Payment facilitators have a significant role to play as Visa expands digital transactions into new markets using QR codes.

The bar codes have turned the point-of-sale world on its head in response to conditions in emerging markets, according to Uttam Nayak, SVP, emerging market digital payments, for Visa.

Traditionally, merchants have used expensive point-of-sale equipment to acquire transactions from low-tech pieces of plastic. Card acceptance has penetrated much of the developed world in that way. But the traditional process and upfront investment have had a harder time making inroads in the Asia-Pacific region, the Middle East and Africa, particularly outside the urban areas.

Now, in a world where mobile phones are widespread and common, the opposite is becoming true in these areas. Low-tech QR displays are performing the terminal functions in conjunction with devices being carried by consumers.

“That’s what’s driving this: let’s use the power of the devices in the consumer’s hand,” Nayak told

Visa announced last week that it was supporting the new EMVCo QR code specifications through its Visa Ready program.

While QR codes solve the problem of expensive infrastructure, Nayak said, they have another advantage for merchants who traditionally have been reluctant to accept cards. Many merchants who are accustomed to cash are concerned about the impact the two-step process of a card transaction, where settlement occurs later, will have on their liquidity.

But the transaction flow for a QR code is different. To make purchases, consumers authenticate themselves and authorize the transaction amounts using their phones, at which point the funds are pushed to the merchant account. The merchant then gets an immediate notification that the transaction has been completed and the money is where it belongs, increasing confidence in the process.

Despite its differences in transaction flow, Nayak said that Visa sees the QR codes as just another form factor. The transactions are treated the same as if a card is presented at the point of sale.

“This is just another channel,” Nayak said. “It’s the mobile channel with the same economics as any other Visa transaction except with the form factor of the QR code replacing the point of sale terminal.”

While QR codes appear to solve these infrastructure problems, Visa still faces other issues in gaining ground for digital transactions in emerging markets. And that’s where payment facilitators come in.

“To activate electronification and digitization of cash in the emerging world, we have to use payment facilitators,” Nayak said.

As has been the case with more developed markets, payment facilitators are helping Visa with its reach into markets where banks have traditionally not found it worth their time. Small and medium-sized merchants typically have low ticket sizes, and are often geographically distributed outside of the urban areas where bank branches are typically located.

But payment facilitators can step in to bridge that gap.

“Payment facilitators will do the heavy duty job of signing up these merchants, generating the QR code, helping them to deploy and doing the settlement on their behalf with the bank,” Nayak said.

Interested payment facilitators will be able to access specifications for interoperable QR code development through the Visa Ready platform, which also offers a testing environment so they can then self-certify their ability to accept the QR code payments.

In its announcement earlier this month, Visa reported that it has already enabled the technology in 15 countries around the world, and is now live in market in India, Kenya and Nigeria.