Digital Payment Options

As the digital economy expands, so do payment options. Businesses that want to actively participate in the digital economy should make an effort to stay up to date on the various payment options.

Mobile Phones

Once mainly used to access social media when away from home, smart phones have become an indispensable tool for conducting business. Retailers make digital coupons available through branded apps or couponing sites such as RetailMeNot. Merchant companies offer businesses card swipes that attach to smart phones to allow businesses to sell products almost anywhere. Customers can purchase goods through company apps or scan barcodes in-store to make sure they are getting the best price. All of the major credit card companies have apps that allow cardholders to pay their bills and check their transaction history.

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Photocredits: www.digitaltrends.com

Social Media

Companies like Chirpify and Venmo are taking advantage of social media by allowing users to purchase products and send money through Twitter and Facebook. With Chirpify, customers can take advantage of a promotion by simply using a hashtag in response to a business’s tweet. Venmo allows Facebook users to securely send money to their friends usually as a gift or to repay borrowed money.

Online Banking

Most traditional banks now offer online banking to account holders. With advances in technology, customers can log in to their account and monitor spending or scan in a check for deposit without visiting the bank’s physical location. In recent years online only banks have been making a major impact on the digital economy. Without buildings to purchase and staff, online banks can offer more benefits with fewer fees to their customers. One major benefit of online banking is reduced or no ATM fees. Even though a bank is online, customers can still get instant access to cash when they need it. In addition, interest rates on saving accounts are higher and interest rates on loans are lower.

Bitcoins

Bitcoins are a completely digital currency allowing users to send bitcoins directly to another person or business. Since bitcoins do not go through a third-party during transactions, the fees are very low, but vary from transaction to transaction. Bitcoins are currently the most well-known and widely used digital currency but many other types are currently in use or in the development stage. For an in-depth explanation of bitcoins, please see the [Introduction to Bitcoins] post.

Digital Wallets

imagesPayPal started the digital wallet trend several years ago. It is a system to send friends and family money and to pay businesses for goods. This is one of the most used digital wallet systems since there is no fee to send money to friends and the fees for businesses are lower than those the major credit card companies charge. Small businesses around the world link online shopping carts to PayPal since the interface is user friendly and will work with most major website formats. Google and Apple have both released digital wallets recently that allow users to access bank accounts and credit cards from one app.

Looking to the Future

As the digital economy expands, more stores will accept digital payment methods and begin to install terminals and software that will allow for digital payment processing. Many stores may also begin to eliminate cash payment altogether as digital transactions are often more accurate. In addition, having less cash on hand means that cash registers are less susceptible to theft. The most reasonable assumption for the future is that businesses will wait to see which digital payment methods have staying power before they invest the money to convert their current checkout systems.

Additional Resources
Retail banks to tackle “digital disruption” in 2013
Digital Wallets