Are Digital Payments Upcoming Trend During Covid-19?
May 25, 2021 - 07:43 AMAuthor - Kenneth Jackson
The concept of digital payments has evolved tremendously over the past few months since the global pandemic of Covid-19 has attacked the worldwide economy. Additionally, it is also raising a question in our mind whether digital payments will be the future or upcoming new norm for society?
The global pandemic has completely changed the way consumers shop or pay for things. With concerns over preventing infection from visiting bank branches and using currency notes, people have started using smartphones for digital payments and online banking for financial transactions as they prefer to stay home and keep social distance. As more & more customers are becoming tech-savvy, it is a big opportunity for global businesses to shift towards digital payment services.
In contrast to the sudden outbreak of the pandemic across the world that further led to lockdown, digital payments & fintech were among those sectors which witnessed higher bloom in 2020. Contactless payment is extensively making its path among consumers and businesses must adapt to such digital methods. Thus, businesses need to understand what digital payments are, how they work, and benefit the economy. This blog has got all your answers.
Let’s start by understanding its meaning.
What Do You Mean By Digital Payments?
Digital payment is the process of placing or executing various transactions digitally through various online channels. In simple words, both the parties ie. the payer & the receiver use digital/electronic mediums to exchange money and it does not involve physical exchange while sending or receiving money. It can be done both on the internet and physical premises.
Key Points To Takeaway:
1. Digital payments are easier to make, convenient, and provide customers with the flexibility to send & receive payments anywhere at any time.
2. They are proving a great alternative to traditional payment methods.
3. There is no use of checks or cash for the purchase of different goods & services.
What Are The Different Methods Of Digital Payments?
As the contactless economy is at its peak, there are a plethora of digital payment methods available for individuals as well as businesses, regardless of their size & nature. Some of the most popular digital payment methods are here as follows:
1. Banking Cards - Banking cards are one of the most popular and widely used payment methods by individuals as well as SMEs and well-established companies across the world. Since they come with various features & benefits such as security, convenience, portability, and safety, etc, they are a great alternative to cash payments. The biggest advantage of using banking card services like Debit/Credit cards is that you can make many other types of payments also.
2. Mobile Wallets - As the name suggests, it is a type of virtual wallet service where you can carry cash but digitally. Many banks and private FIs have launched their digital wallets/apps to establish their global mobile banking presence. These wallets store bank account or debit/credit card information in an encoded format to allow payments. Just download them and you can add money, make payments, or check your account balance by simply logging in. This eliminates the need of carrying cards or remembering CVV or PINs.
3. Bank Prepaid Cards - Prepaid cards are types of cards that can be preloaded with a prescribed amount by the user for single or multiple uses. In other words, it is a type of payment method that allows you to load money into it to make purchases. They are not linked to the bank account of the users and thereby offer safe & secured transactions. Other types of payment cards that offer contactless transactions are:
2. Business cards
3. Visa debit cards etc.
4. Internet Banking - It is also known as e-banking, virtual banking, or online banking where the customers of a bank can make banking transactions or other financial activities online via the bank's websites. Just make an account with a username & password and do your tasks by simply logging in. It may include many services such as transfer of funds, opening a Fixed Currency Fixed Deposit, etc. Since it requires an internet connection, it is known as Internet banking. It is one of the most popular modes of doing online transactions.
5. Mobile Banking - Mobile banking is also a process of carrying out different banking & financial transactions online but via mobile devices. The use of mobile banking is increasing with the introduction of many digital wallets, and payment apps. Today many banks have mobile banking apps that can be used for regular banking transactions with ease, convenience, and speed.
What Are The Benefits Of Digital Payments?
In a present situation where different industries are struggling with operating their business activities, using digital payments is like a boon for them. The impact of Covid-19 has accelerated the shift in payment online and it is going to increase in popularity over the years to come. Though cards are being widely used, mobile wallets are also gaining huge popularity among industries. Here are the benefits of digital payments. Let’s have a look:
1. Quicker, Easier & Convenient - These are probably the foremost benefits of using different & suitable digital payment services providing cashless payment methods. They provide a seamless experience to customers with decreased dependency on cash & documentation. They are faster to proceed and easier to make online payments. It eliminates the need of putting lengthy information or waiting in a queue to withdraw money from an ATM. plus, they are available 24x7.
2. Less Transaction Fee - Many banks & financial institutions are providing their payment apps and mobile wallets services with less economical transaction fees. It makes digital payments highly used by individuals & businesses for buying, investing, or transferring funds online.
3. Efficient Tracking - Using digital payment methods allows you to efficiently track & maintain all digital banking & transactional records. Customers can track each & every transaction that has been initiated by them, regardless of the size of the amount involved. This way, customers can avoid the risk of losing money or online theft as well as don’t need to carry cash.
4. Discounts & Cashbacks - One of the most favorable & interesting benefits of using digital payments is to enjoy various deals, discounts, and cashback on transactions. This is probably the best way to save money online.
5. Pay Bills At One Place -We can say that availing of digital banking services is the one-stop solution to pay all types of utility bills. Be it a mobile phone, electricity or any other bill, it can be paid with a few clicks.
Future Of Digital Payments Amid Covid-19
By looking at its increasing popularity across the world and several attractive benefits, it won’t be wrong if we say that digital or contactless payment is the future. Businesses are willing to apply for digital payment services as they are cheaper and provide much more security, and safety while customers are using them due to their 24x7 availability and flexibility. Cash payment systems can stimulate economic growth by easier payments and cost saving opportunities. They can also reduce the requirements of cash handling for cross-border payments.