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Ant and Covid have made the humble QR code a hit


The name Masahiro Hara does not appear with Steve Jobs and Bill Gates on lists of great innovators of the communications age, but perhaps it should. For the Japanese engineer’s humble, unassuming invention, the Quick Response code, has finally found its moment.

The square QR code, which Mr Hara developed in 1994 to track components in car factories, is being put to many uses in the Covid-19 pandemic. Governments include it on tracing apps, shops offer it for contactless payments and restaurants tape it to their tables so diners can browse menus online. It has become an all-purpose tool.

Mr Hara also deserves a slice of the credit for the rise of Ant Group, the Chinese payments company, which this week launched its $34bn initial public offering in Shanghai and Hong Kong at a valuation rivalling JPMorgan Chase, the biggest US bank. The QR code enabled Ant to pioneer mobile payments in China through its Alipay super app.

The renaissance of QR codes, after years of half-baked efforts by US advertisers and retailers to use them for marketing campaigns and shopping vouchers, shows that it takes time for the strengths of some inventions to emerge. From Viagra, developed to treat angina; to bubble wrap, intended as textured wallpaper, many need a second chance.

It helps to be cheap and flexible. The most dazzling devices, from the lightbulb to the jet engine, have obvious applications when they emerge from years of expensive research and flashes of brilliance. But a simple innovation that can be deployed in various ways is curiously powerful.

The QR code looks clunky, but it is an elegant piece of technology. Mr Hara worked at Denso Wave, part of a components group allied to Toyota, which used barcodes to label components in plants. But the barcode, first used in an Ohio supermarket in 1974, could be hard to use — as anyone who has tried to scan a bag of frozen peas will know — and did not hold much information.

He solved the data constraint by making the QR code a two-dimensional square instead of a horizontal strip, allowing it to store up to 4,200 characters compared to 20 on the barcode. His team also conquered the time-consuming awkwardness of barcodes — every QR code includes three squares at its corners that help scanners to focus rapidly (hence, quick response).

Japanese carmakers found it very useful: it saved some workers from having to scan up to 1,000 barcodes a day. But Denso Wave realised that the QR code had greater potential and did not enforce its patent rights. That enabled others not only to use it free but make variations for their industries.

The invention knocked around for a decade without finding another compelling use until Alibaba, the Chinese ecommerce group co-founded by Jack Ma, realised it could be used for payments. Shopping in the US and Europe, both online and in stores, is mostly done with payment cards, but the QR code offered an alternative.

Most Chinese people did not have a credit card in the mid-2000s and small stores did not want to buy expensive point-of-sale technology, as well as paying fees to banks on transactions. But shoppers had mobile phones, which could scan QR codes using Alipay or its rival Tenpay, now including WeChat Pay.

It was cheap and easy for stores to produce QR codes, which shoppers could scan to pay using mobile e-wallet apps. Both retailers and shoppers in China had a strong reason to use them; by contrast, in US marketing campaigns, customers were unfamiliar with the technology and saw no need to learn.

Every consumer technology is novel at first, and people have to be educated in how to use it. But they also need an incentive to overcome their inertia and change routines. Being able to transfer money quickly and smoothly with a phone is attractive: we make payments daily and they matter a lot.

The Chinese platforms were not the only payment innovation using mobile phones at the time. Safaricom, a mobile phone operator, launched its M-Pesa payment system in Kenya in 2007, allowing people to load cash on e-wallets and send it by text. M-Pesa is now in seven countries and has its own QR-based smartphone app.

Before Covid-19, countries with card-based payment systems could easily do without QR codes, but the pandemic has provided a strong motive: personal safety. Apple made its iPhone camera recognise QR codes in 2017 and there is now a dedicated QR scanner in iOS, but it only became vital this year.

Snap was an early adopter of QR-like codes, after its founder Evan Spiegel visited China and saw how WeChat used them in 2014, and Spotify has its own codes. They are being used for more payments outside Asia: PayPal launched QR code payments in 28 countries in May, and scanners are popping up in shops and restaurants.

Mr Hara should be proud. The QR code was not a glamorous invention but it was adaptable and clever, and has a fine future. There was no way of knowing in 1994 how smartphones and Covid-19 would make his idea so useful, but he created something that lasted.

john.gapper@ft.com



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