIs with differing/proprietary QR code specifications (i.e. interoperability enabled via back-end integration, typically APIs) As QR code payments schemes evolve, two key dimensions of 37 interoperability are typically encountered: domestic and cross-border interoperability

As schemes evolve and gain How to achieve these objectives: scale, strategic ambitions will Agreement structures typically fuel a desire to scale even further through some form – Bilateral versus multilateral at of interoperability. proprietary or national levels There are various dimensions • Integration approach of interoperability, which are – Harmonised QR code versus generally grouped into the back-end integration (typically objectives being sought and how API) to achieve those objectives. This document will now focus on Objectives: the technical aspects of achieving • Geographic focus: interoperability, citing prominent examples of implementation – Domestic interoperability versus approaches. cross-border interoperability • Directionality of interactions – Inbound versus outbound interoperability There are two primary approaches to QR code payments 38 interoperability: harmonisation of QR code specifications and harmonisation via API and/or back-end integration

This diagram illustrates the two key approaches to interoperability, highlighting the Merchant Payment routing Interoperability differences between front-end (e.g. QR code) Proprietary QR code processing and back-end (API) harmonisation. It is harmonisation important to note that: National switch(es)

• Interoperability schemes typically take Cross-border Face-to-face These examples implement the switches either a harmonised approach to QR code EMV standard for MPM and CPM specification OR involve some form of back- QR codes: Interoperability end integration via APIs. API harmonisation • Interoperability does not require both QR code harmonisation and API integration, Propietary Online QR codes i.e. interoperability can be achieved using only one of these mechanisms.

Front-end Back-end There are two primary approaches to QR code payments 39 interoperability: harmonisation of QR code specifications and harmonisation via API and/or back-end integration

Harmonised QR code speciﬁcations API integrations

Proprietary Scheme A National Scheme A Proprietary Scheme A Proprietary Scheme A National Scheme A Interoperability Harmonised QR code Harmonised QR code A’s API or B’s API National Scheme B’s API NS A’s API or NS B’s API approach Proprietary Scheme B National Scheme B Proprietary Scheme B National Scheme B National Scheme B

Harmonised QR code example: API example: China UnionPay (CUP) customer travels to WeChat Pay customer travelling to Indonesia, using WeChat Pay to Japan, using UnionPay at Japanese JPQR transact at QRIS enabled merchants in Indonesia. merchants.

Proprietary Scheme A Proprietary Scheme A*

QRIS Harmonised QR code National Scheme B’s API API

National Scheme B National Scheme B’s For more insights Merchant acquirer and examples of QR National Scheme B QRIS code specification merchants harmonisation, see Appendix D

* WeChat Pay in partnership with CIMB Niaga (using QRIS API). Similarly, Alipay has recently agreed to a deal with Indonesian state-owned banks, BRI and Bank Mandiri • There are many different approaches to the Key trends, adoption of QR code payments, and trends and lessons can be drawn from existing findings and deployments around the globe. • Mobile money providers are actively promoting the use of QR codes for call to action merchant payments in emerging markets, but they must also lay the foundation for interoperability.

• Call to action for mobile money providers TRENDS As QR code merchant payments continue to grow in popularity, 1 of 2 41 it is important to recognise not only the material trends, but also the impacts and implications of these trends

QR code merchant payments are not Government interest and intervention Smartphone penetration is increasing, but new, and there is a significant body of is growing feature phone penetration remains high global knowledge and experience from • Historically, governments and regulators have • Smartphones are essential to the success of providers operating in this ecosystem shown little inclination to intervene in the QR code merchant payments. Smartphone (with varying degrees of success). merchant payments segment. However, this penetration is high in many of the regions Here, we examine some of the major appears to be changing around the world, where QR code merchant payments are trends in QR code merchant payments particularly in developing regions where there popular (e.g. various Asian markets). However, and their key impacts and implications. is a desire to reduce the use of cash and this is not the case in many other markets (e.g. counterfeit. across Africa) where smartphone penetration • Another key objective is to improve financial is growing, but very slowly, and feature phone inclusion and literacy, which has fuelled efforts penetration remains high. In these regions, the to increase the banked population. affordability of devices is a critical challenge. Internet connectivity is required, but remains • Accelerating the penetration of affordable a challenge for many • Regulators recognise that one way to achieve these goals is to reduce the cost of non-cash smartphones is vital, and pursuing a ”bridge” • Some form of internet connectivity is required merchant payments to make digital payments smart feature phone platform in parallel, such to support effective QR code merchant more attractive. as KaiOS, may help mitigate this challenge. payments. Although there continues to be a keen interest in improving coverage, a number • States benefit from all of the above through of regions still have limited or no coverage. enhanced money traceability and, therefore, potentially higher tax revenues. TRENDS As QR code merchant payments continue to grow in popularity, 2 of 2 42 it is important to recognise not only the material trends, but also the impacts and implications of these trends

Interoperability is crucial at various stages • Alipay and WeChat Pay have also begun Biometric payments are becoming more of the QR code merchant payments journey to open their ecosystem in China to those feasible travelling to China, which could bolster their • Various forms of interoperability become • Biometrics could ultimately replace QR codes already dominant position. crucial considerations at certain points in the (and other payment tokens). QR code merchant payments journey. This Downward pressure on payment acceptance • Biometric payment methods are slowly is rarely a consideration in the early stages, fees and costs gaining profile around the world. China leads but becomes an important factor later. Late on this and could pave the way for biometrics, • There is consistent downward pressure on consideration of this aspect can pose material such as fingerprint and/or facial recognition the costs and fees associated with merchant challenges to scale and growth. to replace payment tokens (e.g. QR codes) payments acceptance, including POS and their host devices (e.g. smartphones) for Payment giants are continuing aggressive hardware. QR code merchant payments are payments entirely. global growth seen as a potential solution to this challenge, particularly for micro-merchants. • Alipay and WeChat Pay continue to build on QR code merchant payments: an interim step towards NFC payments? their domestic success and are adopting a Material difference in market approaches flexible approach to cross-border acceptance • In some cases, QR code merchant payments • There are existing and emerging material interoperability to ensure their customers are are seen as an interim step or bridge to NFC differences in market approaches to QR code supported when they travel. payments. merchant payments across geographies • This has effectively applied tacit pressure (e.g. some are heavily regulator-led, others • Major international payments schemes see on foreign bodies and value chain players are fintech-led while others are MMP-led). the potential, but also recognise that this may to enable interoperability in their domestic A one-size-fits-all approach is unlikely to be not be the path some (non-card dominated) markets for inbound Chinese travellers. successful. regions will take. FINDINGS Findings: there are many different approaches to adopting 1 of 2 43 QR code merchant payments, and lessons can be drawn from deployments around the globe

The impact of these approaches will Key headline findings: vary depending on where the provider Crucial enablers and interdependencies Geographic nuances is on its QR code merchant payments journey. • Components of the ecosystem are heavily • A clear and deep knowledge of target interdependent. As a crucial first step, it is markets is required, and a one-dimensional important that target customers have easy, approach is unlikely to succeed. For example, affordable access to appropriate devices, it is important to recognise that different connectivity and bank accounts. However, it populations have different needs (e.g. takes time for a market to shift from feature payments challenges in rural areas will be phones to smartphones, as does convincing different from those experienced in cities) and cash merchants to move to digital payments. markets with deep smartphone penetration will behave differently from feature phone Evolutionary journey markets. • It has been demonstrated repeatedly that Education and trust there are key milestones along the QR code merchant payments journey. These highlight • Ecosystem participants must have trust and the evolving, non-linear nature of the journey, confidence in QR code ecosystems if they are and may require backtracking to ultimately to thrive. Robust and continued education gain forward momentum. of all stakeholders, especially merchants and customers, is necessary to build and embed trust. This can be achieved in a variety of ways, such as promotions by large and trusted retail brands, or enlisting government support (where the government is a trusted entity). FINDINGS Findings: there are many different approaches to adopting 2 of 2 44 QR code merchant payments, and lessons can be drawn from deployments around the globe

Key headline findings cont. Regulatory intervention Strategic objectives • Increasing government and regulatory • Clear, concise and executable strategic • On their own, QR code merchant payments appetite for intervention requires careful objectives are required throughout the journey, are typically a difficult financial proposition consideration of their agenda and determining but these should be reviewed regularly and for providers. These payments should support how to feasibly address these priorities in a recalibrated when required. For example, if the consumption of high-value products and proposition. success is likely to depend on interoperability, services that are the core drivers of revenue do not leave interoperability until the last and profitability. Distribution minute. • Distribution is key. Ubiquitous merchant and • One of the main perceived benefits of QR customer uptake is essential to the success of code merchant payments is the potentially low these types of payments initiatives. Providers cost of entry and participation for merchants will need to resolve the “catch-22” challenge and customers. It is important not to lose of merchants waiting for customer demand sight of this to ensure that QR code merchant before moving to support this demand, while payments remain the most compelling option customers wait for their favourite merchants for stakeholders that place high value on to support the scheme before signing up for it. affordability. CALL TO ACTION Mobile money providers are actively promoting the use of QR codes 45 for merchant payments in emerging markets, but they must also lay the foundation for interoperability

QR code merchant payments QR code merchant payments have already been widely adopted are a complex proposition with in specific markets like China, many moving parts in terms of but are still in an early part of their product flow and technical their journey in other parts of specifications, as shown in this the world, particularly emerging report. It is important the mobile markets. industry aligns on the specific aspects of a QR code merchant Mobile money providers are key payment solution to achieve players in the provision of financial a harmonised experience for services in emerging markets and customers across providers. are actively promoting the use of QR codes for merchant payments To enable this, the mobile money there. industry may consider adopting an existent harmonised QR code They can leverage their leading specification that meets its needs position in these markets or developing a bespoke new to capture the opportunity one that is tailor‑made to address presented by QR code merchant its requirements. payments, but should adopt the lessons emerging from other QR code deployments globally. Conclusion

QR code merchant payments present a Non-telco players are already investing significant growth opportunity for mobile heavily in this opportunity. money providers. There is currently an early-mover Longer term, sustainable growth will be opportunity for the industry. This window underpinned by the industry’s willingness to of opportunity will not remain open collaborate. indefinitely. Join the conversation

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Appendices A Glossary of terms H What can we learn from China and other parts of the world? B List of interview participants I Facial recognition technology and its A deep dive into QR code technology impact on QR codes in China

C Push versus pull payments: technical flows J Emerging QR code merchant payments: examples from Latin America D QR code merchant payments: technical component analysis QR code implementation E Comparisons of QR code specifications: K Scheme specification design and select examples implementation process F QR code merchant payments API L Optimising implementation of QR code component analysis merchant payments G QR code merchant payments: device M Security and risk management affordability Appendix A Glossary of terms Glossary of terms 51

Element Parameter Description Comms channel Internet connectivity TCP/IP-based internet connection USSD connectivity USSD (Unstructured Supplementary Service Data) is a communications protocol used by GSM cellular telephones to communicate with the mobile network operator's computers. USSD messages are up to 182 alphanumeric characters long. Device Smartphone Smartphones are a class of mobile phones and multipurpose mobile computing devices with touch screens. Smart feature phone A smart feature phone is between a smartphone and a feature phone. It has a simple OS and a larger display than a feature phone, and supports basic applications such as social media and messaging. Feature phone Feature phones are mobile phones that retain the form factor of early-generation phones, with button-based input and a small display. QR code Merchant-presented “Merchant presented” is a style in which the QR code is displayed on the merchant side and scanned by the presentment mode (MPM) customer. Customer-presented “Customer presented” is a style in which the QR code is displyed on the customer side and scanned by the mode (CPM) merchant. Payment type Push payments Push payments rely on customers actively sending or “pushing” money to the merchant. The merchant requests the payment and then relies on their customer to send the amount owed. Pull payments Pull payments allow the merchant to “block” or ”pull” money from customers, providing there is a pre-existing agreement between both. In this way, the merchant has greater control over cash collection. Glossary of terms 52

Element Parameter Description QR code type Static QR code “Static” is a fixed, unchangeable QR code. In this type of QR code, the payments transaction payload is placed directly in the QR code Dynamic QR code A dynamic QR code and its underlying data change depending on the transaction. In addition to payments, this code can also be used for access management, password protection, scan analysis and device-based redirection. Merchant Merchant online A situation in which the merchant system is connected to the internet. connectivity Merchant offline A situation in which the merchant system is not connected to the internet. Customer Customer online A situation in which the customer device is connected to the internet. connectivity Customer offline A situation in which the customer device is not connected to the internet. Transaction PIN Authentication using numbers. authentication Password Authentication using secret authentication information such as numbers and text Biometric An authentication technology that uses biometric information such as fingerprints and facial recognition. Transaction Face-to-face Represents in-store payments. channel Remote/ A situation in which a payment is made via remote digital channels. E‑commerce Appendix B List of interview participants List of interview participants 54

Organisation Organisation Type Regional scope Denso Inventor of QR codes China, Global MTN MNO, QR code payments player Middle East, Africa Orange MNO, QR code payments player Middle East, Africa Vodafone MNO, QR code payments player Middle East, Africa, Global Telenor Easypaisa MNO, QR code payments player Pakistan NTT DOCOMO MNO, QR code payments player Global Bank of Ghana Central bank, regulator Ghana Bank Indonesia Central bank, regulator Indonesia Bank of Thailand Central bank, regulator Thailand National Payments Corporation of India (NPCI) National payments industry body and infrastructure operator India Payments Japan Association National standards body Japan Asian Payments Network Cross-regional standards body Asia KaiOS Device OS (smart feature phones) Global PalmPay Fintech, QR code payments player Africa GoPay Fintech, QR code payments player Southeast Asia List of interview participants 55

Organisation Organisation Type Regional scope Bluecode, EMPSA Fintech, QR code payments player, harmonisation organisation Europe CIMB NIAGA Bank, QR code payments player Southeast Asia Visa International payments player Global Mastercard International payments player Global RPC (International law firm) Payments, regulatory and legal Global Accourt Global payments advisory Global NTT Data Global technology organisation Global Appendix C Push versus pull payments: technical flows Push versus pull payments: technical flows 57

Push payments Push payments — Merchant-presented Mode (MPM) Pull payments 0 Static/dynamic QR code 0 Static/dynamic QR code presented by merchant Payment scheme presented by customer The following diagrams 1 Customer opens app, authenticates 1 Merchant scans QR code 3 4 provide a brief, high-level (if required) and scans QR code 2 Merchant requests payment summary of two primary 2 Customer authorises the transaction authorisation against customer’s Customer’s approaches to executing account/ Merchant account via merchant acquirer 3 Customer’s account provider routes acquirer and processing QR code app provider payment instruction from customer 3 Merchant acquirer routes merchant payments. to payment scheme, funds are 2 5 authorisation request to payment settled to the acquirer’s account* scheme, which routes it to the QR code 1 0 (MPM) customer’s account provider 4 Merchant acquirer receives payment Customer Merchant instruction 6 (e.g. Mobile Wallet/bank account) 5 Merchant acquirer makes payment* 4 Customers account provider Pull payments — Customer-presented Mode (CPM) into merchant’s account authorises or rejects the payment authorisation and routes it back to 6 Merchant receives payment Payment scheme the merchant via the acquirer confirmation and funds;* hands goods to the customer 5 The merchant receives payment 6 4 3 3 4 6 authorisation; hands goods to the customer Customer’s account/ Merchant app provider acquirer 6 Payment Scheme facilitates payment from the customer’s account to the 3 2 4 6 merchant’s account via the merchant *Note: this example illustrates a push payment in an immediate payments ecosystem. Some payments may acquirer (this settlement can happen QR code 0 1 take longer to reach the acquirer and the merchant. (CPM) Customer Merchant any time between 1 and 60 days after

5 the transaction) Appendix D QR code merchant payments: technical component analysis Insights: QR code specification harmonisation 1 of 2 59

The EMV specifications are the only International interoperability harmonised QR code specifications Not supported Supported currently, and several schemes have either elected to design to these Since there are few domestic payment Easypaisa is dominant in the QR code specifications from the outset or schemes and many visitors come from payments market in Pakistan and there overseas, and many people work in reverse-engineer harmonisation with is therefore no rationale curently to work neighbouring countries, the government with other schemes, either domestically EMV at a later stage. Few schemes is considering working with overseas or internationally (unless compelled to implement the EMV specifications schemes in parallel with domestic do so by the Regulator). verbatim, as these schemes have supported Not standardisation. different characteristics and features they wish to support, depending on They are not active in working with the country and regional context of There is a great deal of coordination foreigh countries and they are focused between domestic and international the specification. Some examples of on aligning with domestic schemes. payment schemes with QR codes, which Domesitc interoperability Domesitc Because the size of the domestic these dimensions and rationale are suggests they want this coordination to economy is so large and the economy illustrated below. Supported add value. schemes are too many.

The insights were derived primarily based on the QR Code Elements analysis. Refer to Appendix E for more information. Insights: QR code specification harmonisation 2 of 2 60

As an example of the QR code harmonisation approach, the Hong Kong Monetary Authority (HKMA) is linked to both domestic and foreign schemes. The Myanmar Payment Union (MPU) has few domestic schemes, so is working with other overseas schemes. Different strategic drivers therefore influence approaches to harmonisation and interoperability.

Domestic scheme Chinese scheme* International scheme Domestic scheme International scheme

* Initiative led by the Central Bank of Myanmar to enable domestic acceptance, via local banks, for inbound Chinese tourists using Alipay and WeChatPay ** M-Pitesan by Ooredoo in Myanmar Appendix E Comparisons of QR code specifications: select examples Comparisons of harmonised QR code specifications 1 of 4 62

A comparison of the QR code data elements of each scheme using the EMV specification as the base:

QR code data MPM CPM # Category Data elements EMV JPQR HKMA Easypaisa Jordan EMV JPQR 1 Customer Mobile Number 2 elements Reference Label 3 Customer Label 4 Additional Consumer Data Request 5 Application Dedicated File (ADF) Name 6 Application Label 7 Application PAN 8 Application Specific Transparent Template 9 Application Template 10 Application Version Number 11 Language Preference 12 Application Definition File (ADF)Name) 13 Payment Account Reference 14 Cardholder Name 15 Loyalty Number 16 Merchant Terminal Label 17 elements Country Code 18 Merchant Name 19 Merchant City 20 Postal Code Comparisons of harmonised QR code specifications 2 of 4 63

A comparison of the QR code data elements of each scheme using the EMV specification as the base:

QR code data MPM CPM # Category Data elements EMV JPQR HKMA Easypaisa Jordan EMV JPQR 21 Merchant Merchant Category Code 22 elements Merchant Information - Language Template 23 Merchant Name - Alternate Language 24 Merchant City - Alternate Language 25 Merchant Account Information 26 Store Label 27 Payment system operators 28 Merchant Payment Address 29 Geographical Location 30 Merchant Tax ID 31 Merchant Channel 32 Transaction Transaction Currency 33 elements Transaction Amount 34 Point of Initiation Method 35 Bill Number 36 Purpose of Transaction 37 Common Data Transparent Template 38 Token Requestor ID 39 Tip or Convenience Indicator 40 Value of Convenience Fee Fixed Comparisons of harmonised QR code specifications 3 of 4 64

A comparison of the QR code data elements of each scheme using the EMV specification as the base:

QR code data MPM CPM # Category Data elements EMV JPQR HKMA Easypaisa Jordan EMV JPQR 41 Transaction Value of Convenience Fee Percentage 42 elements Date and Time 43 Rewards or equivalent 44 Scheme Payload Format Indicator 45 elements Payment network specific 46 Issuer URL 47 Globally Unique Identifier 48 Interoperability Reserved for Visa 49 support Reserved for Mastercard 50 elements Reserved by EMVCo 51 Reserved for Discover 52 Reserved for Amex 53 Reserved for JCB 54 Reserved for UnionPay 55 Reserved for the FasterPayment System for use in Hong Kong 56 Reserved by the WG for use in Hong Kong 57 Reserved for payment operators for use in Hong Kong 58 Reserved for EMVCo 59 Reserved for FPS 60 Reserved for the WG Comparisons of harmonised QR code specifications 4 of 4 65

A comparison of the QR code data elements of each scheme using the EMV specification as the base:

QR code data MPM CPM # Category Data elements EMV JPQR HKMA Easypaisa Jordan EMV JPQR 61 Interoperability Reserved for Hong Kong 62 support RFU(Reserved for Future Use) for EMVCo 63 elements Reserved for Jordan Payment Switches 64 Transaction Cyclic Redundancy Check (CRC) integrity elements 65 Uncategorisable Other template 66 Additional Data Field Template 67 Common Data Template 68 Unreserved Templates 69 Last 4 Digits of PAN 70 Track 2 Equivalent Data EMV Specification – MPM 66