Transferring funds is no more about physically visiting the bank to submit your checks. Digitalization redefined the whole financial system in the past few decades. Today, you can pay anyone, anytime, and from anywhere around the world with just a click. Fulfilling payments couldn’t be more convenient and faster.
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What are digital payments?
Digital payment is a method of transferring money using electronic or online transaction technologies. Also known as an electronic payment system, it enables real-time transactions between banks and merchants. Moreover, digital banking services are contactless, fast, and available 24/7.
Besides, you can choose from many payment modes available in the market. Let’s check out the trending digital payment options across the world.
Debit/Credit Cards
The revolution of digital payment modes started with the introduction of debit and credit cards. They became more common when Visa and MasterCard companies entered this market. With these bank-issued payment cards, customers can easily buy goods or services.
To date, myriad industries accept payments through debit and credit cards. Debit cards allow customers to use their existing account balance to complete an online payment. Contrarily, credit card users can purchase on a revolving loan for a pre-set limit by the issuing bank.
However, both types of cards ensure a fast and seamless transaction process.
Online Banking
The next came into the picture online banking system. It allows users to transfer money via the bank’s Internet banking service. Anyone with an active bank account can activate e-banking from the authorized bank. Once activated, you can initiate payments by entering your registered user/customer ID and password.
Further, e-banking provides various other services accessible in physical banks, such as checking an account balance, last transaction, and purchase history.
Mobile Wallets Apps
As smartphones become prevalent, mobile payments also become mainstream in the market. A mobile wallet or eWallet app is a source of contactless payments. Simply put, it’s a virtual Visa or Mastercard.
After linking your debit or credit card with a mobile wallet, you can pay online and offline merchants with one tap on your phone’s screen. However, the transaction will complete after you provide the set passcode, fingerprint, or facial recognition. You can also add and store money to your eWallet as long as you want for your future purchases.
Near-field Communication (NFC) technology securely transmits payment information from a customer’s e-wallet to the merchant’s mPOS system. Besides, it’s more user-friendly and faster than the online banking system.
You’ll find various mobile wallet service providers in the market. It includes PayPal, Apple Pay, Neteller, Skrill, Cash App, Samsung Pay, and many more. So you no longer need to carry a pile of cards in your pocket.
QR Code Payments
This payment system was highly instrumental during the Covid-19 pandemic. QR code payments made the transaction process safe when social distancing was crucial. According to a study, in-store contactless payments increased 29% in 2020. The increased acceptance amongst merchants, especially small business owners, further pushed customer adoption.
The touchless payment method allows users to initiate funds or pay merchants without physically inserting a card. You can complete the transactions by scanning a merchant’s QR code from your mobile camera. A QR (Quick Response) code converts information into a scannable image through a peer-to-peer payment app like GPay, PayPal, CashApp, and Venmo. Merchants can add a QR code at their checkout counters or product packages.
Moreover, experts believe that encryption technology used in contactless payment mode boosts security for users. Hackers can’t steal anything since the customer’s card data doesn’t store on the merchant’s device.
Nowadays, several retailers are embracing this advanced payment mode due to its cost-effectiveness and ease of access. They even launch promotions, cashback schemes, and loyalty programs to encourage the usage of QR code payments.
Cryptocurrencies
Cryptocurrency payment mode runs on blockchain technology to verify transactions. Unlike other traditional and digital methods, crypto payments have low transaction fees.
You need a digital wallet app to make a payment via cryptocurrency worldwide. This wallet interacts with the blockchain, allowing crypto payments between a sender and the recipient. Further, the decentralized system creates secure digital transactions that immunes your data from online theft. Thus, you can initiate funds while staying anonymous.
Currently, this cutting-edge financial system is in a nascent stage. Online gambling is one of the initial industries allowing crypto payments. You can wager on sports betting sites that don’t require ID using digital currencies. It provides the improved data security gamblers always look for while playing online.
With regulations in place, more businesses will soon start accepting digital currencies for payments.
FAQs
1. How did digital payments start?
The digital payment system began in the 90s with the advent of credit and debit cards. Further, smartphones, the internet, and mobile-first businesses played a crucial role in popularizing this new payment system.
2. Why is digital payment significant?
Unlike traditional banking systems, digital payment is a quicker funds transfer solution. Besides, users can seamlessly send money anytime to anywhere around the world. Thus, it also saves time.
3. What are the best digital payment methods?
The best digital payment methods for online money transfers are PayPal, Apple Pay, GPay, Cash App, Samsung Wallet, American Express, and Mastercard Debit/Credit cards with EMV chips.
Final Words
Undoubtedly, digital payment systems have been a game-changer for the banking system. Whether you want to shop online, pay bills, or share funds with a family member, you can now do it from the comfort of your couch.
As technology continues to evolve, e-payment can bring more changes to make transactions more transparent, secure, and efficient in the days ahead.