the Philippines, are working towards the enablement of cross-border payments to boost the regional economy in the wake of the Covid-19 pandemic which has stunted economic growth in many regional economies.  QR code payments are becoming more popular in Southeast Asia due to their convenience and speed, as well as trends in customer behaviour following the Covid-19 lockdowns where consumers got used to contactless, cashless transactions.  However, when deployed on a larger scale, the ubiquitous QR payment method raises concerns surrounding transparency, accuracy and network stability. What are QR codes?  “QR” stands for “quick response,” and – as the name suggests – its usefulness is due to speed and ease of use. QR codes are two-dimensional versions of the old single-dimensional bar codes. Invented in 1994 by Japanese company Denso Wave, the QR code is a black square graphic on a white background square grid that can be read by imaging devices such as smartphone cameras. Some are adapted to feature bank or retailer logos in the centre.  Because of the faster reading of the optical picture and their increased data storage capacity compared with simpler bar codes, the QR labelling system was first used in the automobile sector, for roles including product tracking, item identification, time monitoring, document management, and general marketing. Nowadays, QR codes are used in a much broader context, and they have become especially popular in Mainland China where digital businesses Alibaba and Tencent (the parent of WeChat) created a payment wave by scanning QR codes, drawing significant recognition and uptake among Chinese residents.  QR payment systems in Southeast Asia  Since China – and India – took the lead in using QR codes as a payment tool, QR payments are no longer a novel payment mechanism among Asians. According to Qiushi Journal, an official publication of the Central Committee of the Communist Party of China, QR code scanning is the most frequently used payment method for 95.7 per cent of Chinese consumers making mobile payments.  While most foreign payments in Asia are made through third parties such as Alipay in China, Kakao Pay in South Korea, Touch’n Go in Malaysia, TrueMoney in Thailand, and GCash in the Philippines, the Southeast Asian network is to become enabled via a direct arrangement between various central bank systems. These countries’ central banks have been attempting to integrate their systems for many years, but only lately – since the Covid-19 outbreak – has it been an operational priority. The system enables residents of the respective countries to use QR payments for cross-border purchases without incurring any fees, and at conversion rates that are often more favourable than those established by payment processors such as Visa and American Express. The official agreement was signed in November of last year with the participation of Malaysia, Singapore, Thailand, and the Philippines. Vietnam and Brunei announced their eagerness to join the program in August.  The initiative is likely to benefit small and medium-sized businesses or microbusinesses most as QR codes are cheap and easy to make. Because the system runs on mobile devices, business owners will not have to invest money in POS terminals or pay transaction fees to card companies. Each participating country has its own national QR code system. In Singapore, it is run through the NETS system, while Malaysia uses DuitNow and Thailand has PromptPay. The Philippines has QRIS and Vietnam has VietQR. An accord between the central banks of Southeast Asian countries for cross-border QR connectivity has confirmed the region’s fintech ambitions. Due to the weakening of the US dollar and growing tensions between major global powers, the agreement will be handled in local currency, bypassing the US dollar as an intermediary. QR payment systems expansion  Beyond Southeast Asia, the broader Asia-Pacific region is also starting to develop cross-border QR payment systems. In September, Fonepay Payment Service, Nepal’s largest payment network and NPCI International Payments, the global arm of the National Payments Corporation of India, launched the first QR code-based cross-border payment solution between the two countries.  According to Bloomberg, the time is nearing when a single QR will work anywhere in the world. Card giants Visa and Mastercard have signed up to join in via XNAP, a cross-border network, and Google has indicated its Google Pay will follow suit. Western markets, on the other hand, have seen extremely limited uptake. Europe and North America have not paid enough attention to QR cross-border payment as their residents are familiar with payments through digital/mobile wallets, credit card/charge cards, debit cards, bank transfers or Buy Now, Pay Later options.  But as more and more Southeast Asians travel outside the region in the post-Covid world, such Western markets may soon have little option but to join the trend. This story first appeared in the November 2023 issue of Inside Retail Asia magazine.