Note: Occasionally a client may rewrite work or change it enough that I no longer feel it accurately represents the work that I did. In those cases, I keep my version here, so that you can see what my work looks like, and so that I don’t misrepresent work as mine that wasn’t. This piece was accepted and paid for by Testlio.com and edited heavily.
Money has been getting gradually digitized for decades now, and the idea of electronic transfer of funds is nothing new. But over the last five to ten years, internet technology and e-commerce have made various forms of digital payment common, and since the pandemic, these trends have sped up dramatically. In fact, in developing economies, about 40% of people who made a digital transaction were doing it for the first time.
This global adoption of digital payment represents something new and distinct simple credit card entry. Although both technically represent digital payment – the exchange of value via an electronic means without an exchange of cash – modern digital payment technology goes beyond credit cards, allowing a variety of methods online, connected to bank accounts or credit cards, and even including cryptocurrency.
Digital Payment Industry History
Online payments go back to the mid 1990’s, with the Stanford Federal Credit Union generally recognized as the first to offer online payments as early as 1994. PayPal wasn’t far behind, along with contemporary competitors who were either absorbed or beaten out by the now ubiquitous online banking solution.
Now, the digital payments industry is expected to reach a value of over $15 trillion by 2027, representing a doubling from 2021. The reason for this rise is clear – digital payments provide a lot for both consumers and companies:
- Convenience – Digital wallets and other forms of payment can draw directly from bank or credit card accounts, without having to dig out a physical credit card or remember credit card data.
- Increased Sales – Convenience for customers means better sales conversion rates for companies, meaning higher overall revenue and better margins.
- Security – Digital card solutions utilizing tokenization and high-security encryption reduce the risk of fraud and identity theft, meaning they’re safer to use online than traditional credit cards. This in turn reduces chargebacks and investigations that cost companies money.
- Control – Cardholders and issuers alike can put tight, granular control on what payment methods can be used for, set limits, and track transactions, giving customers better control over their spending and sellers greater confidence in sales.
Digital Payment Types
Digital payments include a variety of methods and technologies, all of which boil down to transferring financial value electronically. Most of those methods involve the use of the internet. Some of the most common include:
- Online ePayments Systems like bank transfers, eChecks, and wire transfers represent some of the first digital payment solutions.
- Mobile Payment Apps such as Venmo, PayPal, Boleto, or Stripe make payments easy to collect by businesses large and small, and even allow individuals to exchange money easily, without having to use cash.
- Contactless Payment methods like NFC and MST technology use near-field communication or magnetic security transmission to take payments with tap-enabled cards or digital wallets on smartphones or even smartwatches.
- Digital Wallets such as Apple Pay, Google Pay, or Samsung Pay can gather together various bank debit card, prepaid, or credit card resources into one secure account, locked by password or even biometrics, so customers can easily pay and control where money is drawn from.
- Cryptocurrencies like Bitcoin, Litecoin, or Dogecoin go outside of traditional financial institutions entirely, creating entirely new currencies that aren’t tied to countries or banks.
With the exception of cryptocurrency, all of these methods connect directly to bank accounts and/or credit cards, using encrypted technologies to transfer traditional currency from customer to vendor through third-party payment gateways.
Digital Payment Security
One of the reasons digital payments have exploded in the last decade is because of technological leaps and bounds when it comes to security, speed, and compliance. When it comes to sales transactions, customers need to know their financial information is safe and they need smooth functioning. Any hiccups erode trust and cause customers to shy away. Not only that, customers need to know that you’re complying with all appropriate rules and regulations around online payments, so they know they’re safe in case of any dispute and their data isn’t being used inappropriately.
This means proper testing and solid payment platforms are critical for your business. With Testlio’s SSPA-Approved software platform, security protocols, and processes proven across over 6.5 million tests, you can be confident you’ve got the right partner for your payment platform. To learn more or get started, contact us today to request your free demo.