Quick Response (QR) Code: Definition and How QR Codes Work

A quick response (QR) code is a type of barcode that can be scanned by a digital device and which stores information as a series of pixels in a square-shaped grid. Unlike the pandemic-era masks, the QR codes that became ubiquitous during that period are almost sure to stay. QR codes bridge the physical and digital worlds, as people can scan menus and posters for information with their cellphones or off websites.

But QR codes are used to do more than tell you what appetizers are on special at your local restaurant. Inventory managers hope they gain wider use to track product information in the supply chain, not just in marketing and advertising campaigns. QR codes are considered an advance over the older, unidimensional barcodes and were approved as an international standard in 2000 by the International Organization for Standardization (ISO). Below, we go through the basics of the QR code and why it's gained such wide use in recent years.

Understanding Quick Response (QR) Codes

QR codes were developed in the 1990s to provide more information than a standard barcode. They were invented by Denso Wave, a subsidiary of Toyota, as a way to track automobiles throughout the manufacturing process. Unlike barcodes, which require a beam of light to bounce off the parallel lines, mobile phones can digitally scan QR codes.

QR codes consist of black squares arranged in a grid (matrix) on a white background and are read by specialized software that can extract data from the patterns in the matrix. These codes can contain more information than traditional barcodes and primarily handle four modes of data: alphanumeric, numeric, binary, and Kanji.

Despite the greater capacity, QR codes have not proven as popular with consumers as was expected. Rather than being created by consumers to share information, they are most commonly associated with marketing campaigns.

QR codes have become more widespread in facilitating digital payments and cryptocurrency systems, such as displaying one's Bitcoin address. QR codes are also increasingly used to transmit web addresses to mobile phones. For instance, the QR code below encodes this webpage's URL on Investopedia.

Quick Response (QR) Codes vs. Barcodes

The amount of information that can be conveyed about a product or service was traditionally limited by the amount of space on the product’s packaging or the advertisement touting its benefits. If a consumer wanted more information about the product—availability, price, attributes—they would have to find a salesperson or request extra documentation.

Barcodes are commonly found on the back of product packages and convey data using a combination of various widths of parallel lines, which can be read by machines that have an optical scanner.

The barcode revolutionized the way companies managed inventories and pricing and was first put to practical use in the 1960s by U.S. railroads to track equipment and containers. Traditional, two-dimensional barcodes came into common use in U.S. retail stores in 1974. Barcodes are now found on everything from employee ID badges and hospital bracelets to shipping containers. The impact of this humble set of lines is hard to overstate: without them, the never-ending cascade of products cramming every aisle of our stores could not be inventoried and shipped with such relative ease.

Barcodes are typically used when a simple identification is needed. Supermarkets use them to track product prices and inventory. Libraries use barcodes for book identification and checkouts. Shipping companies utilize barcodes to track packages throughout the delivery process.

QR codes, meanwhile, are commonly used when a large amount of information needs to be shared. For instance, they are often found on event tickets to quickly provide details or on advertisements to link directly to a website. QR codes can also be used in restaurants, enabling customers to view digital menus by scanning the code.

Experts envision even broader applications for QR codes in streamlining inventory and supply chains in the years ahead. Beyond encoding links to drink specials and website URLs, QR codes can store expansive amounts of data, opening possibilities like integrating detailed product information into codes. In the future, scanning a code could show everything from a product's manufacturing data to its transportation history to precise expiry dates.

Some companies are even experimenting with using QR codes to tie digital information to individual products rather than entire product lines. With this level of precision, scannable QR codes could provide consumers assurance about the origins, ingredients, or components of the item they are purchasing. Supply chain managers are hopeful about efficiency improvements, too, if items can be traced to specific factories, batches, and delivery dates. As the possibilities expand, QR codes may radically change how data flows between physical products and digital systems, bridging digital life and the real world.

Types of Quick Response (QR) Codes

Many QR code types may be used for different items. Here are some:

• Micro QR code: A smaller version of a traditional QR code for when space is limited. Micro QR codes can vary in size, but the smallest is 11 x 11 modules, encoding up to 21 alphanumeric characters.
• Model 1 QR codes: Model 1 is the prototype of Model 2 and Micro QR. One to 14 versions are registered to the Automatic Identification Manufacturers International (AIMI) standard. Its maximum data capacity is 468 bytes, which can encode up to 707 alphanumeric characters.
• Model 2 QR codes: Model 2 has an alignment pattern for better position adjustment and contains greater data density than Model 1. One to 40 versions are registered to the AIMI standard, with version 40 capable of storing up to 4,296 alphanumeric characters.
• IQR codes: These can be created in squares or rectangles where space or shape is an issue. It can be made in 61 formats.
• SQRC: This features a restricted reading function to contain private information.
• Frame QR: This has a customizable frame that can contain larger data in formats such as graphics, illustrations, or photos.

QR Codes During COVID-19

The recent pandemic has dramatically increased the use of QR codes, with a reported 25 times surge for restaurants and seven times over surge for hotels as societies shifted toward touchless interactions.

Businesses in the hospitality sectors, like restaurants and bars, utilized QR codes for safe communication (such as digital menus, among many other use cases) and transactions.

While paper menus returned, the use of QR codes continued post-pandemic. The pandemic demonstrated the adaptability and versatility of QR codes, suggesting their potential for use in various industries. 

The Bottom Line

QR codes are intuitive to use with modern smartphones and mobile applications. Their advantages include increased customer engagement, more accessible access to information, and digital utility in areas like digital signage. However, potential cons include security concerns, as they can link to malicious websites and a gateway to a person's private information. Their use, already expansive in Asia, grew considerably in Europe and the U.S. during the pandemic and has remained widely used. Supply chain and efficiency managers see far broader applications for QR codes to track products in real-time.