Reasons your Small Business Should Accept Digital Payments

The world has been seeing a shift in payment method from physical to digital mode in recent years. So before we dive in further, various questions may arise in one's mind, such as,' What are digital payments?' or 'What is a digital payments system?'

The answer to these questions is: Digital payments are the transfer of value or money from one bank account to another using digital devices such as a mobile phone, computer, etc. Internet banking, UPI, mobile wallets, point of sale, and bank card payment are few types of digital payment methods.

One may wonder why there is a necessity for digital payment if the transactions can be done by cash. So to put it simply, the most crucial aspect of digital payments is that one does not need to rush to the bank every single time he/she has to make a payment.

Types of Digital Payments

After the Digital India program was launched, there are a total of ten methods of digital payment available right now. Some of them existed way before the program was launched, while others have recently come into existence.

• Banking cards

Banking cards have been in use since 1981 when Andhra Bank first launched credit cards in India. This model is popular while making both online and physical transactions.

• Unstructured Supplementary Service Data

This mode was launched in India to helps those who don't have access to both banking and internet facilities as transactions can be made by dialling *99#

• AEPS

AEPS stands for Aadhaar Enabled Payment System. This mode of payment was initiated to increase the influence of the Aadhaar. This mode can be used to transfer money from one Aadhaar linked bank account to another.

• Mobile Wallets

Here you can carry money in digital format. This is done by linking bank accounts to mobile wallets to enable transactions.

• Prepaid Cards

These are debit cards that are usually preloaded for single use. These cards are issued by banks.

• Internet banking

Also known as online banking, it allows the customer of a specific bank to transfer money for various transactions with the help of the bank's website. It also provides other facilities like opening or closing an account.

• UPI

An abbreviation of Unified Payments Interface, it brings several bank accounts into a single application. In this digital payment system, a person holding any bank account can transfer money or receive money through a UPI-based app.

• Mobile banking

It refers to the act of conducting banking activities through mobile devices like smartphones.

• PoS Terminals

It is a location where sales usually take place. We can observe such PoS at the checkout counters in malls and supermarkets. Debit cards, credit cards, and QR codes are the commonly used modes here.

• Micro ATMs

It is a device usually used by local shops and store owners to deliver essential banking services for instant transactions.

Digital payments are fast and seamless, still simple enough to be done by the common people. Still, there are small businesses that refuse to accept digital payments as they are not convinced enough. So in this blog, we will talk about all the advantages of digital payments and why they can be game-changing for small businesses.

1. Instant payment transfer

Digital payments are way faster than the old cheque or cash method, especially if there is an urgent need for funds and one needs to send them to some living far away. Digital payments make the fund transfer quick as location and time are not constraints. Therefore one can easily make payments irrespective of time and place.

If you are a small business owner, providing digital payment options can help level up your business. Having an online presence along with digital payment options can increase the reach of your business as customers from all over the country or the globe can have a look at your business and make instant payments while buying your products. Digital payments can be done by various methods such as UPI, internet banking, PayPal, etc.

2. Low chances of thievery

Accepting cash from customers also has a risk of getting stolen because the money has to be stored somewhere physically. This method is not completely foolproof as one can't be vigilant 24×7.

This risk can be decreased if one is using a secure digital payment method. Providing a digital payment method will transfer the complete funds directly to your bank account. One doesn't need to keep a record of all the transactions as the digital payments apps give you a record of all the payments. Therefore security against theft is one of the most significant benefits of digital payment.

3. Contactless

Digital payments have become essential after 2020. People need to avoid human touch in every possible way to protect themselves from the coronavirus. This has led to an increase in the use of contactless payments. The QR code is one such type of digital payment where the payee needs to open a digital payments app and use the scanner to scan the business' QR code.

4. Transparency

Transparency in payments is a vital factor when payments are concerned. Therefore when digital payment methods are used, it becomes essential for a business owner to maintain transparency. In the case of digital payments, a business owner doesn't have to worry about payment records. Also, one can provide all the payment details to the customer beforehand to avoid confusion while making payment.

5. No Processing Costs

Cash payments may not require extra processing fees, but physical stores may cost the customers some extra amount. Also, if one avoids cash and uses checks to pay, then the postage services may charge unnecessary fees.

While in the case of digital payment systems, a person doesn't have to incur heavy processing fees. The only requirement for digital payment services is a fixed subscription fee which is to be paid to the service provider.

6. Customer Convenience

Digital payments help to provide better and more convenient payment services. A mobile payment platform securely stores the customer’s credit and debit card details to make payments for a product conveniently. Therefore if you set up recurring billing and automate the collection of payments, the process becomes effortless.

Another example of the benefits of digital payments is that if one has to make a significant purchase such as home appliances or a vehicle, he/she can make the big payment without any waste of time. While going forward to buying such products, one never knows how much money may be required. If we talk about cheque books, there is a chance of losing the cheque book entirely. Therefore it is much easier to use mobile payment apps that help to make such big payments.

Offering such convenience to customers is good for businesses as sometimes the customers who leave to get cash don't tend to return. Hence digital payments are a great way to boost sales.

7. Better Payment Security

The final and most convincing reason why small businesses must accept digital payments is better payment security. The biggest problem of carrying cash in any amount is that it always has a chance of getting stolen. Another thing to be kept in mind is that if someone by any chance knows that you frequently carry cash, you can become prey and be hurt by criminals.  While using checks, there may arise a ton of check fraud problems too. Finding out the issue and fixing it may take weeks or more. It might also result in cancelling the sale of a product whose transaction you may think was already done.

Another security provided while digital payments are that the payment processors first verify identities and ensure a sufficient amount in the bank account before your businesses accept the transaction. To avoid all such security issues, you can encourage digital payments instead of cash or check whenever needed to avoid all such security issues.

Conclusion

So these were some advantages of cashless transactions and digital payments, which can level up your small businesses. Accept the change, accept digital payments.

Also read:

1) E-Commerce Tools Every Small Business Needs
2) The Rise of Ecommerce over the years
3) E-commerce Business Ideas: What Should You Sell?
4) E-Commerce Customer Service – 10 Best Practices [guide]
5) OkCredit: Simple, Paperless & Secure solution for businesses

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FAQs

Q. What is mobile payment?

Ans. Mobile payment is a payment that can be made with the help of electronic devices like smartphones, tablets, and wearables.

Q. What is a digital wallet?

Ans. A digital wallet helps a person to make a transaction while on the go.

Q. What are the apps that can be used for digital payments?

Ans. There are many Digital payment apps such as Google pay, Phonepe, etc.

Q. How can I save myself from cyber fraud?

Ans. To save yourself from cybercrimes, understand what a one-time password is and never share such passwords with anyone.