How do QR code payments work?

Jul 01 2021 | Julie Warshaw, PayPal Editorial Staff

QR codes can be confusing at first. Even when you know what a QR code does, you may not know how a QR code payment works.
How does a customer use this little checkerboard box to pay for something? We're going to explain the technology behind QR codes, so you can feel confident offering them as a payment solution.


What is a QR code?
A Quick Response code, commonly known as a QR code, is a type of digital code used to store or link to information. It's like a label that can only be read by a machine. Businesses use QR codes for everything from tracking inventory to creating links people can scan to get more information about a product.

If that sounds a lot like the regular barcodes you're used to seeing on the back of packaging, you're right. But while the familiar UPC barcode can only be read horizontally, QR codes are read both horizontally and vertically. This is what allows a QR code to store more information than a regular barcode. But QR codes have other advantages compared to UPC barcodes.

Faster. Once you create a QR code, you can start taking payments immediately. Just print your unique QR code on paper, stickers, and signage, then display it where it's easy for customers to scan.

More efficient. QR codes can hold much more data than UPC barcodes, making them ideal for complex processes like payments. And because of how a QR code stores information, you don't have to create multiple codes for multiple transactions.

More secure. QR codes are difficult to alter or hack. For payments, a QR code directs a smartphone to the right payment account; after that, the payment between the buyer and seller is encrypted as normal.

More reliable. Because QR codes are read in multiple directions, they can still be recognized by a scanner, even if the QR code itself is damaged or partially torn.


How do QR codes work?
A QR code might look like a random mix of scribbles and black-and-white squares, but each slice contains several layers of information. When scanned with a compatible app, all of that information gets put together in the right order for the code to be read.

The square markings in the corners of a QR code tell an app the orientation of the code. This means customers can scan the code from any angle without worrying that it will be read backward. Alignment markings embedded in the code tell the app if the surface the code is printed on is flat or curved so the app can "straighten" out the code to read it correctly.

If you've noticed that QR codes have a space surrounding the square, you might be surprised to learn that space is considered part of the code. It's called the quiet zone and it's there to help the smartphone app recognize where the code stops.
 

How do QR code payments work?
Because a QR code can hold far more information than a barcode, it's able to be encrypted and safely connect to payment processors like PayPal. Here's how you can take a PayPal QR code payment, from start to finish.

1. Get your QR code:​ On the web, click Get Your QR Code, then, log in to your PayPal account, and download your QR code. You can also create your code using the PayPal Business app. We've provided step-by-step instructions, if you need help.

2. Display your QR code: Print your code and hang a copy wherever a customer can easily scan it during the checkout process, like on your register or counter.

3. Shopper scans the QR code: When your customer is ready to check out, they log in to the PayPal app, click Scan and Pay, and then Allow, which tells the app it can use the phone's camera to scan the code. They hold their phone up to your QR code like they're taking a picture and the PayPal app uses the camera to read the code and connect to your business's PayPal account.

4. Receive your payment:​The customer then enters the amount they owe you and presses Send. Their payment appears in your PayPal account and the transaction is complete. 


The public’s preference for touch-free payments is likely here to stay. With QR codes, you can start accepting contactless payments in just a few minutes. Learn more about how to sell with QR codes.
 
 


1How We Shop, PYMNTS.com/PayPal, 2020. Based on a survey of 2,163 U.S. consumers.

The contents of this site are provided for informational purposes only. You should always obtain independent, professional accounting, financial, and legal advice before making any business decision.
 

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Frequently asked questions.

Accepting PayPal payments using QR codes is a new way to pay that's fast, easy and minimizes your need to physically touch cash or your card reader. With PayPal, your customer can pay later and split their payment but you'll still get paid straight away. To use this payment method, you need to be on iOS 13 or above for Apple iOS devices and Android 5 or above for Android devices.

How does it work? 

In your PayPal Zettle app, you generate a QR code for each transaction. To pay, your customer opens the camera on their phone, or their PayPal app, and scans the code to pay.

To take payments with PayPal QR codes:
  1. Select PayPal from your list of payment options in the checkout.
  2. Ask your customer to open the camera on their phone or their PayPal app (your customer must have a PayPal account to use this feature).
  3. Present your QR code for them to scan.
  4. Ask them to tap confirm on their phone to complete the payment.

How much does it cost?

The transaction fee is 1.9% + $0.10 USD for payments $10.01 and above, and 2.4% + $0.05 USD for payments $10.00 USD and below.

What are the transaction limits for paying with QR code?

A lower limit of $1.00 USD and a higher limit of $5,000.00 USD.

Can I deactivate the feature if I want to?

Yes. Go back to Settings in your app and toggle the PayPal option to turn it off.

Do all devices have access to this payment method?

QR code payments are only available to smartphones and tablets running the PayPal Zettle app on iOS 13 or Android 5.0 and higher.

When will my money be deposited?

As soon as the payment has been accepted.
Accepting Venmo payments is a new way to get paid that's fast, easy and minimizes your need to physically touch cash or your card reader. To use this payment method, you need to be on iOS 13 or above for Apple iOS devices and Android 5 or above for Android devices.

How does it work?

In your PayPal Zettle app, you generate a QR code for each transaction. To pay, your customer opens the camera on their phone, or PayPal app, and scans the code to pay.

To accept payments with Venmo:

  1. Select Venmo from your list of payment options in the checkout.
  2. Ask your customer to open the camera on their phone or PayPal app (your customer must have a PayPal account to use this feature).
  3. Present your QR code for them to scan.
  4. Ask them to tap confirm on their phone.

How much does it cost?

The Venmo transaction fee is 1.9% + $0.10 USD for payments $10.01 USD and above, and 2.4% + $0.05 USD for payments $10.00 USD and below.

What are the transaction limits for paying with Venmo?

A lower limit of $1.00 USD and a higher limit of $5,000.00 USD.

Can I deactivate the feature if I want to?

Yes. Go back to Settings in your app and toggle the Venmo option to turn it off.

Do all devices have access to this payment method?

Venmo payments are only available to smartphones and tablets running the PayPal Zettle app on iOS 13 or Android 5.0 and higher.

Do I need a Venmo account to accept Venmo payments?

No. You can accept Venmo payments from your PayPal Zettle app.

When will my money be deposited?

As soon as the payment has been accepted.
QuickBooks Online is a cloud accounting software that makes it easy to manage your books on multiple devices anytime. For more information, please go to QuickBooks Online

Import your daily sales and payments data from PayPal Zettle into your QuickBooks Online account, in the form of journal entries.  

When you first set up the connection, you are asked to give a start date. By selecting a date in the past, we’ll retroactively import your PayPal Zettle data to QuickBooks Online from the selected date.   

PayPal Zettle automatically imports data to QuickBooks Online once every night in your configured time zone. Once you’ve set up the connection, your PayPal Zettle data will appear in QuickBooks Online the next day.  

Note: if you choose a date way back in the past, the retroactive import may take a couple of days to complete. 

FAQ’s

Can I change the start date after setting up the connection?
You can no longer change the start date after setting up the connection as it causes duplicated data for overlapping days. 

Can I connect multiple PayPal Zettle accounts to QuickBooks Online?
You can only connect one PayPal Zettle account to one QuickBooks Online account at a time. 

Which accounts should I allocate my PayPal Zettle sales and fees?
Below are the possible account types to choose from per payment and fee type. 

 
PayPal Zettle accountQuickBooks Online Account type
Net salesIncome, Other Primary Income & Sales of Product Income
Sales taxOther Current Liabilities, Sales Tax Payable
TippingOther Current Liabilities
Gift cardsOther Current Liabilities
FeesExpenses, Bank Charges
Card paymentsBank, Checking
Cash paymentsBank, Cash on hand
PayPal paymentsBank


What will my sales data look like on QuickBooks Online?
We’ll send your sales data to QuickBooks Online in the form of journal entries. You’ll receive 2 types of journal entries: 
  1. Daily sales journal entry named “Z ZR” 
"Z ZR” is a summary of your daily sales. It gives a breakdown of each "tender type" to show how much of your sales were paid by card, cash, gift cards, and other payment types you accept. 
  1. Settlements journal entry named “Z SR” 
"Z SR” shows the reconciliation of the final amounts deposited from PayPal Zettle to your PayPal account. This report also includes your card payment fees.

How do I connect PayPal Zettle with QuickBooks Online?
 
  1. Log in to your PayPal Zettle account.
  1. Go to Integrations and click QuickBooks Online
  1. Click Connect and follow the steps. You‘ll be redirected to log in to your QuickBooks Online account. 
  1. After logging in, you’ll be directed back to your PayPal Zettle account. You can choose to get started with a set of default accounts (Quick accounts setup) or set up your own accounts. We recommend working with your accountant on this initial setup as it will impact how the PayPal Zettle payments appear on QuickBooks Online. 
Quick accounts setup

The Quick accounts setup is suitable for those who are new to QuickBooks Online, but want to get started quickly with a set of default accounts. You can always change the default settings after the setup. 
  1. Go to Integrations and choose Quick accounts setup
  1. Choose a start date and click Finish. Note that you can’t change the start date after setting up the connection. To change your settings, click View my settings, or come back and do it later. Any changes you make to your settings are applied to your previous exports. 
Choose your own accounts

This option allows more advanced users to fully customize the setup. 
  1. Go to Integrations and select Choose your own accounts.
  2. Choose the accounts that you want to export your PayPal Zettle data. Some accounts are optional, but others need to be selected to save your settings.
  3. Choose a start date and click Save. Note that you can’t change the start date after setting up the connection. You can, however, come back and change other settings later. Any changes you make to your settings will not be applied to your previous exports. 

How to disconnect QuickBooks online:
  1. Go to Integrations and click QuickBooks Online
  2. Click Disconnect. You won’t lose any sales data that has already been exported to QuickBooks Online. 

How does the data mapping between PayPal Zettle and QuickBooks Online work?

Zettle sales and refunds
Sales and refunds are recorded on the account you’ve selected for Net sales. This is your total sales for the day, excluding taxes. 

Sales tax
Your total daily sales tax is recorded on the account you’ve selected for Sales tax. This is a lump sum of your total sales taxes you collect for the day.

PayPal Zettle tips
Tips received from your customers are recorded on the account you’ve selected for Tipping. 

PayPal Zettle gift cards
Sales from the gift cards you sell are recorded on the account you’ve selected for Gift cards. These sales will increase the balance of this liability account. Gift cards redeemed by your customers are also recorded on the account you’ve selected for Gift cards. These redemptions will decrease the balance of this liability account. 

Card payments
Card payments taken via the PayPal Zettle card reader are recorded on the checking account you’ve selected for Card payments. 

Cash payments
Payments taken via cash are recorded on the account you’ve selected for Cash payments. 

PayPal QR code payments
PayPal QR code payments are recorded on the account you’ve selected for PayPal payments. Note that fees associated with taking PayPal QR code payments will not be exported to QuickBooks Online. You’ll need to bookkeep these manually by reviewing your PayPal account payments.

Venmo QR code payments
Venmo QR code payments are recorded on the account you’ve selected for PayPal payments. Note that fees associated with taking Venmo QR code payments are not exported to QuickBooks Online. You’ll need to bookkeep these manually by reviewing your PayPal account payments.

Manual card entry payments
Manual card entry payments are recorded on the account you’ve selected for PayPal payments. Note that fees associated with taking Manual Card Entry payments will not be exported to QuickBooks Online. You’ll need to bookkeep these manually by reviewing your PayPal account payments.

PayPal Zettle fees
PayPal Zettle takes a percentage commission on every card payment processed by the PayPal Zettle card reader, and charges fees for other payment methods and services. Fees associated with taking payments via card are recorded on the account you’ve selected for Fee account. These fees will increase the balance of this expense account, while decreasing the balance of the checking account you’ve selected for Card payments. Note that fees will only show up on QuickBooks Online once the underlying payments have cleared. 

Payouts from PayPal Zettle to your PayPal account
PayPal Zettle will deposit money collected from card payments to your PayPal Business account once the underlying payments have cleared. They're recorded on the account you’ve selected for PayPal payments. These deposits will increase the balance of this bank account, while decreasing the balance of the checking account you’ve selected for Card payments. 
How can I raise financial support for my business?
Whether it’s a non-profit or for-profit, we make it easy for people to support your business with donations. You just need to set up a shareable donation link that’s hosted by PayPal, so you don’t need a website or do any coding.

How do I get started?
To get started, set up your donation link. If you want to, you can customize your landing page to include a personal message and a thank you gift voucher. You’ll get a link and a QR code that you can share by email, text, social media, chat, and more.

If you’ve got a website, you can also set up a donation button that you can customize and easily add to your website.

What’s required?
You must have a business account with PayPal to set up a donation link. This isn’t available in all markets and some business categories are not eligible. 
 
Mine is a for-profit business. Can I accept donations?
Donations may be treated as income. Reporting requirements vary by location, so be sure to check with your tax authority for more details. You’ll want to consult with an accounting professional for specific guidance.

How do I know if I receive a donation?
The donations will be processed by PayPal and typically show up in your account within minutes. Sometimes, to make sure transactions are secure, it may take longer to get your money and you can read more about why this may happen. You’ll receive the normal transaction notice by email and you’ll see the details in your account with PayPal. 

Will I know who has made a donation?
The names and email addresses of your donors will be part of the transaction details.

Are the donations subject to PayPal transaction fees?
Yes, you’ll pay your normal transaction fees on donations. Read more about fees.

How can I change the logo that’s displayed in my donation link?
Log in to PayPal and go to Settings. You can change or edit your logo image in Business information.

How does the optional gift voucher work?
When you set up a donation link, you can include a gift voucher for a discount on a future purchase, a complimentary product or a gift with purchase. Your gift voucher will be described in your donation link and donors can redeem it when they next make a purchase. 

How are gift vouchers redeemed?
You can decide how redemption will work best for your business. For example, they could show their donation receipt or reference the PayPal transaction ID with their next order. When you set up your gift voucher, you’ll include instructions for how donors can redeem their gift voucher.

How does donate with PayPal work with Google?
If you have a claimed Google Business profile, you can add the donation link to help generate awareness. If you don’t have an account with Google My Business, you can sign up at https://business.google.com. There are some eligibility criteria for participation in Google My Business.

How do I add a link to my Google Business profile?
Go to Google My Business and paste your link in the section named “Your donation link”. The link will automatically appear in your business profile Google Search and Google Maps.

How can I change my donation link?
Log in to Google My Business and click the link to PayPal to create a new or update an existing donation link.

What info do you share with Google?
To help us ensure that things are working as well as possible, we share with Google the aggregated performance of the donation links we host. You can read more about how Google protects your info and how you can manage your privacy in the Google privacy policy.

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