The best online payment methods

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Are we living a last decade using cash as a payment method? Impossible to imagine it yet. What we do know is that there are possibilities beyond paper currency and credit cards. We are in a moment of coexistence between traditional payment methods and the new ones that rapidly make their way up to gaining more and more users every day.

Due to the technological changes and globalization, the number of payment methods is constantly in a process of growth. Therefore, before you choose a right one for your business, take a look at each one of them, since not all businesses have the same needs.

The evolution of payment methods: Past, Present and Future.

We are a part of transit period, times when the payment methods have gone through their biggest evolution since the ages of its creation. Therefore, picturing a profile of our potential client, we have to take into consideration that he might still use the traditional way of payment, which is cash, but at the same time, due to the technological changes, he is forced to get familiar with new payment methods for some particular needs, for example to pay his utility bills through online bank. For this reason, when choosing a method to accept payments from our clients, we have to offer as many options as possible.

The new payment methods are advancing, although at different speed in each country and continent. The percentage of population who has an excess to the internet, banking infrastructure, economic situation and the level of education of citizens are the main factors that affect the growth of use of a new particular payment method.

In China, for example, it is very common to pay with the mobile phone, while the use of credit or debit cards is extremely low and only foreigners who visit this country still carry their “plastics” in the wallets. In the US, the evolution of payment methods has reached the level of creating a voice pay system. Latin America also advances in the implementation of electronic payment methods, following the global trend.

Europe continues in the “cash or card” binomial mode, although with important differences between countries. Spain is in the queue of the application of the most innovative payment methods (2016 was the first year in which credit card payment exceeded cash), while northern countries are moving faster.

Should I pay in cash, with credit card or what?

To simplify the variety of available payment methods we can divide them in two large blocks.

  • Paper payment methods: Cash, checks, bank commercial paper, all payment currencies that can be held physically in your hand. Although, these payment methods are still used commonly, its role in international commerce and financial growth is less relevant.
  • Electronic payment methods: The category that has gone through more changes and, therefore, will be analyzed in deep below.

Smartphone payments – the protagonist of payment methods evolution.

Do you use your smartphone to pay in the supermarkets? Or maybe you use an application to share the costs of a dinner with your friends? The confidence in the usage of new technologies is growing rapidly and it is easy to guess that in a few years the panorama of distribution of payment methods will change completely.

Smartphone is the most used device, far exceeding the PC and tablet. Year after year it has been "devouring" the market and bringing together functionalities, and that is why it has become an essential tool of our daily life. Users are very comfortable with this device, and that is why it plays a very important role in the revolution payment methods sector.

Payment methods trends

Online payments services sector is relatively new and therefore, its trends are subject to constant changings. It is also a scenario in which the banks, traditional financial managers, compete with so-called fintech or payment entities, technology-based companies that offer new and different solutions focused on the digitalization of the sector. The main trends in payment methods are:

Contactless payments

Contactless payments is one of the technologies that is achieving greater settlement. By contactless we mean a credit and debit card with a chip, which for some years now do not need to go through the magnetic strip of the payment terminal.

Another possibility of contactless payment is to use our smartphone with NFC (Near Field Communication). This protocol is already incorporated in most terminals and allows us to perform operations (making payments is only one possibility) simply by swinging our phone next to a receiving terminal. We recommend this method to accept payments for start-ups who can benefit from a very low risk of possible credit card fraud.

Online payments

Online payments or E-wallets are becoming a very common method of payment among online shoppers. E-wallets are virtual purses (wallets) that are used to perform electronic transactions. Through the payment gateway we can transfer and then save money in our non-physical-wallet and use it later for purchases in online stores.

What are the advantages of e-wallets? The main advantage of e-wallet is that once we create an account linked to our credit card, we will not have to share banking details with any provider. We will only be asked to introduce our PIN number and voila, the payment is made. Another point in favor of e-wallet is that it can be accessed from your mobile phone application.

Peer to peer (P2P) payments

Speaking about Peer to Peer payments, we could also include Business to Consumer (B2C) transactions, because the concept behind these two methods of payment is basically the same: make mobile payments accepted by both parties using smartphone applications.

In recent years the number of applications developed for Peer to Peer payments has grown significantly and although they are not that common yet, the number of users who register each day is increasing. How does this technology work? Peer to Peer payment applications require a user to register and, as a result, the system creates a link between mobile phone number and a bank account. When we log in, from our account we can send money to another person simply by entering their phone number or e-mail.

Giant international corporations, such as Google, Amazon and PayPal have launched their own platforms to make and accept peer to peer payments with the mobile technology. However, traditional banking entities, which are struggling to maintain their position in a dizzying market, are also promoting their own applications, trying to propose conditions that give the rookie user more confidence.

If you have more questions regarding new payment methods, please contact us and our experts will advise you on latest technological trends. We can help you!