China's Cashless Revolution

So often we have heard that little things can make a big difference, but what’s happening in China with the QR codes suggests that they can bring a revolution too. With mobile payments involving QR codes amounting to US$ 5.5 trillion, more than half of the China’s GDP and 50 times greater than that of the US, these little two-dimensional images made up of series of black and white squares are the x-factor in bringing the digital payments boom in China. But then again QR codes, short for Quick Response, never really took off in countries like US and France. There these barcodes are more common in social media apps like Snapchat, Facebook and Spotify.

Originally when these QR codes were created in 1994, by Denso Wave, a Toyota subsidiary they were only used to aid the manufacturing process as they helped in tracking vehicles and components. But after the creation of the barcodes they became a lesser popular choice, as barcodes offered better speed of scanning, higher accuracy, multiple functionalities and needed smaller printing area. But with these came some negative factors too, and by this time QR codes also developed with improved storage capacities and functionalities.

 A QR code is detected by a 2-dimensional digital image sensor and then digitally analyzed by a programmed sensor. The processor locates three small squares at corners of the QR code image to normalize the image for size, orientation and angle of viewing. The small dots in QR code are then converted to binary numbers and validated with an error-correcting algorithm. The encoded data can be interpreted as one of the four primary modes – numeric, alphanumeric, byte/binary and Kanji. Other forms of data can also be displayed with the appropriate extensions. Initially when this QR code technology came around it could hold only four characters and now can hold 1852 characters – enough for a few pages of information.

In China today QR codes is a part of everyday life. They are using an app called WeChat, to call cabs, make payments, text friends and other functions. WeChat’s founder, Allen Zhang is obsessed with them and frequently extols their virtues. According to a Journal “More than 95% of China’s 731 million online population access the internet via their smartphones and half made offline, in-store mobile payments in 2016”. QR code’s success in China is mainly due to large internet service provider companies like Tencent and Alibaba to bring mobile-payment capability to every vendor. The technology is easy and simple to use and transaction can be completed in any place with mobile phone signal coverage. China is turning itself into Codeconomy.

Restaurants have pinned barcode tags to the chests of waiters, waitresses and chefs so that customers can leave a tip if they are satisfied with the service. For renting a bike, anyone can just scan the code attached with it and the it’ll unlock automatically. Similarly umbrellas and batteries are rented too. This technology is also been used to identify lost pets, senior citizens and post and reply to job boards.

Simplicity of use is also one of its major drawbacks too. A scammer has to just replace the original QR with the one of his own and thanks to several do-it-yourself websites, which essentially enables anybody to create these QR’s. There have been several occurrences where scanning a malicious code lead the user into a trap set by criminals. It can lead to installation of viruses which are designed to steal money and personal information. Business owners have no choice, if they will not use these QR’s they’ll lose out on revenue. To regulate the proliferation of these types of crimes an industry standard for QR code specifications was released this July by a consortium of digital payment companies. The consortium, EMVCo, which includes biggest players in market payments like Express, Visa, MasterCard, and UnionPay. China’s love for QR code is eventually paying them well, but still a lot of efforts are needed to increase their digital payments base.