Digital payment methods have made life much easier for all people, individuals and businesses alike. No longer do you need to go around carrying wallets full of cash when you want to make any kind of purchase. In fact, bank tellers and ATM machines are slowly losing their purpose.
According to a report by Grand View Research, the global digital payment market size was valued at $96.07 billion in 2023. The market was expected to grow at a CAGR of 21.1% between 2024 and 2030. All these go to show you how much people are turning from cash to digital payments. Statista reveals that the digital payment market is the biggest segment within FinTech.
Looking at something like crypto, businesses have cautiously but steadily been integrating them as one of their payment methods. The mother of them all, Bitcoin, especially, has been making huge steps in this direction. Especially now that the bitcoin price today is on a high, businesses are ensuring that they take full advantage of this digital currency.
This article will be taking us through the various digital payment systems and why they have been very instrumental in the transformation of business transactions today.
Different types of digital payment methods
There are a myriad of digital payment methods that have been operational within the business environment. These systems include:
- Credit and debit cards: The most prevalent cashless forms of payment. Statista estimates that in 2023, there were over 26.71 billion payment cards in circulation.
- Digital wallets: Services like Apple Pay, Paypal, Skrill, Google Pay, etc. allow customers to purchase goods from their mobile devices. Statistics reveal that digital wallets account for close to half of all ecommerce transactions globally.
- Cryptocurrency: Digital currencies that have been taking the world by storm. The number of crypto users globally increased by at least 190% between 2018 and 2020. By November 2024, there were at least 653 million crypto users around the world.
- Electronic bank transfers: These are mostly used to make large or one-off transactions. You can use a banking app to do this.
After looking at all these, you might want to know the reason behind people moving the digital way. Let’s discuss a number of the reasons.
Improved record keeping
Manually logging sales can be quite hectic, especially when you are dealing with huge amounts of cash. You have to count the notes and the coins, the quarters and the pennies, and ensure you track every single transaction that comes in. Now, with digital payment tools, all that is drastically improved.
These tools can automatically track every single transaction, making it possible to collect valuable business data, track trends and manage income. This means that at the end of the year, you have little to no headache when it comes to filing tax returns and making financial reports.
Enhanced security
Security is perhaps the most sought-after tool by businesses and individuals alike. You see, handling huge amounts of cash can be risky, whether it is in terms of human error or theft. Statistics reveal that when it comes to 10,000 entries, where automated systems would make 1 to 4 errors, humans could make anywhere between 100 to 400 errors. This just goes to say how easy it is for accounting errors to happen when humans are doing manual inputs.
When it comes to fraud, digital payment systems have great encryption and fraud detection technology that allows businesses to protect themselves and their customers. For example, digital wallets use encryption and tokenization to secure data in transit. This makes it hard for fraudsters to mess up with. Also, crypto uses cryptography, one of the most secure systems.
Global accessibility
According to a report by McKinsey, the number of non-cash retail payment transactions increased at a CAGR of 13% between 2018 and 2021. The figure in emerging markets was even higher at 25%. This is because these digital transactions are making it easy for individuals and businesses to transact globally. Right now, it has become easy to see products online and even freelance from any part of the world since payment is easy.
The good thing about digital forms of payment is that they help bridge the gap between different currencies. Take cryptocurrencies, for example. As long as you have a digital wallet, it doesn’t matter what currency you are using. The transaction is not only fast and affordable, but it traverses the need of doing currency exchanges that can sometimes be frustrating.
Better customer experience
When it comes to customer experience, digital payment systems take the day. To start with, many digital payment systems allow their customers to save their details for faster and more convenient checkout the next time they are using it.
Also, the speed of transactions is unmatched. For instance, when you are making an international payment using conventional bank transfer methods, you can wait between 3 to 5 days. To make it worse, at times these periods can go to even two weeks when there is an error made. However, with digital payment systems like crypto, you just need a couple of seconds, and the process is done.
Wrapping it up, you can see how digital payment systems have been instrumental in changing how businesses operate. From improved record-keeping and security to global accessibility and better customer experiences, digital payments have been instrumental in enhancing business operations.
