Last editedAug 20236 min read
Digital payment solutions empower businesses to efficiently process transactions and accept payments from customers through various online channels, including bank payments, card payments, and digital wallets. By leveraging these digital payment solutions, SMEs can streamline their financial operations, enhance customer experiences, and drive growth in today's digital economy while ensuring the utmost security and compliance with industry standards.
In recent years, we've witnessed a notable transformation in how we interact with the world, becoming increasingly digital. For businesses, being able to process payments more quickly and safely has become a top priority, and that means investing in more digital payment solutions.
Over the next few years, digital wallets will continue to close the gap between cash and card as the preferred payment method of the masses, and with a recession all but guaranteed, even small businesses need to adapt to changing consumer spending habits.
The digital payment market is predicted to be worth almost $20 trillion by 2026, and if you want to ride that wave, you’re going to want to get on it sooner rather than later.
What are digital payment solutions?
Whereas currency was once solely exchanged physically from person to person, digital technology allows customers to use electronic payments to send payments with no hard cash changing hands. This allows for easier and more secure transactions both in person and online.
Digital payment solutions have transformed how we spend and how we are paid. They have enabled a world where you can quite comfortably live wallet-free (in certain countries, at least), paying for everything with a swipe of your phone. Online, meanwhile, digital payments have been the standard for years now, with payment solution brands such as PayPal even becoming arguably as relevant as many major retail banks.
Common digital payment solutions
There are dozens of digital payment methods available for small businesses to accept, and which you choose to implement depends on your sector and size and whether you are based online, offline, or both.
Here are some of the more common digital payment methods.
1. Online electronic payment systems
Also known as “e-payments,” online electronic payments include electronic bank transfers and wire transfers. These are some of the more secure and reliable payment methods and can be arranged either directly from bank to bank or through a third-party solution that does all of the encryption and data handling for you.
2. Automated bank payments
Bank payments are a convenient payment solution, allowing individuals and businesses to easily set up automatic transactions to pay bills, mortgages, and recurring expenses. If you want to receive payments from customers, bank payments are a secure, efficient, and cost-effective option. Through automated bank payments, users can set up scheduled transactions for specific dates, ensuring timely payments – and since everything is handled by the system, it also saves a lot of time and effort.
By using established banking systems and adhering to regulatory frameworks, GoCardless prioritizes stability, reliability, and compliance, addressing concerns such as security, fraud prevention, and legal obligations – allowing you to experience the speed, convenience, and global accessibility often associated with bank payments without having to deal with the complexities.
3. Mobile payments
Particularly given the rise of open banking in recent years, mobile payments have taken off in a big way. Using the NFC technology built into most modern smartphones, it’s easy to link your bank account or credit card to your phone and scan a contactless payment terminal to register a payment. Even older phones without in-built NFC technology can scan QR codes, taking customers to bespoke payment pages.
4. Mobile wallets
Mobile wallets refer to platforms such as Apple Pay and Google Pay which allow users to keep all their physical cards stored digitally on their phone. This doesn’t just include credit and debit cards but reward cards, membership cards, and more.
5. Contactless payments
Most likely, you have already used contactless payment with your credit or debit card. Most modern cards are built with NFC sensors that allow them to be scanned by a mobile POS device and instantly make a purchase. Increasingly, the kinds of devices that can be used as POS tools are being expanded to include tablets and smartphones, meaning even sole traders with small businesses can utilize contactless payment with relative ease.
6. Peer-to-peer payments
These platforms link directly to the customer and merchant’s bank account to withdraw and deposit funds. For most businesses, this isn’t going to be an option as the payments need to be set up individually, and the process is quite time-consuming. For micro businesses and sole traders, however, it might be a good first step.
7. Payment gateways
A payment gateway is a technology used by merchants to accept debit or credit card purchases from customers. Payment gateways are the consumer-facing interfaces used to collect payment information. The term includes not only the physical card-reading devices found in brick-and-mortar retail stores but also the payment processing portals found in online stores. Some examples of payment gateways include PayPal, Amazon Pay, and Stripe.
Key Takeaways
Digital payment solutions allow SMEs to efficiently accept payments from customers through various online methods like bank transfers, card payments, digital wallets, etc. This enhances customer experience and drives business growth.
The adoption of digital payments has accelerated after the pandemic, as consumers prefer contactless and online payments. SMEs need to adapt to this shift in spending habits.
Mobile payments using NFC technology have become very popular. Other solutions like mobile wallets, contactless cards, and peer-to-peer platforms are also gaining traction.
Bank payments are a secure, efficient, and automated solution for paying bills and receiving payments, providing convenience and peace of mind.
By leveraging the right digital payment solutions, SMEs can streamline financial operations, improve customer experience, and position themselves for growth in the expanding digital economy.
GoCardless is a valuable solution for small and medium-sized enterprises seeking to streamline their digital payment processes. By leveraging GoCardless, SMEs can efficiently collect recurring payments from their customers, enhancing cash flow management and reducing administrative burdens.
Case Study: PremierePC Technology Group
PremierePC Technology Group, a managed IT service provider, achieved significant cost savings and improved customer experience by switching from card payments to GoCardless bank payments. By using GoCardless' ACH account-to-account payment system, PremierePC was able to collect monthly payments faster and at a lower cost compared to credit cards. Matthew Rydzfski, Managing Partner of PremierePC, explained,
I happened to use a product that had a payment gateway established for GoCardless. I went on the GoCardless website and thought, ‘Wow, these fees are fantastic. This would reduce our fee structure by over 85%’.
The transition to GoCardless and ACH payments was seamless, taking only three to four weeks to fully integrate. Despite initial concerns about client pushback, around 90% of PremierePC's clients willingly switched to ACH payments. Matthew explained that this resulted in credit card payments decreasing from over 85% of payment revenue to less than 3%, leading to substantial savings of thousands of dollars annually:
GoCardless has saved us about $1,200 a month in fees, and that money can be reused to better support staff, our services, and our clients.
Matthew noted that customers were also convinced to embrace ACH payments due to the enhanced security and convenience offered by GoCardless:
Some clients hesitated to share their bank account information to set up ACH payments, but the info needed to pay by GoCardless is the same as that printed on checks. It also stays in the GoCardless system, where we don’t have access to it, so it's superior in terms of security.
Matthew additionally emphasized some of the main benefits of switching to GoCardless:
GoCardless is also a superior customer service experience to cards. We can set up ACH mandates for customers over the phone, or they can do it on their computer one time, and that's it. Set it, forget it, it's done, never worry about it again.
It's quick and easy to get set up and start collecting payments from US customers with ACH via GoCardless.
How can GoCardless help?
Setting up payment collection is fast and efficient with GoCardless. By automating the payment collection process, GoCardless drastically cuts down the administrative responsibilities of managing and tracking invoices for your team.
GoCardless makes it quick and easy to get started with no contracts or long-term commitment required. You can set up one-off or recurring payments in the merchant dashboard in just a few clicks. GoCardless automatically creates and sends all the necessary forms, doing all the heavy lifting for you. You can also connect to GoCardless via over 350 partner apps, such as Xero and Salesforce.
Discover how GoCardless can automate payment collection, making it easier for you to concentrate on what matters most – your business growth.
FAQ: Digital payment solutions
What is digital payment solution?
A digital payment solution refers to a range of electronic payment methods and platforms that enable businesses to conduct financial transactions securely and conveniently online. These solutions encompass various technologies, such as card payments, mobile wallets, online banking transfers, and emerging digital currencies, providing SMEs with versatile options to streamline their payment processes, enhance customer satisfaction, and expand their reach in the digital realm.
By embracing digital payment solutions, SMEs can efficiently manage transactions, reduce reliance on cash, and facilitate seamless interactions with their customers, ultimately fostering growth and competitiveness in the evolving digital landscape.
How do small businesses manage payments?
Small businesses can employ several strategies to effectively manage their payments. Firstly, they often leverage digital payment solutions, such as card payments, mobile wallets, and online payment gateways, to offer customers convenient and secure transaction options. Additionally, small businesses utilize accounting software and point-of-sale systems to streamline payment tracking, invoicing, and reconciliation processes. These tools help monitor cash flow, generate financial reports, and maintain organized records. Small businesses may additionally establish connections with payment processors and banks to access merchant services, which enable them to accept a wide range of payment methods and ensure smooth transactions.
What is the most used digital payment method?
When it comes to digital payments, card payments, particularly credit and debit cards, emerge as the most widely used method across various industries and consumer segments. The widespread adoption of card payments can be attributed to their convenience, acceptance by a vast network of merchants, and the familiarity and trust associated with established card issuers. Card payments offer customers the flexibility to make secure online transactions, ensuring a seamless payment experience.
The proliferation of digital wallets, such as Apple Pay, Google Pay, and PayPal, has further contributed to the popularity of card-based digital payments. These wallets enable users to store their card information securely and make payments with a single touch or click. With their ease of use and widespread acceptance, card-based digital payment methods have become the go-to choice for a significant majority of consumers, establishing them as the most commonly utilized digital payment method in the present landscape.
What is the cheapest way to take payments online?
The most cost-effective way for SMEs to accept payments online is by leveraging payment gateway providers that offer competitive pricing structures. These payment gateways serve as intermediaries between the merchant's website and the financial institutions, securely facilitating online transactions.
Opting for payment gateways that charge minimal or no setup fees, require no long-term contracts, and offer low transaction fees can significantly reduce costs for small businesses.
Choosing payment methods like ACH transfers or bank transfers can be more cost-efficient than traditional card payments, as they often have lower transaction fees. However, it is important for SMEs to evaluate their specific needs and compare the pricing structures of various payment solutions to find the most affordable option that aligns with their business requirements.
