Digital Payments: 5 Trends Business Owners Need to Know

Increased Security

With more digital payments comes more exposure. Efficient cross-border transactions are slowly becoming an integral part of the global economy, and enhanced security and fraud prevention measures are a must to keep sensitive information away from prying eyes. Businesses are looking to artificial intelligence (AI) and machine learning (ML) to lead the way toward a safer, more secure digital experience.

Improvements in the Customer Authentication process like facial recognition and biometrics offer much needed peace of mind to clients who rely on their mobile device as the first line of defense. We’ve also placed emphasis on offering technology at point of sale that utilizes card data tokenization, encryption, and meets PCI-DSS compliance. 

Having the right tech makes all the difference because a valid PCI-DSS council certificate significantly reduces the risk of a security breach. Read more about merchant fraud prevention in our helpful primer.

Going Omnichannel

Pivoting to omnichannel is one way many businesses found success during the pandemic. With brick-and-mortar locations suffering, ecommerce readily took center stage. Subscription services blossomed, creating recurring relationships. B2B branched out to B2C, and vice versa, and newer channels of sale like social media came into their own, offering entirely new ways to market and move a product.

As the world inches back toward normalcy, optimizing these new channels is key to keeping your digital presence profitable while brick-and-mortar takes back its piece of the pie.

Embedded Payments

With ecommerce emerging as the go-to way to shop for many Americans, the need for embedded banking and payments is on the rise. What separates merchants from financial service providers is becoming less defined. Merchants can now use digital platforms and marketplaces to offer their clients easy point-of-sale options without the need for a traditional merchant account. As a result, new businesses can start accepting electronic payments online and in-store almost instantly.

Financial service providers are changing with the times too. They’re making room for APIs and other financial technology (or fintech) designed to fit the modern business’s need for digital transactions, RTP payments, and financial interconnectivity without the traditional friction and pain points.

Peer-to-Peer (P2P) Payments

Replacing cash and check, instant transfers through providers like Zelle^®, Venmo^®, and others take the processing time—and potential health risks—out of sending and receiving payments. The money travels fast and doesn’t require any physical contact. Plus, these systems are easy to use and overcome some traditional banking barriers like complex bill pay systems and slow requests for payment. As these services look ahead, they may place even more emphasis on widening payment options beyond traditional credit, like investments, stocks, and cryptocurrency.

While peer-to-peer services for real-time payments have changed how individuals send money to each other, P2P payments haven’t quite reached maturity for business-to-consumer or business-to-business transactions. Some P2P services also charge transaction fees. While nominal, these fees add up, quickly eating into any business’s bottom line.

But P2P payments do present a risk to some business owners. By nature, they’re susceptible to fraud and human error. And because they’re unregulated, refunds aren’t guaranteed. Tax-related issues also present a problem. Business owners using P2P and avoiding a merchant service platform for taking payments may find it hard to track, export, and reconcile payment information at tax time.

Of all the things we’ve learned from living with and conducting business during a pandemic, one thing that we already knew stands out: change is the only constant. It’s the necessity to adapt and digital payments have emerged as a timely, one-size-fits-all boon to businesses big and small. Combined with proper use, careful management, and an effective merchant account, they can set you up for success while making your customers safer, happier, and more likely to return.

What happens when a major global event like the pandemic brings about a paradigm shift, transforming how people shop and what they shop for? For more information on what your business can do to get ahead of the digital payment wave, read our article, “Four Ways to Prepare Your Business for the Future of Digital Payments.”