Regular readers of NFC.Today will know that we usually only write about NFC tag projects across marketing, authentication and identification. However, one of the most common questions anyone in the NFC industry gets asked is – ‘How is it different to QR Codes ?’.
We’ve written about this many times and our answer has always been that NFC tags and QR codes often function in the same way but are really quite different prospects. In this way, they aren’t particularly in competition with each other. At it’s simplest, it’s difficult to argue that NFC and QR codes are in competition when one is completely free and the other will always cost money.
Which technology is preferred will often come down to how it’s going to be used and where. However, for many years of course, Apple’s iPhone could not read NFC tags and therefore for marketing or identification use cases, the choice was either QR codes or both QR code and NFC. In reality, that’s still the case for marketing as the market penetration for NFC enabled iPhone is still quite low.
In other market areas, such as NFC authentication, NFC is the only choice. There are an increasing number of new projects such as L’Oréal’s sun safety sensor or Moooi’s ‘The Button’ which simply wouldn’t work with a QR code.
And that’s what it really comes down to. In some cases, QR codes are going to be the best choice and in others, NFC will be the best choice. When most projects are completely broken down to a choice between NFC and QR, then in most cases, one of the two will be an obvious choice. For the remaining projects, it’s usually the case of using both to get the widest possible audience.
For many people, regardless of where you live in the world, contactless or mobile payments are becoming the norm. What’s different is how the transaction is completed. In much of Europe and North America, that transaction is made using NFC. However, in China mobile payments will involve scanning a QR code. In other areas, such as Japan, it’s becoming a bit of a mix. The Chinese QR code offering is typically being driven by Alipay and WeChat Pay.
In other countries, such as Japan, there is already a full on NFC vs. QR code payment battle going on. A number of Japanese banks and partners are pushing QR code payments as an alternative to the FeliCa NFC based system.
This isn’t the time to go into the relative merits of each of the two systems. Each has their technical strengths and weaknesses. However, unlike for marketing, identification and authentication where QR codes or NFC tags are more likely to be chosen on their clear merits, payments get a whole lot more complicated. It’s much more likely that the technical merits will take a back seat to partnerships, financial and political merits.
So this is where it gets interesting. Apple have made their move (at the moment) on NFC with Apple Pay. Amazon, on the other hand has Amazon Pay, which has been around for over a decade. Haven’t heard of it ? Well that might be because it hasn’t made much headway.
This year, Amazon opened their first ‘bricks and mortar’ store in New York. Amazon is offering payment via QR code to your Amazon online account. No NFC, no bank systems, no traditional till.
However, it seems that Amazon isn’t stopping there – which is no surprise. The Wall Street Journal has recently written that Amazon has been reportedly been making a bit of push of it’s Amazon Pay system to other bricks and mortar outlets. The first targets seem to be the smaller and simpler outlets such as petrol/gas stations and restaurants.
The reason why QR codes are appealing ? Simple. The ability to get into the market and scale quickly is going to be much easier for Amazon with QR code payments than it will be with NFC.
So the question will be whether we will see a showdown between NFC and QR code in the payment space. We would say that it’s almost certain. So the question is which system is going to win ? And the answer to that is almost certainly neither.
In much the same way that QR codes and NFC are likely to exist side by side and used on their own merit, QR Codes and NFC for payments are likely to exist side by side and used for their own market position.