Digital Payment Services: The Importance of Fast Payments
Coins, cash, and paper checks are becoming a thing of the past. While they were falling out of fashion pre-COVID, the pandemic has accelerated the shift towards digital payments. An estimated 78% of Americans used digital payment methods to pay for transactions in 2020. More and more people are going cashless in a post-pandemic world.
The growth of digital payments is not a pandemic fad. Consumers love the ease and speed of digital payment services, making this trend here to stay. Offering quick payment services is no longer a luxury but a necessity in today’s digital economy. In this post, SeamlessChex will describe the importance of fast digital payments and explain why they’re essential for your business.
What are Digital Payments?
Digital payments are the transfer of funds from one bank account to another using electronic devices and communication technologies. Cashless, paperless, and contactless transactions are examples of digital payments. Digital payment services enable 24/7, real-time transactions between banks and the credit card network to speed up the process of transferring money.
Some of the most popular fast digital payments include:
- Debit/prepaid/credit cards
- Electronic checks/ACH Payments
- Mobile payments
- Bank wire transfers
- Contactless payments
How Do Fast Digital Payments Work?
As we discussed above, there are many different types of digital payment methods. Each payment type employs its own digital infrastructure to facilitate quick bank-to-bank transfers. While the financial technologies used are complicated, you will not be involved in the behind-the-scenes operations. A quick payment service provider will handle all the work for you.
Once you sign up with a digital payment service company like SeamlessChex, processing electronic transactions will become a quick and simple procedure. Here’s a basic rundown of how digital payments are processed:
- At the checkout counter or page, the payer selects their method of payment via a POS terminal or online payment portal
- Payment data is encrypted and sent securely to the digital payment processor
- The processor forwards the financial details to the payer’s bank and credit card company to authenticate the information
- The payer’s bank checks financial details and account balance to approve or decline the transaction
- If payment data and sufficient balance are verified, the payer’s bank approves the transaction and sends the response to the digital payment service provider
- The payment provider informs both payee and payer that the transaction has been authorized to finalize the sale
- Quick payment services perform all the steps above in less than two seconds
- After fulfilling the sale, the payment service requests the payer’s bank to transfer transaction funds to the payee’s account
- The payer’s bank sends the funds to the payee’s bank
- The payee’s bank deposits the money into the recipient’s merchant or business account
The Importance of Speed in Payments
Americans are abandoning inefficient payment methods and for good reason. Constant visits to banks and ATMs… cash handling and processing… writing and mailing paper checks ⏤ old-fashioned payment methods are a hassle to deal with and waste everyone’s valuable time. Modern consumers are turning to digital payment services because of their speed and efficiency.
More than three-quarters of Americans now prefer to use digital payment methods to buy goods and services. In a survey conducted by FinTech company Fiserv, 71% of people said they prefer digital transactions because they are faster than old payment options. Processing fast payments not only helps you increase customer satisfaction but also delivers plenty of other benefits for your business.
The Benefits of Quick Payment Services
Despite the omnipresence of digital payment services, many businesses are still using old-school payment methods to make transactions. Some businesses think working with cash and paper checks helps them save money by avoiding electronic payment processing fees. Contrary to this myth, digital payment processing is cheaper than handling cash/checks and improves business profitability.
Here’s how fast digital payments can benefit your business:
Faster Funds Availability
More than a third of small businesses have cash flow issues and are unable to pay their loans, vendors, and employees on time. Non-digital payments such as money orders and paper checks can take weeks to arrive by mail, exacerbating cash flow problems. Digital payment services like SeamlessChex make funds available within a few days to improve your finances.
Reduce Processing Costs
Processing cash, paper checks, and money orders are a financial drain. Cash handling costs merchants between 4.7% to 15.3% per transaction while processing 500 paper checks per month can set you back $24,000 a year in labor costs and procedural expenses. Digital transactions can reduce your payment processing costs by 57%.
Non-digital payments are manual and time-consuming to handle. You can save a significant amount of time by adopting digital payment services. It takes 542 hours to process $100,000 in non-digital payments, versus 189 hours to process the same amount in digital transactions. Quick payment services can help small businesses save 353 hours for every $100,000 processed.
Increase Operational Efficiency
Digital payments simplify and speed up financial transactions, increasing operational efficiency. Many quick payment providers like SeamlessChex offer intuitive platforms that easily integrate with all your existing systems. You can connect your banks, vendors, employees, and customers into one seamless business ecosystem to streamline financial operations.
The majority of American consumers prefer quick and convenient payment methods. Therefore, adopting fast digital payment services will help you boost sales. In a study conducted by Visa, 74% of small and midsize businesses (SMBs) reported an increase in revenue after accepting digital payments.
Process Fast Digital Payments With SeamlessChex
Slow payment methods not only keep away customers but are also a financial burden on your business. Quick payment services can make your business more efficient and profitable. If you want to send and receive fast payments, SeamlessChex can help. Contact us now to consult with our experts and learn how you can process fast digital payments today.