Without question, the COVID-19 pandemic completely turned the payments industry on its head. Driving a massive surge in digital payments, unlike the world has ever seen.
Many businesses were unprepared and quickly succumbed to the widespread shutdowns of brick-and-mortar businesses and social distancing measures nationwide. Those who fared better were already seeing an increase in digital payments and leaned into the pandemic’s challenges, pivoting their business to operate fully online.
The recent Back To Business Study by Visa® discovered that as much as 65% of business customers want to keep using contactless payments well after the pandemic. What businesses have found is that they have profited generously and want to continue to incorporate this strategy to continue operations.
Consumers Demanding More Digital Payments
According to a study by Grand View Research, the worldwide digital payment market size was worth $68.61 billion in 2021. It is also expected to grow at a compound annual growth rate or (CAGR) of 20.5% from 2022 to 2030. What has mainly driven market growth is customer desire for “real-time payments”.
The pandemic has also affected the way consumers shop, resulting in higher than normal online sales as well as a boost in “online payment solutions.” Consumers worldwide switched from “offline shopping” to online shopping during the pandemic.
A media organization, Digital Commerce 360, reported that online sales in the U.S. were valued at almost $204.62 billion during the third quarter of 2021. This was an increase of 6.8% in comparison to the third quarter, the prior year in 2020. What has pushed the demand for online shopping was customer concerns about crowded places and avoiding physical contact during the pandemic.
The Time To Adopt Digital Payments Is Now
Now that we have seen the impact of the pandemic and the proclivity of consumers toward real-time payments, it is fair to say that the “digitization of payment processes” will not only positively impact your bottom line, but it could help you stay in business for the long haul.
Here are 5 more reasons why embracing digital payments is more critical than ever.
1. Faster payment processing time
For any business, faster payments mean that you can better manage all of your cash flow in real time. You are able to see your payments clear and get settled quickly.
By its very nature, digital payments process faster. In fact, a report produced by Deloitte, PayTech Revolution, indicated that digital payments were found to be over 50% faster to process as opposed to “traditional purchase order processing.”
2. Lower administrative costs
Digital payments are more cost-efficient since they do away with manual labor that can ultimately result in human error. Add to that the cost savings that come from not having to print or mail checks or invoices, and your overall costs are slashed even further. Less cost translates into more growth for your bottom line.
3. Enhanced cash flow
With digital payments, business owners get an instant, panoramic view of their financial health, which enables them to make quick financial decisions, based on real-time data. Since digital payments considerably improve cash flow, business owners are better equipped to analyze their financial information to gain greater, more accurate insights.
4. Better relationships with customers
It has been proven that customers will frequent those businesses that offer their preferred form of payment. And with cash becoming a less prominent method of payment, other forms have become more of the norm, such as digital wallets, ACH, and of course, debit and credit cards. These forms of payment are preferred as they are faster and more convenient for customers.
In the aforementioned study by Visa, almost 72 percent of the businesses surveyed anticipate that their customers will prefer digital payments in the near future.
It was found that both Baby Boomers and Millennials led the way in digital payment use. The Gen Z demographic is considered the “early adopters” within the digital commerce space.
5. Approval process is more efficient
When a customer first receives their invoice, they need to ensure that all charges are correct before they authorize an approval. This can be a long, drawn-out process, causing a delay before a business can ultimately be paid.
However, when “digital payment systems” are used, businesses can establish self-service portals, where customers can have access to their invoices and make payments. If there are any questions or concerns, these comments can be entered directly onto the portal, where they can be seen and addressed in real time.
Digital Payments Are Here To Stay
Although the COVID-19 pandemic was a major catalyst that catapulted the use of digital payments on a worldwide scale, it is not a trend that will be fading anytime soon. On the contrary, most consumers have expressed their desire to continue using digital payments, long after the pandemic has subsided.
As mentioned in this article, businesses have many positive reasons to adopt digital payments as part of their business strategy. Not only will they be able to get paid faster and more securely, but they will also be able to manage their cash flow.
By adopting and embracing digital payments, businesses better position themselves for present as well as future success.