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We’re seeing some pretty clear and distinct use cases for real-time payments. So traditionally, we’ve thought about is a wholesale payment? Or is it a consumer payment? Real-Time payment turns that on its head to say, who’s receiving the payment? Is it a person? Or is it a company, and depending on that, we’re seeing some pretty clear use cases emerging. So if you’re a company that wants to use real-time payments to improve your employee experience, okay, payroll is an excellent use case for that. So a substantial competitive advantage sometimes for companies is how often they pay their employees. So rather than a traditional business owners policy that is weekly or monthly, it could be every day, even every hour, which could be an excellent differentiator in that competitive labor market.
The second is the consumer experience and bringing a much richer, delightful what we would call consumer experience. So if you lose your luggage, or if you get in a car accident, where you need money immediately to fix your car, real-time payments are a great way to embed the payment as part of an overall positive experience.
How can electronic payment benefit entrepreneurs?
The practice of digital payment has conveniently and inexpensively changed the face of payment methods for everyone, including entrepreneurs. Having access to 24/7 internet service and intelligent technologies, consumers do not need to rely on cash anymore. This has presented opportunities for entrepreneurs to enable digital payment methods in their efforts toward a better user experience for their audience.
The research stats will provide entrepreneurs with information about consumers’ preferred payment methods. Especially with the COVID pandemic, more and more people are switching to cashless payment, i.e., the digital method. A study from Pew Research found that around eight in ten American consumers have switched to online shopping: 79% of them have made online purchasing, and 51% have made some digital payment through their mobile phones. The COVID pandemic jumpstarted and paved the way toward digital payment, and with the pandemic slowing down, people still prefer purchasing goods by making digital payments.
Digital Payment Methods for Entrepreneurs
Following are some of the digital payment methods that entrepreneurs can incorporate into their businesses:
- Bank Cards. Bank cards include credit and debit cards. With bank cards, consumers can make payments at the store, on the internet, through mail order, or over the phone. This ease of transaction can save time for both the consumers and retailers. Bank cards are secure and convenient and the majority of consumers prefer to pay using a bank card. Entrepreneurs might be losing out on sales if a bank card is not their primary method of payment.
- Mobile Payment. Mobile phone devices can also hold and access banks’ online services and allow consumers to buy things. Apps services like Venmo (US), Paym (UK), or Bizum (Spain) are accepted by online retailers for online payment. These services allow mobile phone payment.
- QR Payment. The idea of QR payment is also a unique and convenient one. Since the mobile device is already connected to the consumer’s bank account, he can turn on the QR method of the bank’s app and scan the retailer’s QR code and make the required payment. Entrepreneurs can have their own QR codes linked to their banks’ accounts.
Enhancement in Digital Payment Methods for Businesses
The following reasons will tell how entrepreneurs win by having a digital payment method;
- Digital payment methods are faster than cash, cheque, or other traditional methods of payment. There is constraint regarding time and location, payments can be made from anywhere in the world.
- Digital payments allow entrepreneurs to keep track of their inventories, learn to maintain them, and improve profit margins. Entrepreneurs can conveniently keep checking their payment history to plan for their future sales and be able to increase their profit margins successfully.
- Activating their digital payment will put the entrepreneurs on the map and increase their business’ visibility to their target audience. As a result, it will help entrepreneurs gain maximum profits.
- With their convenient and secure features, digital payment will ensure the security of the employees’ wages, along with the accuracy of the amount being credited.
- Government can also eliminate tax evasion by encouraging the public to adopt digital payment methods. Other incentivization toward digital payment methods will definitely incline more people to make purchases through the online method. This will benefit entrepreneurs by leading more people to look towards online businesses.
- In certain developing or under-developed areas, it is not feasible for women to travel long distances towards the suppliers or bank branches. Hence, digital payment methods are the savior for women entrepreneurs, who find that it is a convenient, fast, and secure method of payment.
What are the Top Digital Payments Trends to Watch in 2022?
Trends are emerging in the payment landscape. First is the trend of real-time payments, which we already talked about above. Certainly, in the US, it’s a relatively new system. But around the globe, there are dozens of live real-time payment systems, with more coming online and online with real-time payments or the use of E-wallets and digital wallets and the alternate settlement methods outside of the traditional banking system. So I would say that’s one of the new payment types emerging. The second is all of the rich data associated with payments, and how do you extract that to make payments safer, more efficient, or more cost-effective?
What about cashless payment trends in 2022? How do we see that going globally?
There’s so much change going on in the global landscape. And in all honesty, right? The US is a little bit behind some of that change. Right? If you talk about real-time payments, right? We’re living now with the Clearinghouse the Fed just recently announced that they’re going to go live in a few years with their version of a real-time payment system. But most markets already have one are in the process of already building one.
Real-time payments are all about instant settlement 24*7, and that payment is now kind of mimicking what you see everywhere else, right? We’re a global economy that moves at a very fast pace. And so we see a lot of change. You’ve seen a lot of new payment types as well; in the traditional space, you’ve always had your wires, your ACH, and our real-time payments. Now you see, while it’s not a pay type, it just gives you the ability to do things within a closed-loop system but gives you that instant gratification gives you that speed sometimes gives you more feeling of security as well, because you trust the ecosystem you’re in to change to me is the big theme. We’re seeing a lot of opportunities to do things in different ways, connect to clients in different ways, pay and receive from clients in different ways.
How digital payment can easy for offline and online businesses in 2022?
If you think about the advantages of E-wallets, right? It started in the traditional sense, just as a pay type option so that consumers could pay each other maybe more easily. Now you flip to a country like China, which was predominantly a cash society five years ago. And now they’ve moved predominantly to a wallet society, where within write the ecosystem, you can make transactions, make payments with a QR code, you can show up at the store, and buy things right off your device. We’re starting to see the propagation of new technology, allowing transaction interaction from big to small to happen in different ways. And that’s now opening up the opportunity for all marketplaces and ecosystems to think about that client experience. And you were having the payment be part of that client experience or, in reality, not be part of that client experience. Because it’s seamless, and it’s outside. Right, and that’s what the wallet compared to the user. Is it completely transparent to the user? They don’t even realize the transaction has happened most of the time. And therefore, right, it feels like a very good experience from a client’s perspective.
Virtual account management is a really big deal in the industry. Traditionally, corporates have had to set up their account structure that matches their GL structure which may not necessarily match their business structure or even their business strategy. And so if you are opening a new entity, or if you want to segregate funds, or if you want to see only receipts for this entity and payments for that entity or certain currencies, the traditional answer has been in the banking industry, open another account. So you could have hundreds or 1000s of accounts depending on your business structure and how your GL is structured.
So the interesting thing with the virtual account management system is it allows you to have fewer physical accounts. But the virtual office, if you will, and virtual account management is the information that sits on top of it, that can be sliced and diced in several different ways, by geography, by currency, by the entity, and so on, and so on, and so on. And the really interesting thing about virtual account management solutions is that its real-time. So historically, you would open a new account, fund the account, and get the reporting on the account. And that could take, you know, days. But with virtual account management, this is instantaneous. So going back to the earlier point of data and data being an important part of the trends in the payment landscape, that’s the power that the virtual account management system will bring.
What technologies are important for them to consider of the digital or electronic payment systems?
We have already discussed financial technology in the previous article, so we will not mention everything in detail. We have got APIs; we have got cloud, obviously blockchain and distributed Ledger; we see all of those technologies playing a very important role in the payment ecosystem. Because they bring different attributes, and when combined, can really transform how we’re going to do things as a bank, but how our clients will interact with us as a financial institution, as well. It’s harnessing them in the right way and combining those technologies in the right way to offer a transformative experience. Distributed, Ledger’s, there are some obvious use cases, right.
And it’s always been forced down that payment path because you have this ability in a very secure way to remove intermediaries and remove friction from the process. And we see value in that for sure. But, when you combine that with an API and then maybe store some of your data in a cloud, you now enhance the efficiency your back end system can do, you can provide things in that scale, and back to speed and real-time that’s necessary. And then, as we look at the real core infrastructure payments, we are starting to think about the idea of microservices and building things that you can reuse for multiple use cases or multiple business purposes. So not just build something once and then only be able to use it for that one purpose, but build it and start and reuse it for something new. We’re going to see that in the virtual account management space, where we’ve built now a very powerful account structure that can be sliced and diced and have multiple levels. But what if we could do that at scale and do that in different ways? Right, there will be other use cases for that that we were very excited about.
What are some of the machine learning use cases around digital payments?
A couple of interesting use cases for machine learning is around smart routing. And then not only smart routing but then giving clients better choices. So this is best illustrated through an example at the client-side payment, a BNC file. And they have, and they want instructions routed to certain jurisdictions and beneficiaries. We understand their business rules. Through machine learning and artificial intelligence say; we can accomplish all of those same things that we want. But, if you did X, Y, and Z, instead, it’s going to be less expensive, it’s going to get there faster, or whatever the business goals are. So that’s the major use case, I think, is around the optimization and then helping clients improve their payment flows.
To summarize, existing and prospective entrepreneurs should adopt digital payment methods for their consumers for their benefit. It provides consumers with a QR code linked to their bank account or makes bank transfers accessible. Some organizations have adopted a contactless payment method, where consumers merely need to swipe their cards to make a payment. Others have adopted credit card methods, where the consumers’ credit information is saved for future payments. For instance, if you are availing of any of the services in internet plans, your credit card information is saved in your Xfinity account, and you will be billed monthly for these services.
Be prepared for the future; the future is changing very quickly. Don’t always focus so much on the now. And then you’ve got to take some time and think about where you’re going to be in two years, where you’re going to need to be in five years, where’s your business going, as I mentioned earlier, get connected to the front office in the business, and think about things are going to change, which in my perspective if you stay the course, you will get less efficient if you don’t start preparing for that change now. And we’ve gotten very efficient in payment processing, and Treasury has gotten very efficient. You can’t go the other direction. You’ve got to continue getting more efficient. But to do that, you need to be prepared; because things are going to change and just maintaining, the course will probably not be good enough in the future.
One of the interesting things we’ve noticed is the amount of investment in new FinTech companies in the payment space. So there seems to be a rush of new people trying to enter this space. If you are one of them, we have listed the 100+ List of Top Fintech App Development Companies. They might be able to help you to execute business plans.