By Tanish Pradhan
In response to the aftermath of demonetization in India, the nation began to speak of the need for infrastructure to make digital payments. Many criticized the move, saying that the necessary infrastructure should have been set up before currency notes were made invalid, and that demonetization is not a means to grow a digital economy. While India seemed to be stuck in criticism and discussions, its neighbour state of China was going through a digital revolution of its own.
According to data from the internet consulting firm iResearch payments made through mobile devices by Chinese consumers in the last year alone reached 38 trillion yuanmore than half the nations GDPand 50 times the number of mobile payments made in the US. Figures from Chinas Internet Network showed that 64.7 percent of smartphone usersabout 424.5 individualswere making regular mobile transactions in June this year. This is a 7 percent rise compared to December of last year. This rapid digital revolution quickly leading to a largely cashless economy could be attributed to the rise of payments made using QR codes.
What do QR codes have to offer?
QR or Quick Response codes are two-dimensional barcodes capable of holding 300 percent more data than traditional one-dimensional barcodes. These were initially developed for the automobile industry in Japan but quickly spread beyond it due to their quick readability and ability to hold large amounts of data. In China, they were made popular largely by digital payment apps such as Alipay or WeChat. These apps linked your digital wallets to your bank accounts making it easy to make direct payments for any commodity just by scanning a barcode. They allowed consumers to have personalised QR codes which cashiers could scan to accept the payments with ease, eliminating the hassles of cash-based payments.
Over the past year, China has started to see the benefits of QR codes over other forms of digital payment technologies. It eliminates the problems associated with cash payments like availability, the hassle of carrying it, and the need for exact change. They are also far easier than card payments or NFC technology since they eliminate the need for expensive machinery associated with these payment options; all a shop owner needs to operate QR technology is a smartphone and a printout. It is also far more convenient than technologies like NFC which require sophisticated tech.
New and quirky QR applications
In the versatile and innovative market of Chinathe second largest economy in the worldthe QR code has flourished with uses that werent previously imaginable. The most obvious use is to make easy cashless payments. Today most Chinese vendors have placed printed QR codes in their place of operations. It becomes easy for customers to just pick out the commodities for purchase and scan a code to make the transaction. Furthermore, it becomes easier for family and friends to share and send money to each other, to be used with ease. It has also become an easy way to pay for new rent based sharing systems, where people can rent bicycles or umbrellas by simply paying by QR. All a customer needs to do is scan the barcode and make the payment and the object unlocks itself for use.
Other quirky uses of the new QR payment industry have quickly popped up. Waiters in many restaurants have started pinning QR codes to their shirts as a means to accept tips. In an economy where tipping was sparse and uncommon, the new QR code system has helped some servers pull in as much as 3000 yuan a month in tips. Even beggars have started keeping printed QR barcodes to accept alms in the form of digital payments. The case of a bride who wore a QR code around her neck to accept digital payments as wedding gifts also recently went viral. These barcodes are also being used as a means of advertising, with massive QR codes being printed on billboards to pique the viewers curiosity. People like models and musicians have also been getting tattoos of these codes for the added publicity.
The move towards a cashless economy
What is happening in China is essentially the organic movement of its economy from being cash-based to virtually cashless. This is the same kind of digitization that the government wanted in India. We could even see traces of the rise of QR codes closer to home with Paytm and Freecharge codes becoming popular in both supermarkets as well as small stores. However, there are also a lot of issues associated with digitization.
Similar to the rise in consumer spending associated with the introduction of card payments we can expect the willingness of the public to spend more due to QR technology as well. The equation is simple: the easier the method, more the expenditure. Digital currency also fails to evoke the sense of value in people that hard cash did, making them more likely to be willing to part with their money. While this may be a welcome push to the economy, it may spell disaster when credit lines are opened to QR payments.
Dangers in digital?
Whats more is that the QR transaction fails to maintain the trust that a cash exchange did. In a cash transaction, the exchange of money for goods was a private exchange between seller and buyer. No third party would get a sniff of this transaction unless they were witness to it. The trouble with digital transactions is that it violates this sense of privacy and makes data of millions of transactions available to whoever gains access to it. This may be the government, a business organization or even a hacker. In todays information age, access to this kind of data could spell a huge advantage in the market.
Another issue with digitization that needs to be addressed is that of cybersecurity. When payments and transactions become digital, the security associated with those payments becomes of primary concern. The QR revolution in China has seen the emergence of a new brand of the malignant entity known as trap QRs. Here, innocent barcodes are replaced with others which lead unwary customers to websites which steal their bank details or infect their devices with viruses or trojans. The matter of concern here is that this kind of fraud is hard to prevent as the trust people invest in digital transactions grows.
Can India learn from its neighbours in China and transition to a digital economy, or are we permanently socially and culturally integrated with cash? These are questions the country must answer with haste. As digital finance platforms grow in India, the many concerns they raise need to be addressed. It is necessary to ensure that every individual in India is conditioned and taught to use digital methods of transaction before we start making reforms and changes which adhere to digitization. The effect of this cashless society on our economy has yet to be visualised. However, one thing is clear: QR codes are far from a mere fadthey are a look into our financial future.
Featured Image Source: Pixabay