QR Code Payment: Ever Wonder How It Works? Here’s How

2 min


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The use of QR codes for payment has caused a revolution in the world of online transactions. Additionally, the use of mobile devices for mobile payments has resulted in an increase in the financial technology market. But have you ever wondered how QR code payment works?

Digital payment systems have grown significantly during the past few years, including in Nepal. People now choose mobile payment methods like digital wallets, mobile banking, and other payment system providers (PSPs) and payment system operators over traditional payment methods like cash and debit/credit cards.

Evolution of QR Code in Nepal

Union Pay is the first QR code to be introduced in Nepal. It is a payment system that uses QR codes which were created by the Chinese business Union Pay International. The FonePay QR came in the same year, popularizing QR payments. With the highest volume and transactional value, it is currently Nepal’s largest QR operator. More than 9,00,000 merchants use FonePay QR in Nepal.

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In this way, the use of QR code payments has made the payment procedure more comfortable. The presence of QR code displays is common in urban areas, whether you are shopping in a mall or a neighborhood grocery. It is also slowly growing outside of Nepal’s major cities.

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How Do QR Codes Work for Payment?

Well, as customers, we think it just happens fast. One must launch a mobile app that supports QR payments, such as a digital wallet, mobile banking, or another payment system. They, then choose the “Scan to Pay” option and scan the shops’ static or dynamic QR. Entering the payable sum, they then confirm the payment. Although there are many different QR code companies in Nepal, they all have a connection to banks, other financial institutions, and digital wallets.

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The following processes are taken on the backend to handle payments and settlements made by QR code:

  1. The customer scans a QR code when they go to the checkout area at a physical or online store.
  2. The payment gateway receives the order ID together with a special client and merchant identification.
  3. This data is added to the payment service provider’s database, which contains the QR code payment services. For instance, if you scan a FonePay QR code using Khalti, the data in number 3 is accessible via Khalti’s database.
  4. A QR code URL with the name of the retailer is generated by the database in the payment service provider.
  5. The notification is sent to the PSP when a consumer uses a digital wallet app to scan a QR code at the checkout counter.
  6. The PSP then confirms the customer’s identity along with the distinct QR code URL and merchant ID, and the customer is then provided a notification by PSP that the transaction was successful.
  7. The merchant receives yet another message, and the money is credited to their account.

Also Read: What Is a Pan Card? And How to Apply for One

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