The complete guide to digital payments for local businesses

Introduction

In a world that is increasingly digital, it's no surprise that digital payment processing is on the rise. While cash may still be king in some places, it's never been more convenient to pay through digital payment methods than now. Why? Because with so many people relying on smartphones and other devices to stay connected, it only makes sense that we would also use them to make and receive payments. 

A study from McKinsey on digital payments found that 82% of Americans used digital payments last year. The transition to digital payments has been gradually increasing for a while, but the pandemic caused a rapid acceleration in this trend.

Digital payments offer some advantages over traditional methods like cash and checks:

• Faster and more efficient
• Available anywhere and any time
• More secure with encryption that protects sensitive information

Yet, as a business owner, deciding which digital payment methods are best for your business can be daunting. In this guide, we’ll break down all the types of digital payments, including their advantages and disadvantages, to help you decide.

Back to the basics 

Before we get into all the types of digital payment methods, let’s talk about what we mean by digital payment. 

Digital payments are made electronically, from one account to another, using digital devices like smartphones, tablets, point of sale (POS), or computers. They can also be called electronic payments. This includes bank transfers, mobile money, and payment cards like credit and debit cards.

Here are a few digital payment examples: 

• Sending a payment through a smartphone
• Paying a bill online
• Using a mobile wallet to pay for groceries

Types of digital payments and their advantages and disadvantages

Here’s a quick view of the most popular types of digital payments: 

• Online electronic payment systems (includes: electronic bank transfers, eChecks, and wire transfers)
• Contactless payments
• Mobile payment apps
• Mobile wallets (also known as digital wallets and eWallets)
• Virtual payment cards (virtual card, digital card, and single-use card)
• Scan to pay (also known as QR code payment)
• Buy now, pay later
• Cryptocurrencies

Download the guide to get a better idea of which methods will work best for your business.