The changing business landscape means a change in how businesses handle their transactions. Amongst the biggest changes in recent times is in handling payments.
The way people pay for goods and services has changed over the years. We’ve moved from cash and checks to cards, and now onto a different approach.
Traditional electronic funds transfer at point of sale or EFTPOS machines were once the standard for retail transactions. However, these systems had their limits, such as the need for physical machines and cards. And for small businesses, it meant additional expenses.
These limitations led to the search for better options—the digital methods.
As you can see, each step has moved businesses closer to a cashless and cardless industry. In particular, it gave rise to smarter payment methods.
Keep reading because we’ll be diving deep into this topic in this article. We’ll also focus on what this shift means for businesses, as well as the benefits and challenges it brings.
From Cash to Digital
For decades, EFTPOS machines have been the norm in business. They offer a reliable method for card-based transactions. Many Australians preferred this due to convenience.
But the advent of digital payments is setting a new standard. It’s offering people greater flexibility and efficiency than cards.
Interestingly, the Reserve Bank of Australia reported a decline in cash transactions, from 47% in 2013 to 13% in 2022. Meanwhile, there’s a rising adoption of contactless and mobile payment technologies.
This trend signals a clear shift in consumer preferences when making payments. One that calls for quick and seamless payments through smartphones and other digital devices.
Technologies Driving the Change
The shift to digital payments enhances the transaction process for both businesses and consumers.
Contactless payment technologies allow consumers to make more efficient transactions. They simply must tap their mobile device on a reader to be charged accordingly.
Meanwhile, businesses experience convenience and a faster way to collect payments. Going cashless and cardless means offering seamless transactions. And this boosts their overall customer experience.
At the core of the shift to digital payments are advanced technologies such as QR codes, PayID, and digital wallets.
QR Codes: Simple and Secure Transactions
Once a niche technology, QR codes were mainly used for tracking parts and equipment in industrial settings. Now, they have a new application in business. WifiTalents even reports that mobile payments using QR codes are projected to exceed $3 trillion globally by 2025.
The pandemic accelerated the adoption of QR codes for payments.
At the peak of the pandemic, businesses had to look for contactless payment solutions to reduce virus transmission risks. QR codes also offered them a cost-effective way to do transactions. This is mainly because it doesn’t require expensive hardware.
Its proliferation was due to customers appreciating the simplicity of the whole process.
They can complete transactions by simply scanning the QR code with their smartphone. The integration with mobile banking apps means payments get debited from their bank accounts.
Ultimately, digital payments through QR codes offer a contactless experience with enhanced safety and convenience.
PayID: Streamlining Bank Transfers
A game-changer when it comes to bank transfers is PayID. Linked to the New Payments Platform, PayID allows users to make real-time payments using just their phone numbers or email addresses.
As of October 2022, there were 12.7 million registered users of PayID. And according to the New Payments Platform Australia (NPPA), 47% of PayID users use this payment method weekly. Meanwhile, 68% of PayID users said that they would use it more often if offered as a payment option by businesses.
Aside from speeding up transactions, this digital payment method also reduces the errors associated with entering long bank account numbers. As for businesses, the immediate transfer of funds enabled by PayID can improve cash flow. It also helps reduce the administrative burden of managing payments.
Digital Wallet Services
Apple Pay, Google Pay, and Samsung Pay are among the digital wallets becoming popular today. These platforms use NFC technology to transmit data over short distances, particularly between a mobile device and a payment terminal.
According to Statista, 54% of Australian consumers identified it as one of their most common online payment methods.
Digital wallets offer various payment transactions. They can handle both in-store purchases and peer-to-peer transactions. These wallets also allow consumers to store digital versions of their debit and credit cards.
With digital wallets, doing business transactions can be as simple as a tap with a smartphone.
Benefits of Going Cashless and Cardless
The transition towards digital payment systems offers numerous advantages over traditional methods. But it is particularly beneficial in three key areas of business: operational efficiencies, cost reductions, and enhanced security.
Digital payments streamline the checkout process. That is, customers can complete transactions faster. This efficiency is crucial for businesses that experience high customer traffic. After all, increased throughput means reduced wait times. It also leads to happier customers, as the layer of convenience of going cardless or cashless is unmatched.
What’s more, adopting digital payment methods can also lead to significant cost savings for businesses. These savings come from a reduced need for payment equipment and lower transaction fees, for instance.
Digital payments can even enhance security. The encryption and tokenisation technologies involved protect consumer data during transactions. Moreover, going cardless or cashless also reduces the risk of fraud. And the minimised handling of cash can decrease incidents of theft.
Challenges in Transitioning to Digital Payments
The move to digital payments is largely beneficial to both businesses and consumers. But it also presents challenges that businesses need to manage effectively.
For one, businesses must invest in new technologies and training to accommodate digital payment methods. This transition can be resource-intensive, particularly for small businesses with limited budgets.
There’s also a concern with adaptability. Some customers, like the elderly and those without access to modern technology, may find it difficult to adapt to cardless or cashless payments. As such, businesses must consider ways to support them during the transition.
Make Transitions To Cashless And Cardless Transactions Easy
The movement towards a cashless and cardless society is gaining momentum. It is driven by advancements in payment technologies and the increasing consumer preference for digital payments.
And understandably so.
After all, digital payments lead to improved efficiency and reduced costs. Not to mention enhanced security and better customer experiences. These benefits—and more—are paving the way for their widespread adoption.
As your business adapts to this change, you may need more funds to fully make the shift.
If so, Unsecured Finance Australia is here to help. Apply for a loan online and you can receive your approval within 24 hours.
Find out more by taking a look at our unsecured business loans.
