The payments industry has changed drastically as a result, on both a corporate and consumer basis. In fact, 65% of adults have made or received a digital payment in recent years. The Covid-19 pandemic accelerated the modernisation of the payments industry by forcing companies to accept new forms of payment without face-to-face interaction.
What Are Digital Payments?
Digital payments is something of an umbrella term. It refers to the transfer of funds from one subject to another subject using a digital or online medium. There is no exchange of hard-cash whatsoever with a digital payment. Under this umbrella are a slew of new technologies, applications, and processes that have evolved to streamline payments.
For example, paying from a financial account with a digital wallet is a common example of a digital payment individuals, and businesses alike, use today. Digital payments such as this can help to prevent fraud and allow for increased diversification of assets.
What Are the Factors Influencing the Evolution of Payments?
While the Covid-19 pandemic acted as the catalyst for widespread increased adoption of digital payments, the foundation for this change in the industry has been building for a long time. With that in mind, here are a few common factors that have contributed to the evolution of payments:
- ‘Buy Now, Pay Later’: The mentality and ability to buy something now and pay for it later has greatly influenced the adoption of payments. Digital automated payment plans are cited by 31% of individuals as being the primary substitute for cash or a debit card.
- Widespread use of smartphones: Having a smartphone in your pocket is equivalent to a handheld computer. With the ability to access your bank account at your fingertips, on the fly, and the ability to add your payment cards onto your device, it’s no wonder digital payments have increased.
- Online shopping: E-commerce sales were predicted to reach $5 trillion in 2022 alone. Every single one of those sales required the ability to conduct a digital payment without hard cash. For companies to survive with so many consumers moving behind their computers, they needed to pivot which payments they accepted.
The above three factors are just a small sample of the many factors that have increased the adoption of digital payments. Reduced costs, increased payment speed, and simply the convenience of it all are other common reasons digital payments began to increase in the first place.
Different Types of Digital Payments
As mentioned, digital payments is an umbrella that includes a range of technology, software, and other advancements used on a daily basis. Some of the most common types of digital payments seen by consumers and businesses include:
1. Digital wallets
Whether it’s Apple Wallet, Google Wallet, Samsung Pay, or something similar, digital wallets are one of the newer, yet most common, types of digital payments. With a single tap of their device, a person can immediately pay for a product or service in seconds. Digital wallets have demolished the leather wallet industry, with over 60% of the global population predicted to use digital wallets by 2026.
2. Mobile payment applications
Sending money to friends, family, or for business purposes used to require writing a check, handing cash, or some other physical transaction. Nowadays, sending money is as easy as launching Venmo, Zelle, PayPal, or other similar apps. These apps have changed how money is sent from one group to another, and created an entirely new business model based on unique fees per transaction.
3. Electronic payment systems
The oldest form of digital payment that still exists, though is being overshadowed by newer forms, is electronic payment systems. ACH, wires, bank transfers, and E-Checks are all common examples. Bank transfers mostly occur between a single party moving their own funds around, with the other types occurring between businesses in most cases.
As digital payments continue to evolve, the umbrella will undoubtedly widen to include new software, applications, or completely unthought of innovations. Though one thing is for certain: the future of payments is headed towards a completely digital model.
How to Integrate Digital Payments Into Your Workflow
Whether you are a company or an individual, integrating digital payments into your daily processes(es) can streamline your workflow or just simplify your tasks. For individuals, many digital payment applications can be linked directly to your bank account, via an encrypted connection, allowing you to send money to anyone who also uses the application.
Additionally, digital payments as an industry opens the door to holding multiple types of bank accounts. A checking account can be held with one bank, for example, and a high-yield savings can be had with another. If funds are needed, you can simply transfer from bank to bank in an instant if it’s supported, providing quick access to your cash.
For companies, here are some simple tips for including digital payments:
- Accept broader forms of payment including digital wallets or payment applications
- Open an online store if one does not exist already
- Offer buy now, pay it later plans for customers
With the world adopting digital payments at a rapid rate, being adaptable and flexible with payments is a must. Spotting the trends before they take hold can allow any organisation to get ahead of the competition, and any individual to integrate the process into their daily workflow for a simplified lifestyle.
Surge past the competition today
Predicting the future of an industry with complete certainty is impossible. By identifying the key trends shaping that industry, however, anyone can make an educated guess on its trajectory. Using that information, people can integrate new and exciting developments in any industry into their daily lives.
Companies can jump ahead of the competition by being proactive with their integration, and consumers can streamline many of their day-to-day actions. Avoid being the last in the know by spotting trends of the future in their early stages.