How Can QR Codes Replace the Age-Old Cash System?

Five years from now, and you won’t see any dollar bills.

While the above statement is made-up, don’t be surprised if cash currency entirely disappears from the world. Mobile payments, cards, and contactless systems are taking over the transactional space. And with COVID-19 being an insult to injury, both buyers and sellers are ditching cash currency.

At the same time, the use of QR codes is on the rise. Economies worldwide are adopting QR code payments to fight the pandemic and enhance transitional efficiency.

Let’s discuss how QR codes can replace the age-old cash system.

The Problem with Cash Payments
Before getting into the ‘how,’ let’s talk about the ‘why.’ Why the traditional cash-based transaction system needs to be replaced? Physical currency has remained the primary mode of the transaction since the first human walked the earth.

So, why change a system that’s been successful since the Bronze Age?

Well, there are reasons, and they’re enormous. Let’s look into them.

1. You Can’t Create a Credit History
Though the first bank was established in 1492, the concept of credit history and credit scores came into play in 1989. This score is a collective indicator of how financially responsible you are. When you apply for a loan, the provider looks into your credit score and credit history.

When it comes to credit scoring, your payment history is the biggest indicator. But when you make most of your transactions with cash, you won’t be able to create a credit history. And a lack of credit history can affect your ability to secure loans.

2. The Risk of Assaults
Did you know that the leading causes of violent behavior and crime are poverty and resource scarcity? Simply put, money is the primary reason behind the majority of violent crimes.

When you carry a large amount of cash with you, you’re always at a risk of robbery or assault.

But when you don’t have any cash, the risk of suffering heavy damage during an assault decreases. Even if, by chance, you get robbed, the robber won’t find any money.

3. Difficult to Measure Expenses
Unless you’re maintaining an expense diary, keeping track of how you’re spending your cash is difficult. When you use digital payments, your payment history remains saved. You can check your payment history and determine your spending behavior anytime you want.

4. The Risk of Losing Money
Physical belongings are always at the risk of being lost or misplaced. What if you dropped your wallet? Or maybe you were carrying cash and a mobile phone in the same pocket, and the money slipped out when you were taking out your phone.

When you pay online, you don’t have to bear the risk of carrying physical cash. Even if, by chance, you drop your wallet, the loss you’d incur won’t be enormous.

The Rise of QR Code Payments as Cash Alternative
One thing’s for sure: the pandemic has taught the world to use QR codes in innovative ways. Before the pandemic, a QR code was nothing but a piece of cryptic design that Chinese people used to make payments. While it was certain that QR codes would thrive in the future, no one had thought they’d flourish at such a rapid pace.

Various countries are using QR code payments as a cash alternative. The country leading this change is, of course, China. The nation’s cashless policy played a pivotal role in helping it fight the coronavirus disease. The use of QR codes in all operations, from hospitals to banks, depleted human contact, and virus spread.

Similar trends are being observed in India. The adoption of QR codes in India goes back to 2017 when the National Payments Corporation of India launched Bharat QR.

Bharat QR is a common QR code system that supports united payments interface (UPI) capabilities. In essence, this led to the rise of interoperability of QR codes in India.

QR codes are also proving their mettle in Ghana. The Ghana Interbank Payment and Settlement Systems has partnered with HPS to launch a universal QR code platform. It will allow consumers to make payments from mobile wallets and cards by scanning the QR codes.

While the use of QR codes has soared in Africa and Asia-Pacific, the adoption has been moderate in western economies like the EU and North America.

But as COVID-19 doesn’t seem to be diminishing anytime soon, you might witness these countries adopting QR codes in the near future.

How do QR Codes Really Work?
We’re talking about replacing the age-old cash system with QR codes. So, we ought to know how this stuff works. Thankfully, the process is simple and straightforward.

Let’s get into it.

The merchants create QR codes with logo, print them, and put them up to be seen and scanned by the buyers.
The buyer uses a mobile application to scan the code. The mobile application must have QR-scanning capabilities.
After scanning the code, the buyer enters the amount and clicks the “Pay” button.
The seller’s bank receives the money transfer request.
The seller’s bank confirms the payment. The money is deducted from the buyer’s account and transferred to the seller’s account.
QR codes are mainly of two types: static and dynamic. You create static codes in advance and print them at the payment counter. This code remains unchanged, so the scanner needs to manually add the amount and pay.

Dynamic codes are generated for each buyer and contain a specific payment amount. When the user scans, the payable amount is automatically selected, and the buyer just needs to confirm the payment.

Why Should QR Codes Replace the Cash System?
As mobile payments are emerging as the way of the future, QR code and NFC payments have become the go-to choice for consumers. But NFC payments have a few drawbacks. The biggest one of them is the cost of hardware.

NFC payments involve EMV chips and NFC communication protocols. Not only are these expensive, but they’re also complex and difficult to implement.

QR code payments, on the other hand, don’t have any technicalities. With a QR code generator app, you can create a QR code within seconds. Also, you can easily get a Cheap dynamic QR Code plan and generate QR codes for your business without spending too much money.

That said, QR codes have myriad benefits that make them an ideal alternative to cash payments. Let’s delve into these benefits.

1. The Cost of Making is Low
A lot of paper and ink is required to create paper currency. This leads to unwanted costs. We talked about how QR codes are less expensive than NFC payments, but the story doesn’t end here.

They are cheaper than cards, like MasterCard and Visa. First, the cost of plastic that goes into making cards is eliminated. Second, there are no intermediaries, like MasterCard and Visa themselves, which charge transaction fees.

QR code payments don’t require any intermediaries. The transactions take place directly between the buyer and the seller’s banks.

2. No Infrastructure Needed
To process card payments, you’ll need a swipe machine. The same goes for NFC payments.

But you don’t need any hardware or infrastructure for receiving QR code payments. Just print the QR code and put it up at your payment counter.

You may think that cash doesn’t require any infrastructure either. But what about storing the money? You’ll need to have a cash box to store the dollar bills. Organizing different bills of value will be a hassle, let alone the challenge of collecting all the cash and taking it to the bank.

3. Seamless Integrations
The possibilities of QR code payments are increasing as the interface is becoming more open. Integration of banks is just the beginning. You can seamlessly integrate QR codes with the latest financial instruments, like cryptocurrencies.

Besides, you can use QR codes anywhere. Apart from ordinary stores, they can be used in eCommerce, instant messengers, and any other app. Moreover, there’s no limitation to where you can display the – banners, store walls, windows, gates, cash counters, and more.

Wrapping Up
Entirely replacing the cash system might seem unrealistic. Cash currency also has advantages. For example, you don’t need an internet connection. Just pull out a bill and make the payment.

But the drawbacks of the cash system overpower its benefits. And as the world shifts towards contactless technology, the age-old cash system might sooner or later go extinct.