How International Shoppes Is Leveraging QR Codes To Cater To Global Consumers

QR codes are a worldwide phenomenon, used by tech-savvy consumers in countries across the globe. Up to 30 percent of consumers in developed nations were reported to have used QR codes as of 2014, and another report predicted that 80 percent of all checkout and payment services will be conducted via contactless transactions by 2024, including those enabled by QR codes.

Some countries are nearly at that mark already, with 70 percent of the Chinese population using QR code-enabled payments on a regular basis last year. Other countries have a long way to go, however, with only 11 million U.S. households leveraging QR codes for any purpose. Few industries demonstrate this difference more starkly than the airport retail space, in which consumers from all over the world want to transact with their own country’s preferred methods. One example of this comes from International Shoppes, a duty-free airport retail chain and operator of several third-party branded airport boutiques, such as Kiehl’s, Estée Lauder and Hermès.

“We’re an interesting case just because our business really is not focused on Americans,” said Matthew Greenbaum, vice president of business development for International Shoppes. “We’re seeing how normal and customary this sort of payment platform is to Chinese shoppers and a lot of other countries and not necessarily here in the U.S., so it’s been very educational, and in the last few years of working with it, we’ve gotten to see a little bit of what the potential of QR [code] payment is all about.”

Greenbaum recently offered PYMNTS an inside look at how International Shoppes utilizes QR codes for contactless payments, why U.S. consumers’ use of this technology lags behind that of their international counterparts, and the future challenges and benefits that QR code-enabled commerce could bring to the retail industry.

How International Shoppes Deploys QR Codes

Many U.S. retailers tend to gradually phase in QR codes over long periods of time, adding features by piecemeal until they have a complete payments suite — but International Shoppes’ adoption of QR code payments was much more sudden, according to Greenbaum. The retailer partnered with mobile payment solution provider Citcon several years ago to institute an entire payments package to cater to an international crowd — and the benefits of this adoption were immediate.

“I was shocked to see how once we put [in] those terminals, it was just like turning on a spigot,” Greenbaum said. “The Chinese nationals who were coming through, in particular, were totally familiar with it, and they were ready to transact.”

There are many theories as to why Chinese consumers are so much more accepting of QR codes than their American counterparts, but Greenbaum’s theory is that it comes down to convenience. Consolidating all of one’s payments into a single smart device is simply easier than carrying around a wallet with payment cards, and Chinese consumers latched onto this concept immediately.

“People are totally reliant on having their cell phones, and if we can get to a place where you don’t have to carry around credit cards in favor of your phone, I guess there’s a reason that it’s worked in China,” he explained. “I think it’s probably just because it’s easy and it’s one less thing to worry about carrying around in your wallet.”

Retailers and consumers alike are reaping the benefits of QR code adoption, said Greenbaum — especially when it comes to customer conversion. The payment processors for these QR code terminals run their own behind-the-scenes promotions that save customers money while providing the full purchase value to the retailer, driving conversion with zero effort on the merchant’s part.

“When a customer comes in using a QR [code] payment, they’re probably going to buy more because promotions happen behind the scenes that we don’t even have to get involved with,” Greenbaum said. “They’re taking care of their customers after their transactions [have been] made, and we’re being paid in full and don’t have to worry about any paybacks or anything to support these promotions.”

These advantages will likely continue to drive QR code payments adoption in the future, but this system is not without its challenges.

The Future Of QR Code-Enabled Payments

One of the most pressing concerns regarding QR codes, as with all non-cash payments, is the potential privacy issue. This is also one of the reasons QR codes may not be as popular in the U.S. as they are elsewhere, Greenbaum noted.

“With any sort of transaction that’s trackable, there’s a loss of privacy,” he explained. “Anytime you move away from cash, whether that’s credit cards or QR codes or whatever, there is definitely some compromised privacy. I know in this country especially, we’re pretty fierce proponents of privacy, so there may be some resistance to usage because of that.”

The sheer seamlessness and convenience of QR code-enabled contactless payments will likely outweigh these privacy concerns, however. Many of the consumers expressing apprehension are those who have not personally tried using the technology yet, and the ones who do try it often find that the user experience is worth it.

“I think the convenience will probably mitigate most of that, because people want the convenience of a quick payment,” Greenbaum predicted. “I think the reason that some of the payment platforms we use have been so successful is that they make it a great experience for their customers through promotions or discounts, and they make it really easy for retailers like us to drive business.”

Enabling QR code payments could thus result in a positive feedback loop as more customers trying it for the first time could result in higher long-term adoption rates and recommendations to fellow consumers. Only then can QR code usage in the U.S. begin to match its popularity in countries abroad.