Electronic Payments: Best Trends and Practices
Customers make payments millions of times daily using their debit cards, electronic payments, checks or other payment methods. Customers have grown comfortable with the use of credit cards as they are very convenient to use and accepted widely as a way to pay for most transactions.
Life of ePayments
In today’s world, it is very hard to imagine a world without credit cards where customers paid for goods and services strictly with cash. According to recent data, the payments market grew from 20.9 billion transactions worth a reported $8.9 trillion. In the POS (point-of-sale) category, here are some of the predominant trends:
- Consumers continue to seek speed, convenience and rewards which will continue to drive the trends in POS including card transactions and e-commerce.
- Cash is still the predominant payment method among customers although the numbers point to a downward trend for cash as a payment method for transactions.
- Consumers tend to use electronic payments for remote transactions more than commercial entities that are still using checks and paper items as payment methods.
The Transition Begins
The use of cash as a payment method has declined 30% since 2013 even though it is considered the most widely used payment method among consumers. Credit and debit cards are the next most popular payment methods. Even though prepaid transactions and contactless payments are only a small portion of POS volume, they are the fastest growing method of POS transaction.
The payments market continues its long-term transition to electronic transactions with more than 77% of all payments being made electronically. Segments that continue to drive growth in the electronic payments market include online transfers, debit and credits cards and prepaid transactions. Even with the growth of electronic transactions, paper forms of payment and cash will still remain a popular payment method.
The Future of ePayments
The future of the payment processing industry will be exciting to watch. Look for a continued trend of increased use of mobile payments, wearable wallets such as the Apple Watch. In payment processing, we’ll see innovations toward point-of-sale terminals along with wireless and e-commerce payment as well as integrated check-outs that allow customers to check out using their iPhone or other mobile applications.
While there are still some hurdles to face in the area of mobile payments such as consumers loyalty to traditional payment methods such as checks and credit cards, loyalty rewards are drawing more customers in to using mobile payments as a preferred payment method. In fact, the popularity of contactless payments continues to increase and you can look for all major credit organizations to jump onboard with their own new innovative payment applications.
The ePayment Advantage
In today’s competitive business environment, businesses are seeking ways to become more cost efficient. One way of decreasing costs is by addressing the inefficiencies of legacy payment systems. In fact, a manual processed payment transaction costs approximately 44% more than one processed through an automated system. There are some challenges businesses face in fulling adopting electronic payments including integration of existing accounting systems with new payment software.
While most businesses are still paying almost half their invoices through paper checks, there are some distinct advantages to using electronic payment methods including discounted prices for paying early and other types of discounts from suppliers.
The bottom line is this—ePayments benefit businesses and help account teams effectively manage payment terms. This in turn, frees up working capital and allows companies to receive vendor discounts in exchange for early payments. In addition, Accounts Payable Automation are also a more secure way of making payments. Your suppliers will also benefit with an increase in immediate cash flow, no complicated contracts to complete as well as freeing up capital for new investments.