7 Types of Digital Payments to Consider Accepting in Your Business

It’s no question that the world has been digitally transformed — both in business and in life. We can hail a ride from a mobile app, and our transactions for all sorts of goods and services can be easily paid for from our phones. Physical wallets are phasing out, left behind in favor of digital wallets. All we need is a smartphone.

There’s no question that cashless payment solutions and digital payment adoption have accelerated over the last few years. In 2019, 77% of US consumers were using at least one type of digital payment system. By the end of 2020, that rose to 78%.

What has grown more significantly is the number of digital payment services consumers now use. Between 2019 and 2020, there was an 8% rise in the number of consumers increasing their options to two or more types of digital payments. That figure now stands at 58% of the US population.

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What Exactly Constitutes a Digital Payment?

Digital payments essentially make up any payment method that is done digitally. From a consumer’s perspective, that means any transaction that doesn’t need a physical credit card, debit card, prepaid card, or cheque. Mobile phone and online bank transfers, mobile wallet payments, in-app payments, online payments, QR code payments, and every other electronic payment qualify as a digital payment.

For merchants, digital payment methods include the ways in which payments are accepted. A consumer may use their physical credit card, for example, but if the point of sale system is digital — such as a mobile device instead of an analog cash register — this would be considered a digital payment.

Types of Digital Payment Methods

With more than three-quarters of US consumers performing digital transactions, the incentive for businesses to accept them is huge. Whether you’re an eCommerce business or a retailer, the smooth processing of digital payments will help win consumer confidence.

Here are the various types of digital payments to consider bringing on board.

1. Mobile point of sale (mPOS) systems

Mobile point of sale systems most commonly come to mind when discussing digital payments. mPOS systems work through smartphones, tablets, and other wireless devices to accept payments from anywhere.

Restaurants, retailers, and on the road service providers benefit the most from mPOS systems. They allow you to move with the device and accept payments wherever you need — both bank cards and mobile wallet payments.

What makes mobile POS systems unique?

Wireless devices allow business owners more flexibility. When social distancing came into place, those with mPOS devices could easily meet customers where they sit, limiting contact or gatherings of people at checkouts.

In addition, most mPOS software solutions come with features that allow businesses to email receipts, track sales, inventory and even set up loyalty programs that go straight through the system. It’s a more convenient, modern way to accept payments, enhance the customer experience, and boost productivity.

Setting up mPOS in your business

Mobile POS systems are easy to adopt. Solutions providers like Stax integrate with a range of solutions to enable merchants to go mobile. Plus, all Stax solutions accept mobile payments, such as Apple Pay, Google Pay, Samsung Pay, etc.

2. Contactless payments

Contactless payments is rapidly becoming table stakes for consumers and businesses alike. Thankfully, the technology was already there, and today most businesses accepting card payments are accepting contactless.

What makes contactless unique?

Contactless payments are powered by near-field communication (NFC) technology. This allows contactless-enabled cards to connect with the right devices to perform the transaction. This is the same technology that has paved the way for mobile wallets.

Accepting contactless payments in your business

Contactless payments can only be accepted by NFC-enabled devices. If you don’t already have one, you will have to buy one or get one on a plan. Same as with an older terminal, credit card transaction fees do apply, which may be a barrier for businesses that have been all-cash. But those who are used to accepting credit cards will find it almost the same. You just tap instead of insert or swipe.

Both credit cards and mobile wallets work with this technology. And the good news for mobile wallets is that providers like Apple Pay and Android Pay don’t charge for transactions. It’s just the fees through the payment processors that merchants will need to check.

NFC-enabled POS devices can be explored here.

3. Digital wallet payments

A digital wallet lets consumers make contactless payments, linked to their card information, without the need for a physical payment card. It is essentially a virtual Visa or Mastercard that sits in a mobile device.

Earlier in 2021, Finder.com found that roughly 150 million North Americans have used a digital wallet at one time or another. The reason? According to 98 million of that 150 million, it’s because they’re so unbelievably convenient.

What makes the digital wallet unique?

Digital wallet technology has become very easy for consumers to adopt and use. Nearly every smartphone comes with its own wallet that’s ready to be set up. The iPhone has Apple Pay, Samsung has Samsung Pay, and so on. This ease of use and setup has enabled digital wallet adoption to spread rapidly among consumers.

What’s great for merchants is that most in-person POS systems that allow contactless payments will accept mobile wallet payments.

Accepting mobile wallets in your business

If you are using a POS or mPOS system that accepts contactless payments, chances are your device will also be able to accept mobile wallet payments. To check, simply contact your payment processing company to confirm.

For new or upgraded solutions accepting mobile wallets, Stax has a suite of contactless solutions that have you covered.

4. Peer-to-peer digital payments

Venmo, PayPal, and even Facebook Messenger are examples of digital peer-to-peer payment solutions. These platforms allow users to search for other users and perform online transactions between themselves.

What makes peer-to-peer payments unique?

Peer-to-peer solutions link to the payer and payee’s bank account to withdraw and deposit funds, providing a way for users to easily perform a funds transfer. In most cases, mobile banking apps don’t make it easy to transfer money between users that don’t share the same bank account. Peer-to-peer solutions bridge this gap.

Accepting peer-to-peer payments in your business

Peer-to-peer solutions are not going to be viable for most businesses, but it does present an opportunity for micro and small businesses. If you run a market stall or a small services business, peer-to-peer payments could be a great way to start accepting payments before investing in the more costly payment gateways and solutions.

To set up peer-to-peer payments, you simply need to download whichever platform you want to use, connect your accounts, and you’re ready to transact.

5. Biometric authentication

Biometrics can seem a bit daunting, but most people are already using this technology to open their phones dozens of times each day. It’s essentially just a tool to verify identity, ensuring only the person who owns the bank account or digital wallet can be the one to authorize transactions through it. Today, most mobile wallets are already using biometric authentication, requiring the user to scan their fingerprint before the wallet can be opened.

For those that have enabled facial recognition, this too can be the authenticator to enable payments.

What makes biometric authentication unique?

Biometric authentication is one of the most secure ways to verify the identity of the person making the transaction. This makes fraudulent payments very difficult, making yet another case for why consumers are rapidly switching to mobile wallets.

Biometric authentication doesn’t stop at mobile wallets, though. There are many new services and startups in the works around the world that are using biometrics for payments. Schools in the UK have started using facial recognition to take payments in the lunch line. India has designed cards that simultaneously are tapped and take fingerprint biometrics to ensure the “tapper” is the person who owns the card.

Accepting biometric authenticated payments in your business

If you’re accepting mobile wallets, you’re already accepting biometrically authenticated payments. But if you want to really step into a totally wallet-free solution, consider looking into biometrics payment platforms. While these solutions aren’t as widespread as other solutions, it may be worth keeping an eye on biometric payment trends.

6. Social media payments

Small businesses doing big things through social media are harnessing the built-in mobile-commerce solutions that some social media platforms enable. Facebook, Instagram, and Pinterest business accounts all offer an in-built social shopping solution, including in-app purchases.

Any business selling online, promoting goods through social media should be aware of the ways these platforms can accept digital payments.

What makes social media payments unique?

It’s very common these days for brands to build entirely on social media. Some may even start as influencers, gaining a great following and venturing into their own product lines, all within the social media ecosystem.

As anyone with a website knows, building web traffic requires a lot of work. If you have a social media platform that’s already thriving, why take them away from that platform when you could instead engage with and accept payment from them there?
Accepting social media payments for your business

The best way to accept social media payments depends on the platform. Platforms like Facebook, Instagram, and Pinterest all have unique social selling features, so look into your account settings to learn how to start accepting payments.

7. Crypto payments

No digital payments list would be complete without discussing cryptocurrency. Cryptocurrency has gained its foothold in the mainstream, but it is still largely unknown to many, particularly when it comes to accepting crypto as a valid form of payment.

What makes cryptocurrency unique?

Cryptocurrency is a decentralized currency that is not managed by any financial institution. It is run on the blockchain, a totally secure digital infrastructure that makes it immune to fraud and theft.

Businesses, at this point, don’t get a lot of direct benefits from cryptocurrency. Regulation is in the works, so it’s not a way to get out of taxes (as it was once purported to be), but with so many consumers now holding cryptocurrency, accepting it is a way to ensure you’re ready to take whatever payment consumers want to transact with.

Accepting crypto payments in your business

There are a few ways merchants service  provider can accept cryptocurrency, covering both online and in-person payment options:

  • Cryptocurrency POS terminals. A variety of providers are now accepting cryptocurrency in the same way they would accept a mobile wallet or contactless card payment.
  • Personal crypto-wallets. Everyone using crypto will have a wallet where they store their currency. Merchants could set one up to allow customers to make peer-to-peer style transfers for goods.
  • Crypto payment plugins. eCommerce sites have a range of options in the form of app and plugins that enable businesses to accept cryptocurrency.

Keeping Up with the Future of Digital Payments

Not every business owner needs to rush out and set themselves up to accept all of the payment types above. However, it helps to be aware of them so you can be ready to adapt when needed.

It’s also beneficial to choose a payment processor that supports today’s most widely used payment methods.

Stax has a range of solutions, from hardware to software and payment processing, so you are ready to take on the digital world.

Get in touch to learn more about how we can help you keep up in the realm of payment processing.

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