The payments industry has seen numerous changes throughout the years, but it is the Internet that has brought about its most radical transformation.
It is estimated that consumers will spend $385 billion on e-commerce throughout 2016.
By 2020, this figure is likely to exceed 600 billion, and e-commerce and the advances in the online payments industry show no signs of slowing down.
The Changing World of Payments
Not too long ago businesses used to depend on mail order, credit card and check payments through the post.
And while this process is still used, it’s slow, and doesn’t suit the consumer’s demand for convenience and speed.
The huge growth in online payments means businesses are no longer having to wait for payments, either.
There are no delays while checks clear, or waiting for credit card orders to arrive in the post. Instead, they can receive notification of the payment instantly and dispatch goods as soon as an order has been received.
Reduced Reliance on Checks Means Improve Cashflow
The use of checks is declining. Consumers and businesses alike might view this as a good thing due to the several disadvantages to them: checks take too long to clear, they can go missing in the post, and they’re not great for cash flow.
As the use of the check declines, credit card payments have increased, and online payments provide faster money. And as ecommerce and online payments grow in popularity, they are altering the way companies work, too.
Here’s three major areas where online payments are changing the way businesses function.
Greater Efficiency, Faster Payments and Reduced Costs
Every business owner craves greater efficiency and lower costs without compromising the service they deliver, and accepting online payments achieves this.
- Online payments mean reduced paper work, which lowers the administrative burden on businesses – and makes purchasing more convenient for the customer, too.
- Accepting online payments also lowers costs and boosts efficiency by lowering paper waste
- Sending checks through the post isn’t the most secure method; by accepting online payments, a business is also offering customers a safer way to pay
- Online transactions also boosted payment speed. As a business, you can effortlessly improve your cash flow by accepting online payments.
- Faster payments lead to a quicker service for customers. They allow instant notifications allowing so retailers can pack goods straight away and dispatch them. A faster service results in improved customer satisfaction, and an overall better customer experience – and a satisfied customer is likely to keep coming back for more.
Online Payments have Provided a Boost for Subscription Based Business
One major area where online payments have changed the way businesses work is in the subscription sector.
Subscription based businesses are fast becoming one of the most popular business models: Consumers love the convenience of having a selection of their favorite goods delivered to them every month, while merchants like this model because they have a steady stream of income coming in.
However, while some predict that traditional subscription-based businesses might reach saturation point, that doesn’t mean the subscription model is declining in popularity. Other types of companies such as digital marketing and ad agencies have realized the advantages and are now using subscriptions to boost their cash flow.
Typically, agencies will offer up to three or four separate packages to a client, ranging from basic services to top of the range.
For some agencies and clients, this is becoming preferable to an hourly or per project rates. With a subscription, the client knows exactly what they will get for their money, and the business has a steadier income and it is freer to concentrate on other aspects of running the company, such as reaching out to new markets.
Online payments make a subscription model so much easier to run. There’s no need to send a reminder to the customer as payments are scheduled automatically, and no paperwork to worry about as everything is managed electronically.
In addition, working with a professional payments processor can minimize the administration work involved with running a subscription business, while providing the merchant with a variety of secure online payment methods to offer customers.
Wider Audience, Improved Security, and 24/7 Accessibility
The Internet has revolutionized the way we do everything from managing our bank accounts to communicating with friends and family, but it’s the retail sector that has been one of the biggest beneficiaries.
The ability to set up shop and accept online payments has allowed even the smallest of businesses to reach a much wider audience, and opened up to new markets which might not have been possible before.
Not only that, but ecommerce has changed the way businesses function by making them available 24 hours a day, seven days a week, no matter where they are based in the world, which is perfect for today’s economy.
Increasingly, consumers want their services or products on demand. They want to go online any time of day or night and buy what they want, whenever they want it. Global ecommerce is predicted to be worth 2.48 trillion by 2018, and it shows no signs of declining. Companies need to offer online payments to answer the demand from consumers.
Finally, while consumers still have concerns over online security and consumer confidence in online transactions has been hit by data breaches, the general consensus is online payments are safer than sending checks.
And many businesses view accepting online payments as a more secure way of collecting money. Payment processing companies have fraud monitoring measures in place to flag up potential safety concerns, and there is no longer a need to wait for checks to clear that might ultimately bounce.
Accepting online payments offers multiple benefits to both the consumer and to the business, and they have changed the way that many companies work. For the businesses, there is access to a wider audience, less admin, and 24/7 availability, and for consumers, there is the added convenience and security of being able to order online whenever they wish to.
Online payments also offer a greener solution, which is becoming increasingly important to consumers, and the reduced administrative burden offered by online payments is a welcome relief to businesses too.