NFC Vs. QR Code Payments: Which Method Will Take Center Stage?

Today’s payment landscape offers users a wide array of alternatives to choose from. Among this variety of options, transactions employing NFC chips and QR codes have become particularly popular over the past few years. What’s more, as we navigate through 2024, we can expect the competition between these two contactless technologies to intensify even further.

In this guide, we uncover the key pros and cons of NFC and QR code payments and share predictions about their future. Keep reading for all the valuable insights!

NFC Technology in the Modern Payment Landscape

This increasing prevalence of NFC technology is likely to encourage more business owners to accept mobile wallet transactions and turn to the Tap to Pay functionality. However, the adoption of such NFC-enabled payment methods also calls for adjustments to the chargeback process, which are likely to make disputes more challenging for retailers to win.

While this chargeback issue makes some merchants reluctant to hop on the NFC trend, many of them are forecast to give in under the pressure of losing a competitive advantage, as at least 57% of consumers who have tried this contactless payment type in 2020 reportedly continue using it post-pandemic.

Benefits of NFC-Enabled Transactions

What’s more, the increasing adoption of NFC payments is driven by the multiple benefits they offer, including:

• Convenience. NFC payments are quick and easy to conduct, as they require users to simply tap their device or card near the terminal.
• Speed. Transactions via NFC-enabled devices take place in seconds, which makes them one of the fastest payment methods out there.
• Security. NFC transactions often use tokenization and encryption, which ensure their security and significantly reduce fraud risks.
• Versatility. Nowadays, users have access to a variety of NFC-enabled devices, including smartphones, smartwatches, and contactless cards.

All these factors make it evident why NFC payments have been seeing stable growth throughout the past years and continue to gather steam moving forward.

What Are the Drawbacks of NFC Technology?

Despite all their advantages, payments conducted via NFC chips also have their drawbacks, namely:

• Dependency on infrastructure. Such payments rely on NFC-enabled terminals or other mobile devices, which may not be available everywhere.
• Security concerns. Although NFC technology is considered secure, it still has some vulnerabilities, which occasionally lead to financial losses. For instance, in the UK alone, £34.9 million were lost to contactless card fraud in 2022.
• Interference issues. This technology is susceptible to interference from other electronic devices operating on similar frequencies, which can impact the reliability of NFC transactions.

However, NFC technology continuously evolves, so we are likely to see improvements in these aspects in the near future.

QR Code Payments Overview

In 2022, North America emerged as the dominant global QR code payment market, holding a substantial 39% share of the total revenue. However, in the upcoming years, the Asia-Pacific (APAC) region is expected to take the lead due to its accelerating smartphone adoption, robust mobile internet connectivity, and a culture that heavily favors mobile devices.

Notably, experts predict that the adoption rate of static QR codes will exceed that of their dynamic counterparts. This is mainly due to the fact that this payment method does not require any additional software, which makes it easy for small and medium-sized businesses to implement.

Pros of QR Code Transactions

Moreover, the increasing popularity of QR code payments is also the result of a variety of advantages they offer, including:

• Accessibility. QR codes can be easily generated and scanned by smartphones, which makes them an accessible and user-friendly payment method.
• Cost-effectiveness. This payment solution is relatively inexpensive to implement for merchants.
• Standardization. QR codes usually follow a global standard, which is why they can be used across different platforms and payment providers.
• Ease of integration. Business owners can integrate QR code payments into their existing systems without significant modifications.

These positive aspects linked to QR codes make them the preferred payment method for many consumers and businesses across the globe.

Cons of QR Code Payments

While QR code payments come with plenty of advantages, they are also associated with a few setbacks, such as:

• High reliance on smartphones. A user needs to have a smartphone or tablet equipped with a camera to be able to conduct QR code payments.
• Internet connection dependence. QR code transactions require an internet connection to be completed, which may be a challenge in areas with poor connectivity.
• Security risks. QR codes are generally considered secure. However, they can still be susceptible to fraud, including phishing attacks.

Yet, as technology continues to develop, QR codes are expected to overcome these challenges, providing an even more seamless and secure payment option for individuals and businesses.

Summing Up: Which Payment Method Is the Better Pick?

Besides, given the dynamic nature of the payment landscape, predicting which of these methods will be dominant in 2024 and beyond remains a challenge. What is certain, however, is that both of them will continue improving and getting rapidly adopted in the foreseeable future.