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What are QR Codes: Types of QR Codes and How QR Code Works?

QR Codes

The Indian digital payments market is estimated to reach the $10 trillion mark by FY 2026 and is expanding at a rate of 10x, according to a Business Standard report. The Indian government’s launch of numerous digitally-focused initiatives is largely responsible for this increase. These include the launch of UPI, Aadhaar Pay, BHIM, and other initiatives. Another project launched to promote and broaden the acceptance of cashless transactions across the nation is QR Codes Payment. The three main pillars that will support India’s transformation to a cash-lite society are innovation, interoperability, and security.

Despite being created in the mid-1990s, the QR Code didn’t really take off until the advent of smartphones. In the age of a pandemic, mobile devices made it possible to utilise the digital mark in more dynamic and diversified ways, making it a simple and frictionless way to connect to and share information.

In this article, we’ll examine in further detail what a QR Code is, how it operates, the different types of QR Codes, the advantages and drawbacks of using QR Codes for payments, and more.

Let’s start by understanding the basics.

QR Code Full Form and Meaning

The full form of the QR code is “Quick Response Code.” Despite their apparent simplicity, QR Codes may actually store a lot of information. No matter how much information a QR Code contains, scanning it should rapidly give the user access to that information, this is why it is named a Quick Response Code.

What are QR Codes?

A QR Code is a type of barcode that is simple for a digital device to read and carries data in the form of a string of pixels arranged in a square-cornered grid. Because many smartphones have built-in QR readers, QR Codes are frequently utilised in marketing and promotional campaigns. They are also frequently used to track information about products in a supply chain. They have been crucial in recent efforts to track coronavirus exposure and restrict the virus’s growth.

Denso Wave, a Toyota subsidiary and a Japanese business, developed the first QR Code technology in 1994. In order to track vehicles and parts during the production process, they needed a more precise method. They created a specific kind of barcode that could decode kanji, kana, and alphanumeric characters in order to accomplish this.

Traditional barcodes can only be read from top to bottom. As a result, they can only hold a limited amount of data, typically in an alphanumeric format. However, there are two ways to read a QR Code: from top to bottom and from right to left. It can therefore store a lot more data.

A QR Code may hold up to 4,000 characters of text, phone numbers, and website URLs.

Another way to use QR Codes is to:

1. Direct download links for apps can be found on Google Play or the Apple App Store.
2. Verify login information and account authenticity online.
3. By saving encryption information such as the SSID, password, and encryption type, you can access Wi-Fi.
4. Transmit and receive payment data.
5. And much more; a UK business called QR Memories even designs QR Codes for gravestones so that visitors may scan them to learn more about the lives of the deceased (if they have an obituary or news story relating to them online).

The QR Code’s design team aimed to make it simple to read so that workers would not lose time getting it at the proper angle. In order to make it stand out, they also wanted it to have a distinctive look. They ultimately decided on the enduringly popular square shape as a result.

Denso Wave announced that they would forgo exercising their patent rights and made their QR Code freely accessible. Therefore, QR Codes might be created and used by anyone.

Though the concept took some time to catch on, the first QR-enabled mobile phones were introduced in Japan in 2002. The prevalence of smartphones contributed to the rise in the number of businesses utilising QR Codes.

Denso Wave kept enhancing its initial design in 2020. Traceability, brand protection, and anti-forgery features are all included in their new QR Codes. The QR Code has a wide range of new applications, including transmitting payments and locating items via augmented reality.

How to scan QR Codes?

The majority of smartphones come with a QR reader or scanner, but if yours doesn’t seem to, you can download one from the app store on your device.

Open your camera app on your iPhone and, if your device supports it, switch to the QR Code mode before scanning a QR Code. Next, align your camera so that it can capture all four corners of the code. Your phone should automatically take a photo and display a visible link to the code’s information.

If you want to scan a QR Code with an Android device that is version 8 or later, the procedure is the same. Hold down the home button while you wait for the “Lens” selection menu to appear. When it’s ready, turn on your camera and point it at the QR Code. Then, use the magnifying glass icon at the bottom of the screen to scan the code.

QR Codes

Types of QR Codes

Static and dynamic QR Code systems are currently being used by Indian businesses to take and distribute payments. Let’s discover more about them in depth.

1. Static QR Code

It’s a code that, as its name implies, is static in nature. The information contained in a QR Code cannot be updated or changed once it has been generated. For one-time or private use, they’re a fantastic QR Code payment option.

For a food store, for example, a static QR Code would be quite useful. Once created, the QR Code can be easily adhered to the counters of the shop to accept payments from numerous clients using the same code.

2. Dynamic QR Code

Dynamic QR Codes, in contrast to static QR Codes, can be modified whenever necessary to meet the demands of the business. These can be customised to accept or send particular payments to clients and suppliers, accordingly.

For instance, when using a dynamic QR Code, a consumer need not specify a payment amount. They are pre-filled with such information. As a result, the payment procedure is friction-free and churn is decreased.

Additionally, dynamic QR Codes are incredibly adaptable. They give consumers the ability to keep track of important information like the number of scans, locations, operating systems used to scan the code for payments, and so forth. They are perfect for businesses of all shapes and sizes.

How does QR Code work?

The QR Code payment procedure typically involves three participants.

1. Issuer – A business, like a bank, where a customer’s funds are kept.
2. Acquirer – The bank, payment service provider, or payment aggregator partner of the merchant who receives and distributes payments.
3. Transaction Processing Engine – This engine helps to finalise payments made using QR Codes. It is the end transaction routing engine. The transaction processing engine in India is called NPCI.

Here’s an example of a QR Code payment transaction that occurs when a retailer partners with a bank or payment service provider.

First, there are 2 ways for the merchant to receive payments using QR Codes:

1. Create a merchant account with a bank.
2. Partner up with a payment aggregator or gateway.
Once a bank or payment gateway has been linked, they are prepared to take payments.

Following that, here is how the QR Code payment flow appears:

A customer uses a scannable app on their smartphone to scan the merchant’s QR Code.
The customer is subsequently sent by the scan to a website with several payment choices, including cards, UPI, Net banking, BNPL, etc.

Here is how the remaining steps of the payment process would proceed if the consumer chose to pay with a card.

1. The payment information is tokenized and encrypted by the payment gateway.
2. This information could include a card number, a CVV number, a VPA in the case of UPI, etc.
3. The acquiring bank receives the payment details from the payment gateway after that.
4. The acquiring bank then transmits the data to the relevant card network (VISA, Mastercard, Amex, RuPay, etc.)
5. Following a fraud check, the card network sends a report to the issuing bank.
6. If the information is verified as accurate, the issuing bank approves the transaction.
7. The card firm sends the notification to the acquiring bank, which then asks the issuing bank to transfer funds.
8. The funds are received by the Payment Aggregator and are preferably transferred to the merchant’s account in T+1 days.
9. The customer’s account is debited, and money is then placed into the merchant’s account.
Note: The entire transaction is completed in about 3 seconds.

Challenges of using QR Code Payment System

The QR Code payment system has a lot of advantages, but it also has some drawbacks. Let’s look at them now.

1. Secure QR Code payments

Payments made via QR Codes are safe, but only if the codes are created using an end-to-end encrypted PSP.

Although there are many free online tools available to help businesses create QR Codes for their marketing purposes, it is always advisable to only purchase QR Codes from reputable, government-approved issuers. This removes the possibility of fraud and security breaches.

2. Application restrictions for dynamic QR Code payments

Only a few situations allow for the usage of dynamic QR Codes for payment acceptance. They come highly recommended, for instance, for receiving payments online. However, they cannot be used in actual stores because they are not printed.

3. Criminal activity

One method of ensuring a secure payment procedure is data encryption. What if someone manipulates QR Codes that have been posted in public areas, though? Anyone who scans the code runs the risk of being taken to a dangerous URL. Furthermore, it’s challenging to tell at a first look if the original QR Code has been altered.

The security breach can only be found when the scans fail to complete.

How can I increase the QR Code Security?

You never know when or where you might encounter a fraud QR Code. Because of this, it’s crucial to select a QR Scanner you can rely on rather than picking one at random from the app store or online.

Before sending any data to you, QR Scanner should automatically verify that a scanned link is secure.

The scanner should offer QR Code authentication and warns you of any threats concealed by a QR Code, including:

  • A phishing scam
  • A forced app download or premium text message scam
  • Dangerous links


QR Codes


Cash is still king in India, but there has been a noticeable shift toward digitisation as a result of numerous recent occurrences. In Q1 of 2022, India had 9.36 billion transactions totaling roughly INR 10.25 trillion, according to a Business Standard article.

Out of them, 4.97 million Bharat QR Code payments were made in total in March 2022, a 39% increase from March 2021.

As of March 2021, there were 172.73 million UPI-based QR Code payments, a rise of 87%.

Given the statistics, it should come as no surprise that both customers and businesses are embracing the QR Code as a payment method and using it to their advantage in every way. In exchange for a great acceptance experience, merchants may easily set up the payment method and spend next to nothing.

Nevertheless, there is still much potential for the QR Code payment system to advance innovation in the Indian payments sector.


1. What is the full form of the QR Code?

Ans: The full form of the QR Code is “Quick Response Code.”

2. What is the meaning of the QR Code?

Ans: A QR Code is a type of barcode that is simple for a digital device to read and carries data in the form of a string of pixels arranged in a square-cornered grid.

3. What is the difference between a barcode and a QR Code?

Ans: In barcodes, numbers are stored in a printed format that computers can understand. A QR Code is a printed, two-dimensional data representation that may be scanned to access data.

4. What are the types of QR Codes?

Ans: Static and dynamic are 2 types of QR Codes that are currently being used by Indian businesses to take and distribute payments.

5. How QR Code works?

Ans: Similar to barcodes, a QR Code acts similarly. Each QR Code is made up of black squares and dots that stand in for various kinds of data. The barcode’s unique pattern turns into data that can be read by humans when it is scanned.

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