Adoption of digital payments is one of many technology-forward trends accelerated by the pandemic. In 2020, 78% of consumers had used digital payments in the past year, up from 72% in 2016, according to McKinsey.
Consumers embraced digital payments out of necessity, as Covid made touch-free payments more appealing, but now that they’ve gotten used to such methods of payments it’s unlikely that the gains will reverse. Businesses have embraced digital payments as well, particularly as shipping and mail delays have made enhanced concerns about the reliability and security of more traditional payment methods. There’s also a heightened understanding that – when done right—digital payments can make a business more efficient and more flexible, two key attributes for successful businesses in today’s world.
Demand for frictionless, flexible payments appears poised to continue growing. More than two-thirds of customers have purchased products in new ways over the past two years, according to Salesforce. Here’s what that means for your business:
Accepting one form of digital payment is not enough
Among those who have begun using digital payments, the vast majority use more than one type, but they may also have a preferred method of payment for certain types of purchases. One consumer, for example, might be using Venmo to split a bill with friends, Apply Pay for mobile purchases, and a near-field communication (NFC) credit card to tap and pay for in-store purchases.
The more methods of payment you accept, the easier you’re making it for your customers to pay you. You may also be expanding your customer base by appealing to those who might prefer a specific form of payment.
Another benefit of accepting multiple forms of digital payment is that you don’t have ot worry about picking winners and losers. Over time, there will likely be some platforms or methods of payment that become dominant while other lose out, by accepting multiple methods now you don’t have to worry that the one platform you accept falls out of favor.
The data you’re collecting is incredibly valuable
In addition to customer data, digital payments also generate a range of real-time transaction data—from average sale size to inventory levels–you can use to make better business decisions. If you’re able to connect your loyalty program to your payments data, you can also track the effectiveness of marketing programs and discount offers. Customer behavior is changing in nearly every industry, and the more data you have, the easier it is for you to spot trends in those behavioral changes—and identify how to monetize those trends.
In addition to accepting digital payments, your business is likely also transitioning to making digital payments. More than 70% of businesses are currently in the process of moving from paper checks to electronic payments, according to a recent study by the Association for Financial Professionals. There are data benefits there as well. By digitizing your accounts payable and moving toward virtual cards, you may be able to identify spending trends within your business—and areas where some changes could eliminate mistakes or make the company more efficient.
Cyber security is more important than ever
While accepting digital payments can open many opportunities for your business, it also increases the risk of a cyber security breach. If you experience a breach and customer information gets hacked, it could be difficult to rebuild trust. Plus, you could face regulatory penalties for not properly safeguarding customer information.
While it’s impossible to completely eliminate this risk, you can minimize it by conducting a cyber security audit and hosting cyber security training for your employees. Make sure to carefully vet any partners you’re working with to process payments and ask them their policies on cyber security as well.
No matter where your business is in its journey toward digital transformation, accepting digital payments is an important, necessary step for long-term growth and sustainability. Nearly half of businesses (48%) say that offering the best payments options has become a competitive differentiator for their business. Accepting digital payments a signal to your customers that you understand the ways that their world is changing—and they’re you’re prepared to change along with them.