Quick response codes may be cheaper than NFC tags, but are they worth the security risk? That's a question payments industry leaders need to consider as many merchants warm up to QR codes.
Merchants are eyeing mobile-tagging as an alternative to more costly near-field communications apps such as Google's NFC mobile wallet. While it costs more, NFC technology offers a more secure model for payments, according to a blog for the Retail Payments Risk Forum of the Federal Reserve Bank of Atlanta.
Consumers can download content via QR codes at fast speeds by snapping a picture with their smartphone. The problem is that leaves users vulnerable to hackers who may use the code to lead them to a malicious website or application.
Fewer than 5 percent of people have got some form of security on their mobile devices, Norton online safety advocate Marian Merritt said in the post.
A continued upsurge in mobile-related hacking is expected this year as QR code-enabled mobile applications grow more advanced and popular.
Some merchants already are cashing in on the technology to process payments. Starbucks has recorded millions of transactions with its QR code-based mobile payment app launched last year.
QR codes might make sense for smaller, closed-loop payments systems, like Starbucks prepaid business model for a cup of coffee. On a larger scale, the payments industry should think seriously about whether risking security for short-term economic gains makes sense.
Source: Federal Reserve Bank of Atlanta, February 2012