Online Payments – The Transition Story
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With the advent of eCommerce and the internet and the growing popularity of shopping through the online platform, online payments have transformed from being a technological marvel to the best-suited payment options available now. Hybrid systems, legacy, cloud and several other payment infrastructure help process the tremendous amount of electronic payments which in turn have received exemplary support from the development of bank credit and debit card processing, resulting in today’s payments systems and industry.
From Barter to Digital:
During ancient times, there wasn’t any specific currency in place. Goods were exchanged for goods based on equal weight or equal quantities. For instance one quintal of wheat in exchange for one quintal of maize. When human beings did not have equal amounts of goods that weighed equally they started exchanging goods based on price value in place of weight. So a kilo of rice grain was exchanged with a lesser weight of silver whose price was equal to that of the rice grain. The major issue that created chaos, disorder, and disharmony at that time was the fact that a good that had more price value at one place did not have the same price value at another place and was thus not getting exchanged. This ledlead to the introduction of currencies by kings to carry on trade and commerce.
The currency system began with the end of the barter system but it too had its own share of anomalies. The coins that were minted were not good enough for the purpose of carrying out trade and marginal values were always left out. So many times we bought a product for Rs 7.5 and ended up paying Rs 8. With the advent of digital currency payments were being made with accuracy without any need for rounding off.
Digital currency is vulnerable to phishing and hacking and people have now resorted to investing in cryptocurrency that seems to be more secure than the digital version of the same. Few vendors can support cryptocurrency transactions and only a handful of them accept the same. Cryptocurrency is also vulnerable and only a few vendors accept them. This is how the world has shifted from barter to digital over the concourse of several centuries.
What are digital payments?
Digital payment is any kind of financial transaction that occurs through online or digital mediums without any exchange of paper-based physical currency or money involved in the same. The payer and the payee both use electronic mediums for exchanging funds. Digital payments can take place in physical locations as well as on the internet.
Benefits of digital payments driven by consumer need
There are several benefits of digital payments for consumers. They are as follows:
1. They provide cash backs as well as reward points.
2. Merchants are able to get their payments even from remote locations
3. There is minimal risk of fake currency
4. Merchants can sell and customers can pay to foreign nations.
5. Buyers can directly pay from banks
6. Every digital transaction gets accurately recorded
The growth in online payments – accelerated by e-commerce and internet
E-commerce has now shifted to mobile e-commerce and the mobile wallet has emerged as the most sought out payment mode and platform. The growth in payments done through the online mode has thus increased in leaps and bounds, not only in India but across the entire world.
Electronic funds transfer has been growing at breakneck speed with various benefits associated with the same and the growing number of application users on mobile has accelerated the visibility and reach within consumers. Innovation in financial technologies and the rise of biometrics in mobile devices has accelerated the number of online transactions.
What the future looks like
The future of online payments would evolve for the better in the next decades and even further. Some of the changes that are most likely to take place are as follows:
1. Easy and quick payment checkout systems and customers preference for one-click solutions will drive the customer’s journey
2. Banks would integrate with online payment systems and the credit card mode of payment would gradually fade away.
3. Businesses would seek to authorize payments and create e-invoices on mobile devices to make financial transactions more efficient. Financial institutions would focus on big data and analytics and visual reports would help them compete well in the market.
4. Customers would seek price comparisons, choice of selection, and easy payment gateways. Banks would seek to own not only the final payment but the entire customer experience
5. Consumer loyalty would be sought out through customer support and the wholesale and retail payment systems would eventually converge. Total elimination of third-party partners in order to establish in-house gateway programs would help further smoothening of online payment processes.
Digital payments are rapidly gaining popularity; we continue to see the growth of various alternative payment methods. One of the significant benefits of cashless payments is that the companies promoting digital alternatives provide adequate security and speed up the payment process. Before the transition clinches, several new trends will appear and disappear. These tendencies will play a significant role in determining our upcoming payment methods. We are definitely on the path where technology will take superiority, and the use of cash would end significantly.
Know more about digital payments on our blog on Different Ways You Can Pay Online