Progressive Payment Solutions

QR Code Payments: What Are They and How Do They Work?

Understand how QR code payments work and what benefits they bring to see if they’re right for your business.

You see them everywhere. On a restaurant receipt. At a news stand. Even on the label of an orange. QR codes are proliferating like never before, including in the payment world.

But what are they? How do they work? And what should you know about them if you’re considering using them for business? Let’s find out.

Unlocking what QR means

QR stands for ‘quick response’, meaning it works better than the traditional barcodes that have been around since the 1970s. They can store more information than traditional barcodes and are designed to have less errors when scanned.

Their design dates back to Japan in the 1990s. In order to facilitate identification, shipping, and especially tracking in the automotive industry, Denso Wave reinvented the barcode to hold much more information in the same size as a barcode. 

Instead of merely wide and thin lines, Denso Wave’s code used a matrix of small squares situated between three larger squares in the left two corners and upper right corner. These smaller squares can be arranged in any number of sequences, vastly increasing the data they can store. Thus, the QR code was born.

Now, they’ve become essential to quickly conveying and syncing information–particularly payments. We’ll see how QR payments work next.

How QR code payments work

To scan a QR code, a mobile device equipped with a camera and QR code software is needed. Common fintech apps like Venmo, Apple Pay, Google Pay, etc all use QR codes.

The payment app is opened, and then the camera is activated. The camera is positioned above the code, then the software scans the image and deciphers the unique pattern of black squares on top of the white background.

From there, the mobile device is taken to a payment screen, verifying that the transaction amount is correct and asking the user to approve the transaction. If the confirmation button is clicked, the transaction is sent through, instantly debiting the customer. 

Even though the transaction was instantaneous, they normally take a few business days to be fully reconciled and settled with both party’s banks.

It’s important to note that a major difference between barcodes and QR codes is that the latter are easily scanned from a screen, unlike barcodes that need to be printed on paper to work effectively and scanned by laser. This means businesses can also use their POS terminal to scan a customer’s phone screen to receive payment as well. 

Interestingly, there are actually two different types of QR codes. We’ll learn what those are next. 

Types of QR code payments

To help understand what’s possible with QR code payments, we’ll examine both major categories.

Static QR codes

You might think of static QR codes as a simple two-way street: the code is generated by the business, and is then scanned by the user.

These are often used with basic payments, as they take the user directly to the invoice/payment page. The user then enters the payment amount, submits it, and the merchant then verifies the amount. 

However, other businesses need more than a simple invoice presented to the customer. That’s where dynamic QR codes come in handy.

Dynamic QR codes

Unlike the simple function of static QR codes, these are packed with features. These include the ability to manage access, analyze each unique scan, redirection based on what device is using it, along with password protection.

These editable codes are much more useful for companies who are in need of greater control, accountability, and security, along with those in need of greater analytics data. 

As technology continues to progress, dynamic QR codes are proving to be the dominant type thanks to the control and conveniences they offer. For example, the data they capture includes the customer, payment amount, location, merchant info, and much more. 

Fintech software makes everything much more simple by automating the process of entering the payment amount and having it validated by both parties. Thus, a simpler, better payment experience.

Benefits of using QR code payments

Necessity is the mother of invention. And as always, there’s a constant need for improvement when it comes to how people pay. Let’s take a look at three needs that QR code payments help solve.


Faster is almost always better. This is especially true of payments: the sooner both parties know the payment went through without an issue, the sooner they can move on.

QR code payments are extremely fast by design: open the app, scan the code, tap the accept button. Done. No counting bills and no inserting a card and waiting for a series of beeps and buttons to tap.  


QR code payments are among the most secure forms of payment. Encrypted end-to-end connections and information mean that no one else can possibly access any payment details. 

Not only is encryption a major security protection, but also the complete lack of stealable information makes for another security feature. Unlike credit card numbers that can be stolen and used anywhere, a QR code payment system doesn’t involve any details that are visible to anyone else. Thus, there’s simply nothing to steal and use elsewhere from a QR code payment transaction. 

Ease of use

Because QR payment apps are so well developed, they’re a breeze to use. Setting them up only requires you verify your identity and link your bank account. Instead of merchants needing costly POS systems, they can now simply use their mobile device to accept payments.

Once they’re set up, all that is required is to simply open the app and tap the pay icon. With the proliferation of smartphones, billions of people now have access to QR payment technology. 


With their many advantages and worldwide distribution, QR code payments are increasingly becoming a desired form of payment. Thanks to their customizability, speed, security, and ease of use, they will likely only grow in popularity with time.

Progressive Payment is all about giving you the know-how to make running your business easier and more affordable. Find out how else you can benefit your business by taking a look at our blog that’s centered on all things payment.

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