Last editedFeb 20233 min read
Particularly in the wake of the pandemic, the way we interact with the world is 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.
In 2023, 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. 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.
3. 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.
4. Contactless payments
You will undoubtedly 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.
5. 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.
6. Cryptocurrency payment
Using a cryptocurrency such as bitcoin is seen by many as a more secure method of payment, as the data is sent through countless decentralized sources and is harder to trace and duplicate. However, the crypto bubble seems to have burst in recent months, and solutions such as GoCardless offer many of the benefits of crypto without any of the drawbacks.
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.
How can GoCardless help?
GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with.
While not technically a traditional payment gateway, GoCardless allows businesses to collect payments directly from customer bank accounts quickly, easily, and cost-effectively. This is particularly useful for smaller businesses wishing to scale, as direct payments mean fewer, if any, late payments. This saves time and money, improves cash flow, and reduces stress.