The pandemic has also accelerated with QR codes for event ticketing, Restaurant menus and marketing material. The potential of using QR codes for contactless mobile payments in Australia and other developed markets is growing in the industry – which has been common practice in China for several years. But only a few know where QR codes come from as a technology.
“In addition, the codes could be read ten times faster than traditional barcodes; therefore they were called ‘Quick Response’ codes or QR codes for short. “
QR codes are two-dimensional black and white barcodes that can reveal a URL (web address) or other information with a scanning device. The QR codes we know today were created in 1994, almost 30 years ago, by an engineer named. Invented for use in Japanese automobile manufacturing Masahiro Hara at Denso.
As part of the Toyota group of companies, Denso was and is one of the world’s largest manufacturers of automotive components. The unit that Hara worked for became a subsidiary called Denso Wave.
At Denso Wave, Hara and his team were responsible for developing barcode scanners and optical character recognition (OCR) equipment for inventory management and production control. According to Hara, the switch to “flexible” or just in time production in the Japanese automotive industry in the 1990s required more careful production control of the components.
Under what has become known as Kanban System, engineers tried to reduce production errors and improve throughput in the production process by carefully tracking and restricting the component workflow.
To do this, engineering teams turned to traditional barcode technology. One-dimensional or linear barcodes were widely used in Japanese manufacturing in the 1980s and 1990s to identify and manage the throughput of auto components in the production process.
However, linear bar codes had a limited information capacity of up to 20 alphanumeric characters. In order to convey enough information, up to 10 barcodes had to be used on each component. Scanning these was a time-consuming and error-prone process.
In 1992, Haro and his team were asked to develop a barcode with increased capacity. Solving this problem with one-dimensional barcodes proved difficult.
According to Hara, the idea for QR codes came to him out of his love of strategy games: “I used to play GO during my lunch break. One day, as I was arranging the black and white pieces on the grid, I noticed that it was a simple way of conveying information. It was a Eureka moment. “
In 1994, after a year and a half, Hara’s small development team came up with the idea of a QR code system that could encode 7,000 characters, including Japanese Kanji characters. The codes could also be read at ten times the speed of conventional bar codes; hence they were called ‘Quick Response’ codes or QR codes for short.
Hara’s team has also developed QR codes that scanners can read from any angle, including high-speed cameras on the production line that enable automated scanning of components.
Hara’s team at Denso couldn’t ensure the advancement and necessary adoption of the technology on their own, so they did made the technology patents open by keeping them but not exercising their rights over them.
Companies across Japan then adopted QR code technology. In Japan, the use of QR codes expanded beyond the factory in three phases, starting with product and inventory management in the automotive, pharmaceutical and retail industries. QR codes later spread to consumers with camera-enabled clamshell phones and later to smartphones in the early 2000s.
Denso’s decision to patent the QR code contrasts with previous experiences with the invention of 2D barcodes. The first 2D barcode was invented in 1987 by David Allias in the United States. Still, like several other 2D barcodes that followed it, it did not become widely used because it remained a proprietary technology.
QR codes have been approved by one international ISO standard in June 2000, which ensures wide international use. The low cost of QR code systems also made them affordable for companies in developing countries for industrial and retail applications.
Another boost to the use of QR codes came in 2017 when the latest cell phones no longer required a separate application for reading QR codes. With iOS 11 in 2017, Apple added native scanning of QR codes the iPhone camera app and Android devices have been equipped with native QR code scanning with Android version 8, which was released in 2018.
Drive mobile payments
QR codes offered consumers and merchants in developing countries a cost-effective way of making and accepting mobile payments by viewing or scanning a printed QR code – without expensive point-of-sale hardware (PoS) and pre-equipped near field communication (NFC) Devices – which enable so-called mobile wallets – were widespread.
QR codes have become the dominant mechanism for initiating mobile payments in the world’s two largest developing countries – China and India. Especially in China QR code initiated mobile payment have supplanted the use of cash in most low-value transaction scenarios – from shopping in a store to paying for a taxi. QR codes are also widely used for remote e-commerce as they allow users to pay by scanning a QR code displayed online or a poster displayed offline.
QR codes are also enabling the rapid growth of mobile payments in Southeast Asia, in countries like Indonesia, Thailand and Malaysia.
As consumers use their mobile phones to scan QR codes for mandatory check-ins, they are increasingly using mobile wallets for contactless payments. With this in mind, the industry is increasingly focusing on the potential for QR code-initiated payments in Australia and other developed markets.
These include the soon to be merged eftpos, BPAY and the new payment platform under the name Australian Payments Plus (AP +). As part of the merger agreement, the Australian Competition and Consumer Commission forces the development of a joint open industry QR code payment standard until the end of June 2022.
Now that Australia’s east coast is coming out of strict lockdown with the surge in vaccinations, the QR code’s role in managing COVID-19 exposure and tracking will further advance the profile of the technology.
Dr. Luke Deer is an independent finance researcher and tutor at the University of Sydney Business School