Everything You Need to Know About QR Code Payments and Their Benefits

QR code payments have moved from novelty to necessity, offering businesses a fast, contactless way to collect payments. Whether in retail, food delivery, or eCommerce, they’re reshaping customer transactions with simplicity and speed. For businesses, adopting QR codes can streamline checkout, improve customer experience, and support digital-first operations.

This guide explains how QR code payments work, their benefits, real-world use cases, setup steps, and best practices.

Defining QR Code Payment

QR code (Quick Response Code) payments give your business a fast, secure, and cost-effective way to accept digital payments. Instead of relying on cash, physical cards, or expensive point-of-sale terminals, customers complete transactions by scanning a QR code with their smartphones. 

With each scan, the QR code instantly transfers all necessary transaction details, enabling quick and contactless payments. This method is especially useful if you plan to cut operational costs, simplify checkout, and offer your customers a modern, seamless payment experience.

The Mechanics of QR Code Payment

Here’s what the process of QR code payments looks like:

• Generate a QR Code: You’ll start by creating a QR code that includes your payment details. This can be done through your POS software, payment gateway, or a QR code generator provided by your payment processor. You can use a static QR code or a dynamic code. 
• Display the Code to Your Customers: Once generated, display the QR code at the point of sale. You can display the QR code on a printed sign at your counter, the customer’s bill or receipt, your digital checkout page (for eCommerce or remote sales), or takeaway packaging.
• Customers Scan the QR Code: Your customer opens their preferred payment app like Google Pay, PhonePe, Paytm, or a banking app and scans your QR code. The app automatically reads the embedded payment details, such as your business’s account or UPI ID.
• Customer Confirms and Authenticates: If the amount isn’t pre-set in your QR code, the customer can manually enter it. To finalise the transaction, they’ll authenticate it using a PIN, fingerprint, or facial recognition.
• Funds Transfer to Your Account: Once the customer approves the payment, it’s routed through a secure payment processor to verify the transaction with their bank. If approved, the funds are transferred to your account in real-time or within a short settlement window, depending on your payment provider.
• Receive Instant Confirmation: Both you and your customer receive instant confirmation, either on-screen, via SMS, or email. Some systems also provide a digital or printed receipt for your records and your customer’s peace of mind.

Example of QR Code Payment

Here are some common ways in which QR code payments are used across different industries:

• Restaurants and Cafes: Placing QR codes on tables or receipts lets your customers scan, order, and pay all from their mobile phones. This can help you reduce wait times, ease the workload of your staff, and simplify overall service operations.
• Retail Stores: In physical stores, QR codes are generally placed at checkout counters to enable customers to scan them quickly, enter the payment amount, and finalise the transaction. 
• eCommerce and Invoicing: Integrating QR codes into your checkout process or invoices can help you eliminate friction and errors from manual input. When a customer scans the code, they’re taken directly to a secure payment page.
• Peer-to-Peer Transactions: If you run a service-based or freelance operation, you can generate a QR code, enabling clients to pay you instantly by scanning it. It’s perfect for quick settlements and tips.
• Subscription-Based Businesses: You can include a QR code on each monthly invoice if you operate on recurring billing (like a gym, club, or streaming service). Customers can scan and pay immediately. There’ll be no need for re-entering card details every time.
• Event Ticketing: Adding a QR code to your digital event tickets not only streamlines entry at the venue but also confirms payment and verifies attendance with a simple scan.
• Donation Campaigns: You can print or display QR codes on marketing materials, kiosks, or social media platforms. Supporters can quickly scan the QR code to make donations.
• Superapp Ecosystems: You should consider aligning with platforms like WeChat Pay, Alipay, Kakao Pay, or LINE Pay if you’re targeting markets in Asia. These apps use QR codes extensively for in-store payments, transit, and loyalty integration.

Here are some major retail brands and how they are using QR codes:

• Walmart displays QR codes at checkout. Customers scan via the Walmart Pay app to pay and get e-receipts.
• Amazon Go uses QR codes for seamless entry and checkout-free shopping.
• Starbucks lets customers pay, earn rewards, and manage cards through scannable QR codes on its app.

Different Types of QR Code Payments

Below are the main types of QR code payments:

1. Static QR Code Vs Dynamic QR Code

A static QR code is used when you want a fixed setup, instead of dynamic pricing or automated invoicing. It stores permanent payment details, like your UPI ID or account number. Once customers have scanned the code, they can manually enter the amount and confirm payment. It’s best suited for small retail stores, cafes, restaurants, donation drives, etc. 

A dynamic QR code is more flexible and smarter. It’s generated freshly for each transaction and includes specific payment details like invoice numbers, amounts, or customer IDs. It’s ideal for eCommerce checkouts, utility payments, transport and logistics, and businesses offering personalised invoices. A dynamic QR code can offer better tracking, real-time pricing, or automated reconciliation.

2. Presentation Modes: Merchant Vs Consumer Presented

In merchant-presented mode (MPM), you display the QR code (digitally or printed), and customers scan it with their mobile apps to pay. These are most commonly used in retail stores, restaurants, public transport systems, etc. It helps you keep the payment process in your hands, with minimal effort from customers.

Consumer-presented ode (CPM) involves your customer showing a QR code generated from their banking or wallet app, and you scan it to collect payment. This type of QR code is useful for loyalty programmes, point-of-sale systems that need a customer ID, and membership-based transactions. CPM can help you capture customer data or tie purchases to user accounts.

Key Advantages of Using QR Code Payments

Here’s how using QR code payments benefits your business directly:

• Faster and easier transactions: You can speed up the checkout experience by letting customers pay simply by scanning a code with their smartphones. 
• Lower operating costs: You don’t have to worry about expensive POS hardware. All you need is a QR code and a mobile device. Whether you’re a small vendor or a large retailer, the low setup cost makes QR payments a smart and scalable solution.
• Better security: QR code payments rely on encrypted, tokenised systems. That means you’re not handling sensitive customer data directly, reducing your exposure to fraud or breaches and increasing trust in your payment process.
• A smoother customer experience: Customers appreciate convenience. By offering QR payments, you align payment options with how today’s consumers want to shop and eliminate the need for cash or cards. As a result, customers get faster checkouts with fewer complications.
• Contactless: Minimise physical contact by accepting QR payments. It’s an important factor (in physical stores) to ensure the health and safety of your staff and customers.
• Flexible and adaptable: QR codes are not only used for in-person payments but can also be used on printed receipts, websites, packaging, and even email campaigns. QR codes integrate easily across channels regardless of your business model.
• Access to customer data and insights: Each QR code transaction helps you gather data, like what’s selling and when, or who your returning customers are. You can use this to make smarter inventory, marketing, and staffing decisions.
• Boost marketing and loyalty: QR codes open up opportunities to engage customers even after the sale, and keep them coming back by linking them directly to promotions, discounts, or loyalty programmes.
• Quick and easy setup: No complex system integration is needed. You can start accepting QR payments immediately, getting you up and running without disrupting business operations.

How Secure Are QR Code Payments?

Explore the key security mechanisms that protect QR payments and how to implement them effectively.

Use Strong Encryption to Safeguard Data

When your customers scan a QR code to pay, their data needs to travel securely across networks, and that’s why encryption is important. Reputable QR payment platforms use AES-256 encryption to protect customer information. Encryption ensures that if data is intercepted during transmission, it remains unreadable and useless to hackers.

You should make sure the QR payment provider or mobile POS system you use supports end-to-end encryption, securing digital payments.

Enable Two-Step Verification for Account Access

Two-step verification (2FA) helps ensure that only authorised users can access your payment accounts or apps. For example, logging into your merchant dashboard might require both a password and a one-time code sent to your phone.

On the customer side, most wallets like Google Pay or Apple Pay require biometrics (fingerprint or facial recognition) or a PIN. If your system is breached or a device is stolen, 2FA significantly reduces the risk of unauthorised transactions.

Choose Tokenisation Over Storing Payment Data

Tokenisation involves converting sensitive customer data, such as their account or card numbers, into random tokens while the transaction is ongoing. These tokens are unique, time-limited, and can’t be reverse-engineered into the original data. The real payment info stays securely with your payment processor, and not in your systems or devices.

Tokenisation reduces your liability and exposure to data breaches. Even if a hacker gains access to your transaction logs, the tokens they see are worthless without the original data.

Opt for Dynamic QR Codes to Prevent Tampering

Since static QR codes remain the same, fraudsters can easily copy, reuse, or replace them. Contrarily, dynamic QR codes are generated for each transaction in real-time. They’re valid for one-time use and expire quickly. 

Dynamic QR codes are much safer for both you and your customers. They minimise fraud and add a layer of authentication to every purchase.

Follow Industry Security Protocols

To process QR code payments securely and compliantly, your business should align with current industry standards:

• Ensures safe handling of card data by complying with PCI DSS.
• TLS (Transport Layer Security) keeps your internet communication encrypted.
• In regions like the EU, PSD2 regulations mandate strong customer authentication.

To protect your business and customers, always work with payment processors or platforms that meet these security benchmarks and standards. 

Setting Up QR Payments for Your Store or Website

Here’s a step-by-step process to start using QR code payments:

Choose a Payment Provider

First, pick a payment service provider (PSP) that supports QR code payments. Some reliable and well-known payment service providers are MobiKwik, Paytm, Razorpay, Stripe, etc. 

Look for one that integrates well with your current setup, whether your POS system, eCommerce platform, or both. Consider transaction fees, security features, and ease of use when making your choice.

Create a Merchant Account

Once you’ve chosen a provider, sign up for a merchant account. This is where your QR-based payments will be deposited. Most providers streamline this process so you can get started without needing a developer or technical background.

Generate and Display Your QR Codes

Log in to your PSP dashboard and navigate to the QR code or payment link section. Enter payment details like amount, recipient, and product or order information, and generate a unique QR code.

You can use static QR codes for physical stores, while you should consider generating dynamic codes tied to specific transactions or products for online stores. When generating QR codes, make sure to choose the appropriate QR code sizes to ensure that they are easily scannable by your customers. Some platforms even let you customise the look of your code to match your branding.

You can display the QR code in your physical store, on your website or app, or you can even share it via email, etc..

Customer Payment Process

Your customer will use their phone’s camera or a payment app to scan the displayed QR code. The code takes them to a secure payment page or opens their banking or payment app. Once they confirm the payment, you’ll receive an instant notification.

Integrate and Test the QR Code

Add your provider’s QR payment tool to your website using a plugin or API. Test the QR codes to confirm they route correctly and deposit payments into your account. Place the codes where customers can easily see them, and provide clear instructions. When you simplify the process, customers are more likely to scan and pay without delay.

Potential Risks and Drawbacks of QR Payments

Here’s a breakdown of potential challenges that may impact your operations, customer trust, and bottom line:

Security Risks and Fraud

Fraudsters can easily swap out your legitimate QR codes with fake ones. If that happens, payments could go straight to a criminal’s account. Your customers won’t know anything is wrong until it’s too late because QR codes are opaque to the naked eye.

A malicious QR code can direct users to websites that capture login credentials or download malware. This not only puts your customers’ data but also your brand’s reputation at great risk. If you’re storing or processing QR code transaction data without proper safeguards, you risk exposing sensitive customer information that could lead to costly chargebacks, lawsuits, or regulatory penalties.

In industries like finance, healthcare, or eCommerce, failure to secure customer data from QR-based fraud could land you in serious trouble with regulators. Non-compliance can mean hefty fines or legal action.

Operational and Technical Challenges

QR payments require stable internet and smartphones with functional cameras. If there’s poor connectivity or the customer’s device doesn’t cooperate, transactions can fail, hurting your conversion rate and customer satisfaction.

Not every customer has a smartphone or knows how to scan QR codes, especially if you operate physical stores in remote areas. Relying solely on this technology means risking excluding demographics that aren’t digitally savvy or don’t use mobile wallets. Switching to QR-based systems also involves training your team, which takes time and may meet resistance, especially from employees used to traditional POS systems or who fear a drop in customer interaction.

Customer Experience Concerns

If you operate in a service-heavy sector like hospitality, switching to QR codes can reduce face-to-face interaction. This can make the customer experience feel less personal, which may affect loyalty or tips. 

Some customers may not understand how to use QR codes properly. Confusion at checkout increases the chance of errors, longer transaction times, or abandoned purchases.

Financial and Reputational Risks

QR payments, particularly those outside traditional card networks, may lack established consumer protection policies. Resolving disputes is more complex and likely less favourable. 

If a QR code breach occurs or if customers have a poor experience with the system, you could face long-term damage to your brand reputation. Earning your customers’ trust is hard, but losing it is easy. 

Seamless Payments with Shiprocket Checkout

Shiprocket Checkout is designed to help D2C brands maximise revenue and minimise friction across their payment and checkout process. It accelerates checkouts by 70%, bringing you more prepaid orders, fewer returns, and a much smoother customer experience. With an intuitive, mobile-first design and intelligent automation, we help you reduce cart abandonment by 25% and boost conversions by 60%, ensuring every visitor has the best chance of becoming a paying customer.

Here are some reasons why you should be using Shiprocket Checkout:

• Complete checkout control: One-click checkout and autofill for 95% of addresses, discourage COD orders by charging a COD fee, and ensure delivery date visibility to build trust and increase completion.
• Flexible customisation and security: No-code integration for easy deployment, customisable UI with brand-aligned elements, personalised coupon logic and freebie triggers, and PCI-DSS compliant with enterprise-grade data security.
• Smart cart recovery and upsell: Intelligent cart recovery with personalised offers, A/B test checkout flows and monitor performance via UTM tracking, identify high-intent users and optimise journeys in real-time.
• Seamless integrations: Compatible with Shopify, WooCommerce, Magento, and custom stores, API-ready with plug-and-play setup, and supported by a dedicated onboarding and tech team.

Conclusion

As customers look for faster and more secure ways to pay, QR code payments have become necessary for modern businesses. They simplify transactions, cut costs, and match the growing demand for convenience. Adopting this payment method can help future-proof operations and improve customer experience. The real question now is not if but how soon to get started.