- The profitability of your business is highly dependent on the scope of payment options available to your customers.
Over the years, the world has shifted from physical payments to digital as the preferred method for transactions. A digital payment is the means by which the money is transferred from one bank account across a digital service to another bank account, such as via a cell phone or computer. Internet banking, cell phone wallets, point of sale systems, and card payments are just a few of the types of methods for electronic payments that we can use today. In today’s digital world, many companies are making the transition to electronic payments. Still, there are many small businesses that are unsure if this type of transaction is beneficial to their organization. In our guide, we’ll cover the reasons why every small business should be accepting digital payments in 2021.
Types Of Digital Payments
There are many types of digital payments that your business could benefit from, and find the right one for your company can be confusing. We’ve broken down the top types to make it easier for you to find what will work with your business, but for more in-depth information, check out Nadapayment’s guide to electronic payments.
- POS Systems: A point of sale is anywhere your customer can make a purchase, such as online or in-store checkout. The POS systems are made up of software and hardware that make the transaction possible, and the functionality of these systems goes further than simply taking payments. Some POS systems can provide assistance in creating schedules, keeping track of inventory, or even store customer details for loyalty programs.
- Credit Cards: This is the most popular way for many customers to pay for their purchases. When a customer uses a credit card, you receive the payment immediately, and the amount is added to the customer’s credit card bill for them to pay off later.
- Cell Phone Wallets: A cell phone wallet is created when the customer links their banks and cards to a payment service on their phones. They can then pay for transactions through their phones using contactless payments without needing to carry their physical cards with them.
- Prepaid Cards: These cards are usually loaded with a certain amount of money and are designed to be used before being discarded. Many customers use this option as a way to limit their spending.
- Internet & Mobile Banking: Also known as online banking, a customer can transfer a specified amount directly from their bank for various transactions through their computer or on the go via a cell phone app.
- Micro ATMs: This type is usually used by small stores to deliver banking services for instant transactions.
One of the most significant benefits of digital payments is that they are instant transactions and are faster than the traditional cash or cheque methods. Without the constraints of needing to deposit cash or wait for cheques to arrive via the post, electronic payments can be made easily and are instantly available to the business. Digital payments can be beneficial for scaling up a business as accepting electronic payments can enhance your company’s reach by attracting new customers, especially if you have an online presence. This is because your company will not only be able to do business within your own country, but your business will be able to expand globally.
Reduce Risk Of Theft
If you have a physical location where you take transactions from customers in person, there’s always a risk of theft if these transactions involve cash. There is also a risk of human error when handling money, causing the amounts to be wrong when counted at the end of the day. These risks can be drastically reduced when using a secure digital payment method as an alternative to cash. Providing your customers with the option to complete their purchases electronically will allow the funds to be transferred directly into the business bank account. You don’t need to keep detailed records of the transactions by hand either, as most digital payment systems keep an electronic record for you to streamline your processes.
Since the pandemic, digital payments became essential for every business in order to survive the reduced footfall and closures in physical locations. Every person was trying to avoid human contact as much as possible during the height of Covid-19 as a way to protect themselves from coming into contact with the virus. This led to the increased demand for digital payment systems, especially contactless payments. Businesses implemented systems that allowed customers to use a range of contactless options in order to keep their company running. Many of these contactless options involved cell phone wallets or QR codes that allowed customers to scan them with their phones via a digital payment app without touching or tapping anything.
Transparency & Costs
Transparency is essential when making or receiving payments ad customers want to know upfront about any charges that may be included in their purchases. During any purchase, most customers are happy to pay a small surcharge for the convenience of using their credit cards or other digital payment methods. However, if the charge is hidden and the customer is unaware of it until they check their statement, it is like that the patron won’t become a repeat customer of your business. Avoiding confusion or frustration at unseen charges by offering full transparency will ensure your customers are happy with their purchase and return for future shopping.
Cash payments don’t typically require any processing fees for your business, and cheques usually only require postage services if used. With digital payments, there are no hefty processing fees, and generally, the only expenses incurred by the business are subscription costs for some digital payment systems.
Increased convenience is the biggest reason your customers will love digital payments. Online or cell phone payment platforms can store customer’s card details when they make a payment; this adds to the convenience as your customers can use the previously saved information to make future payments or set up recurring billing or automated payment collections, making the entire process of purchasing effortless.