The fun thing is that you have a number of ways to pay electronically in the US, PayPal and Venmo are pretty widespread.
What is missing is an effortless way of asking to pay, like by scanning a QR code. Contactless payments using NFC in cards and phones do not quite cut it, and require a terminal.
How is QR any different than NFC from a user perspective? Both require a terminal to be effortless for the consumer (an LCD or e-ink display that shows a real time QR with transaction details like amount, or an NFC chip that does the same thing).
I think QR is slightly worse since I have to open my camera app, or open my payment app and select camera, vs just waving my watch/phone at a terminal.
Things like metro payments are 100% doable with NFC and would be an awful nightmare with QR.
> How is QR any different than NFC from a user perspective?
Back when AliPay and others were scaling up not too many phones had NFC.
However, more importantly, QR is way better from merchant's stand point. A static QR code is a thing of beauty. A tiny mom-and-shop merchant could take a printout and stick it up on their physical store front. It allowed AliPay to onboard of hundreds of thousands of merchants with minimal or no operations team on the ground. This strategy was almost 100% replicated in India by Paytm and their ilk. It was incredible to see even the smallest of shops with a printed QR codes stuck to their push carts, rickety shops etc.,
Until everyone starts faking receipts, and then you’re back to terminals and someone validating they did receive a payment.
Or they go the other way and they’re scanning your QR code.
Basically, it isn’t actually better than NFC, just different. And maybe a little worse for speed, but better for donations or things that anything is better than nothing.
"Anything is better than nothing" is exactly the point. We are talking about businesses that run on a shoestring here. Peddlers, street vendors, people who may not even have a phone of their own but one of their family members does, and that's whose QR code they have printed out to accept payments. In a society where nobody carries cash any more, the best you can hope for as a bottom-rung vendor is that your customers aren't desperate enough to try cheat you out of a few kuai.
At the next level up, of course, vendors will have their own phone so they can check their notifications to make sure that a payment went through. And that is a big step forward for vendors in developing countries - there's no risk of receiving counterfeit currency with electronic transactions.
Unfortunately the bottom rung can least afford the fraud.
If the currency is good enough to fool a street vendor, it’s probably good enough to spend with their suppliers. Not like they’re sticking it in a bank. I suspect those street vendors are also not accepting bills so large they’re worth counterfeiting.
Chargeback fraud of course being more likely with credit card payments - but again, unlikely for small vendor transactions. It’s not worth it for anyone.
The argument that people don’t carry cash anymore is certainly real enough - and the beggars/window washer at a red light types are the most impacted rather than real merchants.
Most QR systems (in merchant presented mode, anyway) require good internet connectivity, which may not be a given in developing markets. This isn't a problem for NFC.
Using WeChat or Alipay in China does not require anything other than the app, which is quickly opened. Merchants just have pieces of paper with their QR code on them, and the payment is nearly instant. NFC is extremely finicky and much slower. I don’t know how many times I’ve seen lines held up by people needing to wave their phone or credit card around to get the NFC recognition to work.
As someone who has visited China, it truly feels like stepping back in time when coming to the U.S. with regards to payments.
How do you validate I've paid and let me through with a static QR code for something like the metro, or a ticketed event, or even a coffee? How do you know they paid the right amount? I turn and show you my receipt, and you hope it's not faked?
The answer is they don't do that - and they do it the other way around. The user shows THEIR QR code to the merchant (or automated kiosk).
Which means they still need a terminal - and it's going to be slower than NFC.
It goes both ways and depends. The point is there are options and your statement is not correct.
Some merchants, like street merchants or drivers, will simply have their code printed out. You scan it and pay them and they get a notification on their phone or tablet that you've paid. Other places, like at bigger restaurants, have QR screen readers that will scan the purchaser's phone.
Either way, I don't see what you're getting at. The terminal is the phone in many cases, and other cases, there is a terminal in the sense of an integrated scanner system, but why does that matter? For the user it is much more convenient and faster. It's essentially instant, and I have never waited for the amount of time it takes for a credit card or NFC payment method to process. Further, it allows basically anyone to have this method because, again, the terminal is your phone and can be so for both parties in the transaction.
> And NFC works when my battery dies.
So what? You can charge your phone essentially anywhere in China.
> How do you validate I've paid and let me through with a static QR code for something like the metro, or a ticketed event, or even a coffee? How do you know they paid the right amount? I turn and show you my receipt, and you hope it's not faked?
By and large when I've used these systems, the vendor just checks they received the correct amount of payment in their app. It's largely immediate
Only foreign visitors carry cash these days in China in cities in my personal experience :-) Some shops actually don't accept cash at all - so you have to pay a colleague in cash and they'll pay the vendor with Ali or Tencent Pay on your behalf.
China netizen population is estimated around 900 million. So essentially all adults in Urban and many in rural excepting small kids. Generally for the elderly, their kids or grand kids will help.
It's also pretty easy to take an item and walk out without paying. But it doesn't happen. At least, it doesn't happen that much, and I would guess it happens much less in China than in the USA (though I'd be curious to see actual shrinkage numbers).
QR codes seem to have largely supplanted cash and credit cards in mainland China, whatever hypothetical downsides they might have. And the very limited hypothetical advantages of NFC (it's unclear to me what they actually are, but let's grant they exist) don't compensate for the fact that an expensive terminal is needed, so NFC isn't displacing QR codes in the near future.
It doesn't have a bearing on which method is riskier, but it does have a bearing on the idea that everyone is going to be generating fake receipts on their phones.
And, yeah, most places do verify based on another phone.
weird, must be a regional thing. both NFC cards and apple pay are pretty reliable for me. as for speed, I don't see how getting out your credit card and waving it next to a terminal can be slower than getting out your phone, unlocking it, opening wechat, selecting the qr scanner, lining up the camera, waiting for it to focus/scan, and confirming the transaction.
The difference is that for most people their phone is always in their pocket or easy to grab, 24/7. A credit card may be tucked away somewhere for emergencies, or left at home. I lost my credit card somewhere years ago and didn't care when I lived in China because the physical object was irrelevant. It's only when I got back to North America that I realized some retailers still awkwardly require you to present the physical thing.
Just like the phone made wrist watches and portable music devices obsolete, it's also made the wallet obsolete. I agree that both NFC and QR code are equally convenient (although obviously QR codes are more accessible because they work on all phones and no special scanning devices are required), but I think the main issue is with NFC in a card versus NFC in a phone. The phone is always going to be more convenient, because people today are rarely - if ever - without their phone.
WeChat's QR scanning is basically instant and doesn't need to be lined up. In my experience, it basically has scanned and processed the QR code when I've barely realized I got it in view.
Regarding NFC, I've just seen too many times of having to put the phone in the right place in the right orientation to get the communication to work, and then it still takes time to make the payment. It's faster than credit cards when it just works but slower when it doesn't. And Alipay and WeChat are faster than both.
In China, you don't need a wallet. You just need a phone. So you get used to knowing what you need. There's an initial learning curve, but then you can be paying and biking around and everything else with just your phone.
No need to come close and touch. This can be important in some scenarios, like paying to a street musician, or donating to a cause by just pointing your camera at a billboard, or a graffiti, or a printout on something.
I think I need to restate the well-known: the gulf between reasonably easy and zero effort is quite large, and crossing it changes a lot in user behavior.
> This can be important in some scenarios, like paying to a street musician, or donating to a cause by just pointing your camera at a billboard, or a graffiti, or a printout on something.
Pointing a camera at something that deducts money from you seems extremely ripe for abuse, what’s to stop someone from putting fake QR code’s over real ones and hijacking payments?
The act of paying indeed should involve pressing a button "pay $amount to $party", and the flow should go through a server verifying both parties.
I'd say that paying with a contactless card has a problem here, an NFC credit card lacks a confirmation button, and the one on the terminal is controlled by the receiving party.
> Pointing a camera at something that deducts money from you seems extremely ripe for abuse, what’s to stop someone from putting fake QR code’s over real ones and hijacking payments?
How would that work? If someone somehow put a fake QR code over a merchant's real one, the merchant or person you're paying would not get a notification when you scanned their code to pay them. Thus, both parties involved in the transaction would be alerted to the situation immediately. The wrong QR code would be tied to someone's account and be easily found by the system.
A camera has been available on lower end phones for at least 10 years, NFC not so much. QR codes are also ubiquitous in China so it's a familiar concept to people there, even less tech savvy/educated people.
Yes, they have everything in place, except the zero-effort contactless payment feature, a way to show or export / print a QR code.
Paypal.me works great on the web as a clickable link, even though the commission is several percent (don't remember exactly), not the 0.3% which Alipay boasts.
What is missing is an effortless way of asking to pay, like by scanning a QR code. Contactless payments using NFC in cards and phones do not quite cut it, and require a terminal.