When you use a card, smartwatch, or any other payment tool to run a financial transaction, you’re basically doing a digital payment. Let’s define this notion first.
The notion and types of digital payments
Digital payment is an offline or online payment solution, which is used to make a financial transaction without the need to go to a bank. Basically, if you do not visit a bank, do not engage a bank worker to complete a specific financial transaction, and do not fulfill any paper order to make a transaction, then you’re doing a digital payment (DP).
There are such types of DP means:
- Chip card, credit or debit
- Magnet stripe card, credit or debit
- Phone-connected POS (a device connected to a phone to turn it into POS)
- Regular POS
- Online payment bank interface
- Website online payment interface.
All of the mentioned above use software to make a transaction and hardware, which is where this software works. It’s just the principle of the usage of the hardware differs: it can play a passive or active role in the process of payment. It is passive when you simply use a device to access some website to make a payment by pressing buttons and keys on a keyboard. And it is active when you do not enter anything via this hardware’s keyboard but use it to accept the means of payment or turn it into the means of payment itself for this particular transaction.
An example of passive hardware: a PC that you use to open your bank account and, through typing and clicking, initiate and complete the financial transaction. Here, you type to whom to send the money and their account and receiver’s requisites.
An example of active hardware: your smartwatch, which is connected to the e-wallet, which you tap to the POS terminal that connects to it through the NFC or MST technology. Here, you don’t type anything and simply authorize the execution of an operation by tapping with your smartwatch.
How digital payments business facilitates the development of the world
First of all, the usage of DP significantly facilitates and speeds up the execution of financial transactions. Basically, thanks to the introduction of the DP notion, the business industry has significantly gained because now clients are given a chance to pay for the services and goods on their own, not involving the personnel of banks and the business entities in that.
Not only it is heavily cool for regular business, which sells something but also it is convenient for routine and regular payments, like payments for utilities. Establishing a regular payment for anything only once, you let it execute once and for all — until you physically stop it when you don’t need it anymore. You can even forget about that payment and simply enjoy that your mobile account is replenished on time or that your kindergarten bill is paid every month — without your involvement.
Routine payments, which you do on your own, via a PC/smartphone/smartwatch, also become faster, cheaper, and more convenient for modern payers, as they can do them when they have free time and desire, without the need to visit banks.
Digital payment services: convenience and contactless transactions
All sorts of DPs are designed for the people’s convenience. Today, one can choose the preferred form of such a payment, as they become widespread everywhere, offline and especially online.
You don’t have to carry a bank card with you anymore — opt for a smartphone, smartwatch, or even biometric authentication. E-money makes it convenient to pay online through not just e-cash that’s stored in a bank but also via tonnes of various e-wallets and cryptocurrencies. That’s feasible thanks to payment companies and intermediaries, such as Samsung, Apple, Google, PayPal, Zelle, Venmo, Cash App, and thousands of others. The payment mediators heavily vary across the countries and legislations, though.
Virtual IBAN has also made foreign transactions far more secure and convenient for businesses. Services like Monneo seamlessly connect merchants and businesses with global, digital payments.
Contactless payments are convenient for those, who hate to give their bank card to someone other’s hands, even for a second. That also decreases the fraud chances. And opens more ways to stop entering your PIN code and verifying a transaction completion with your physical signature on some paper slip (because, you know, you press the buttons of the POS terminal or they give you a pen that has been touched by ten thousand people before you, many of whom have bacteria, germs, fungi, feces particles, and worms on their skin, which is simply devastating for us, hygiene-sought-after people). Contactless payment is cool in our post-pandemic world, where many have finally become clearer (at least for a couple of years).
What is also cool is that a large part of DPs is touch-free, which means, you do not interact with any person or any foreign for you surface when you pay for something. And, thank god, as contactless digital payments will progress, we all will contact any objects and people increasingly less, which is for the good of humankind.