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Are QR Codes Worth The Security Risks For Payments?

Posted on Mar 14, 2012

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