Payment

The success of QR-based, realtime, account-to-account payment systems in Asia is remarkable. It introduced a long-overdue element of healthy competition into the payment industry that was dominated by banks and their card payments (domestic as well as Visa/MC).

However, contactless EMV gives traditional payment systems two huge advantages that cannot easily be overcome by the new QR systems: fast, tap-and-go style transactions and account-based ticketing in automated fare collection systems.

In this article, I am trying to explain why EMV is so suitable for mass transport ticketing. In the next article, I will then cover three topics:

In part one of the QRPh series I looked at the history of QR payments in the Philippines, in part two I described how a transaction might be processed, and in part three I was writing about the EMV roots of QRPh. In the fourth part, I dissect the data of a dynamic merchant-presented QR code.

The QR Code was presented by a payment terminal for a retail transaction at a department store in Makati. It worked with the QRh payment function of my BPI banking application.

To find out a bit more about QRPh and how it works, I was looking for a place where I can actually conduct a QRPh transactions. An opportunity presented itself last year at the Landmark Department Store in Makati. In this post I am describing the customer experience and speculate what the backend transaction flow would look like. Since then, I have done a lot of QRPh transactions which all went even better, as cashiers are getting used to this.

Most, maybe all, countries in South East Asia have their own national QR code standard which is usually based on the EMV merchant-presented QR standard (for instance, Cambodia (1), Singapore (2) or Vietnam (3).

The Philippines, where the standard is called QRPh, is no exception. However, as far as I know, neither the QR code part nor the backend processing part of the QRPh standard are in the public domain.

But since the QR codes out there can be analyzed based on the EMV standard, and the backend processing can be inferred from press releases and other public sources, we know quite a bit about it.

In the next couple of posts on my blog, I will look at the QR code format, the user experience, the backend processing and the EMV underpinnings.

In my last blog post on QR cross-border payments, I was wondering what it would take to build cross-border payment systems in Asia. My opinion was that one of the driving factors for cross-border payments for the Central banks would be to avoid a repeat of the quasi-monopoly that Visa, MasterCard and other international payment schemes enjoy.

I am therefore not surprised that the rapid growth of QR account-to-account payments and the rather sluggish uptake of traditional card payments outside the main cities of the emerging South-East Asian economies would spure Visa into action.

In a (1) published by PR News on November 6, 2024, Visa announced that they would enable cross-border payments at QR merchants, starting in Singapore.

In this article, I am speculating how such cross-border payments may actually be done. I have no direct knowledge or sources other than the Internet. However, I am trying to provide a reason for any assumption I am making.