Technological advancements have reshaped the way we live, work and connect with each other — this is especially true when it comes to how we conduct business. Whether it’s shopping online for the latest tech software, supporting a nonprofit, purchasing a brand-new car, dining at a 5-Michelin-star restaurant, and more, technology has made the payment experience easier than ever.
We are talking about the type of technology that has taken center stage in recent years — digital payments. Individuals are no longer required to take the long commute to their favorite retail store because everything is available online, and electronic payments have replaced paper checks for many businesses.
Digital payments have revolutionized how we handle, manage and exchange money; the process is smoother, more convenient, and can even enhance cybersecurity. Now, customers can pay using a wide variety of payment channels. Digital payments are crucial for the very sustainability of a business and can even give it a competitive edge over others.
Although the adoption of digital payments has become widespread and popular, there are still many (businesses and customers alike) who have not taken to this game-changing technology. We'll look at why digital payments are important for businesses and how to get customers to use this technology effectively.
What Are Digital Payments?
Digital payments are an alternative form of payment where transactions are conducted via electronic devices and/or a digital platform. With this method, funds are transferred between two parties without requiring the use of cash or checks. There are several different types of digital payments:
- Credit Cards and Debit Cards: These are by far the most common forms of electronic payments. Nearly every single one of us owns a credit card or debit card, and we’ve had the experience of swiping our cards and entering our PIN numbers. This transaction is authorized and processed electronically via a point-of-sale (POS) system, online portal, mobile device and more.
- Online Payment Gateway and Processors: Payment gateways and payment processors work as intermediaries between merchants and customers. A payment gateway is the online portal that the customer uses to enter their credit card or ACH information. The payment processor initiates the transaction between the required parties.
- Digital Wallets: Digital wallets are apps that store payment card information on mobile devices and can be used to make in-store purchases. Digital wallets have been gaining momentum as an alternative form of on-the-go payments.
Digital Payments and the Health of a Business
Digital payments are essential for the growth and sustainability of a business. Here are the reasons why digital payments give companies a competitive advantage:
- Enhanced Customer Satisfaction: Customer satisfaction directly impacts the success, growth and reputation of the business. Satisfied customers are more likely to become loyal customers. Studies have even shown that increasing customer retention by 5% can increase profitability by as much as 95%! Digital payments improve customer satisfaction by making payments more convenient, efficient and secure. Customers can pay anytime, anywhere without needing to visit a physical location. Payments are almost effortless and don't involve long wait times. In addition, by providing multiple payment options, businesses are better able to cater to the customers’ personal preferences. By elevating the customer experience, businesses are increasing customer retention.
- Increased Revenue: Diverse payment options help businesses make more money because they’re able to reach more customers. Transactions are not limited to one place anymore. Businesses can gain sales from anyone in nearly any state, which results in more sales opportunities and revenue growth. Having multiple payment options even ensures the very sustainability of the business because it will reduce the extent of unpaid invoices. In the U.S. alone, 82% of businesses fail because of poor management of cash flow and unpaid invoices.
- Operational Efficiency: Digital payments streamline and simplify the entire payment process from beginning to end. Digital payments are automatic and there is no need for paperwork such as recording checks and manual bookkeeping. Digital payments also reduce errors which can create a positive payment experience for both parties.
Best Tips for Driving Adoption of Digital Payments
Businesses can encourage customers to adopt digital payments by raising awareness via various marketing strategies, which include:
- Educational Content: Curate rich online content that helps customers understand the how and why of using digital payments. This can include blog articles or FAQs which can walk customers through the online payment journey while answering common questions the customers may have.
- Emails: Email campaigns can be highly effective if a business wants to increase adoption of digital payments, all the while encouraging action and customer engagement. These emails can include educational content about the advantages of using digital payments. The value of email campaigns is targeting a list of subscribers who already support your business.
- Website Pages: Business owners can leverage their website to promote the adoption of digital payments. For example, owners can feature prominent sections or banners on their web pages that showcase the availability of their digital payment options. Clearly communicate the many benefits of digital payment methods such as:
- Faster ways to pay
- Protection against cyberattacks
- Enhancing security
- Ease of use
- Realtime reporting
- And more
- Seamless Experiences: By far, the most important way you can encourage your customers to adopt digital payments is to provide them with a seamless payment experience. If your current online payments process is not working easily, is not PCI compliant, or is prone to technical glitches, then it will drive customers away. Adopting electronic payments needs to be as easy and as secure as possible for the customer. A seamless experience includes:
- Prominently displaying payment buttons on product pages
- Automatic balance updates and payment confirmations
- An easy check-out process with minimal steps
- Built-in security measures (e.g., PCI compliance)
- And more
As a leader in fintech and digital payments, REPAY offers the seamless integration of various payment methods to your existing platform to support simplified payment experiences for your customers. Get in touch with your fintech partner and start revolutionizing your business today.