Digital payment has managed to achieve fast, secure, and convenient payment methods. Cutting-edge technology is what characterizes today’s payment, and the younger generation has fully embraced it.
Generation Z, comprising 7 to 20-year-olds, is more tech-savvy. The young adults within this age bracket use digital payment services more than other generations.
This is because the young generation is interested in the latest trends in technology. More businesses will offer these customers what appeals to them. This means that there will be fewer cash payment methods and more digital payments in the future.
This is due to the rapid development of technology that has also led to the evolution of payment methods in the past 5 years. More changes are expected in the future. To use these methods effectively, you need to understand how digital payment works.
What Is a Digital Payment Method?
Digital payment is a method people use to transfer money from one user account to another. The money is mostly in digital form and is transferred using digital methods like mobile wallets, mobile POS, or a contactless method.
They are also called electronic payment methods that allow customers to make cashless transactions. Many people are embracing this mode of payment because it has many advantages.
The digital method of money transfer focuses on offering consumers a seamless payment solution. The methods should be fast, secure, and convenient. Here are some unique and in-trend digital payment methods.
1. Debit and Credit Cards
Debit and credit cards are digital payment methods that offer convenience and security to users. Consumers have used these cards for many years and they will continue to use them in the future because they are integrated with the latest technology.
Debit and credit cards are old digital payment methods that utilize the latest technology like Near Field Communication. Its importance is emphasized as the market even offers card accessories to safeguard this payment method.
Top brands use sleeves to organize and protect cards distributed to their customers, often with a printed design. They can easily remove and reinsert cards in the sleeves while protecting them from tampering and scratches.
2. Biometric Authentication
Biometric authentication is a unique payment method that provides accuracy and efficiency. It is also known for its reliability and security benefits.
This is because it involves the use of an individual’s unique biological features as a verification method. Biometric authentication uses fingerprints, voice recognition, facial recognition, signatures, and vein mapping to identify a person.
Biometric authentication has been used for many years and it has proven to be one of the most trusted authentication methods. It is reliable, although it can be a costly method to implement.
This method has helped try to overcome the problem of identity theft. Millions of people prefer biometric payment authentication methods. It is estimated that in 2021, approximately 2.5 million payment cards will be issued.
3. Smart Speaker
Smart speakers are also referred to as home assistants. It is a technology that receives and responds to voice commands. A user can give any instruction to a smart speaker, like checking traffic updates or weather.
Smart speakers have evolved. Now you can use them to buy products like groceries or clothing. Statistics show that 35% of people use smart speakers to buy groceries.
You can also use smart speakers to send and receive money. Big brands like Amazon, Apple, and Google Home use this payment method.
4. Mobile Wallet
More people continue to use mobile wallets, and the number is likely to increase in the coming years. This method of money transfer provides convenience to users.
It is easy to use and fast. You can access this payment method using an app. Most businesses are using mobile wallets to increase sales and offer convenience to customers.
A mobile wallet is a type of wallet that you can use to send, receive, or store money. It works the same way as a real wallet works.
It is an easy method to learn and start using immediately. Any group of people, young and old, can use it because it requires a shorter learning period.
You can also use it to buy goods and services, pay utility bills to buy tickets, and get rewards. Companies that use mobile wallets include Apple, Samsung, and Google.
5. Mobile PoS (Point of Sale)
A mobile POS payment method requires you to use your mobile as a cash register. Merchants receive payment from their clients virtually using this method.
It provides a seamless experience where payment can be made across stores. What you need are a mobile POS platform and a good internet connection.
6. Contactless Payment
A contactless payment method offers a fast and convenient money transfer process. It is a method that is widely accepted as a health and safety measure. No contact takes place between the seller and the buyer.
Two devices are put near each other, and communication takes place. The devices can be a watch or a smartphone that has Near Field Communication technology.
Contactless payment method uses NFC (Near Field Communication) technology to transfer encrypted information to the point of sale device. The transfer of encrypted data makes this method more secure.
It is a fast and efficient method that most people continue to embrace. Data encryption eliminates the risk of cyber criminals intercepting sensitive customer information. The money transfer takes place instantly, and big brands are embracing this payment method.
7. Bank Transfers
Bank transfers are online payment methods that customers can perform. Customers can access online banking and make payments from their accounts.
This payment method works well for customers who cannot use their credit cards or prefer not to use their credit cards. Bank transfers are more detailed and provide safety as the account holder must prove their identity.
Before making payment, you are required to log in using your password. This is a security measure before you checkout.
8. Electronic Checks
An electronic check is also called an internet check, direct debit check, or online check. This online payment allows drawing money from a customer’s account to a merchant’s account.
It is a secure payment method that provides authentication using a public key. Some of the authentication methods include encryption, cryptography, and digital signatures.
An Automated Clearing House (ACH) regulates this direct deposit to the merchant’s account from the customer account. A customer authorizes the payment from their bank account. The process is similar to regular check payment.
9. Codes (EMV) Technology
EMV (Europay, Mastercard, Visa) technology uses codes for money transfer each time a transaction is made. The codes are temporary, and they are different for each transaction. The computer-generated codes make this method more secure compared to plastic money.
10. BNPL (Buy Now Pay Later)
This is an instant lending method that is popular among the younger generation. Consumers are allowed to shop without money and pay later.
The buy-now-and-pay-later scheme influences a customer’s choice. It determines the type of product a customer will buy. Businesses offer BNPL because they understand that payment is an important part of selling.
This service does not require credit. It offers convenience as shoppers are allowed to buy in installments. Providers of this service include Afterpay, Zip, Klarna, and Affirm.
Other big companies like Amazon, Apple, and PayPal also offer BNPL to their customers. BNLP is introducing a browser extension that will allow customers to download an app and buy anything online.
Technology in Digital Payment
Digital payment methods are possible using cutting-edge technology like machine learning and AI (Artificial Intelligence). These technological advancements make it possible for shoppers to use their mobile wallets or applications to transfer money from one account to another.
The technologies power digital payment methods that are convenient and fast. These payment methods also come with challenges such as security.
Machine Learning Technology
This technology helps to study and improve security and user experience. It enhances protection against fraud on online payment methods.
NFC (Near Field Communication) is a technology used for contactless payment methods. You can transfer money between two electronic devices that are close to each other.
Consumers transfer money using their smartphones, watches, and other electronic devices using contactless technology.
MST (Magnetic Secure Transmission)
This technology uses magnetic signals. Many payment processors can use it. A magnetic signal is transmitted from an electronic device like a mobile phone to a card reader.
Digital payment methods are here to stay. Payment methods will continue to transition from physical cash to more convenient, fast, and seamless online payments.
Cashless transactions hope to reduce the risks that might occur in handling physical cash and increase transparency in transactions. This makes digital payment a more accepted method of payment in many places.
Many trends will also emerge that will lead to more robust online transactions. Apps like square cash, Venmo, and Zelle will continue growing and shaping the digital payment system.
Different forms of fraud prevention methods will also emerge to ensure consumers are secure transacting online.