Payments are the last step in the cycle of the trade process, and with the digital development in all fields. Organizations should not fail in digital transformation, allowing the exchange of payments in a real-time and cost-effective manner, and here appears digital payments that allow payment processing in a fast and low-cost manner. In this article, we will show you everything you need to know about digital payments, their importance, and the most prominent methods used.
Modern technology has contributed to finding new means of payment and exchange of money due to the use of some new technologies in financial systems, the most important of which are digital payments, which allow digital remote payment methods.
The wide availability of digital or cashless payment methods will also help facilitate digital transformation and will be an important driver of economic recovery,
As well as the development of the financial sector, as well as addressing concerns about transparency and traceability of remittances.
What Are Digital Payments?
We can define digital payments as one of the modern methods that are used in the process of supplying cash payments through the Internet to be the tool that transports funds from the accounts of payers or buyers to the accounts of holders or sellers.
Or through the supply of these amounts to bank accounts of the recipients of financial payments.
The concept of digital payments is not limited to buying and selling operations only, but there is a group of financial operations that can be paid or received electronically in addition to buying and selling operations, the most prominent of them are:
- Tax refunds and payments.
- Insurance company premiums
- Dividends to shareholders
- Credit transfers.
- Loan payments.
- Discount transfers.
The need for funds to be paid or received electronically has emerged through developments in global markets whether through the development or expansion of commercial operations at the local or international level. Also through the emergence of financial markets, the physical payment process became an obstacle to completing some operations in the financial markets.
The digital payment environment began through time to become more common in many commercial operations.While on the other hand, some of the old methods that were used in the past in the electronic payment process began to shrink, such as deposits and direct cash payments, especially in large financial and purchasing operations.
In addition to the periodic payments that have become electronically paid automatically, and the presence of electronic payments over time contributed to the emergence of the so-called electronic clearing house.
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The importance of digital payments
Digital payments have gained great importance, especially in the recent period, with a large number of individuals accepting it. A large percentage of individuals started to pay digitally instead of paying cash, and the following is the importance of digital payments:
The emergence of digital payment systems was due to the urgent need of financial and commercial markets imposed on cash dealers.
Where digital payments create a different environment for financial dealings that have specific characteristics.
And the following are the most important points that illustrate the importance of digital payments and their effects on financial and commercial markets:
- Enhance economic efficiency
Where the presence of digital payment systems has contributed to the complete smoothness of cash flow.
And this is certainly in the interest of the conduct of operations and economic activities more easily than the old payment systems.
This, in return, helped in the recovery of some sectors and commercial projects whose sales or commercial operations were weakening payments or collection of funds.
- Provide financial protection
The presence of digital payments has contributed in increasing financial security for the payer or the recipient, whether through the flexibility of the electronic payment process,
In addition to not having to transfer a large amount of cash in the traditional way, and the additional safety factor that electronic payments enjoy through digitization systems.
There are also serial numbers for electronic payments, where these numbers are preserved in an electronic form that is difficult to lose, unlike paper documentation of cash payments.
All of this has made digital payments widely used to collect tax revenue, payroll deductions, and other government payments of all kinds.
- Emergency relief support
Digital payments contributed to providing a safe and fast cover in order to provide support and assistance in cases of humanitarian, health or natural disasters at the level of a particular country or at the international level.Funds are transferred electronically and at the maximum speed to initiate the provision of urgent financial aid, or the provision of health or medical supplies that can reduce the risks of natural or health disasters.
- Reduce costs
The presence of digital payments has contributed to reducing expenses for companies or organizations in terms of receiving or paying financial dues.
As funds can be transferred easily and in short time without the need for specialized employees to collect transfers and deliver funds.
The consequent financial risks make the process of collecting or transferring funds in some cases very expensive compared to electronic payments.
Reducing expenses related to paying or collecting money is not limited to transportation and collection costs as there is some paper or printing material supplies and some other administrative expenses related to cash payment and collection.
- Saving time and effort
The entry into force of digital payment systems in many companies and organizations contributed to saving a lot of time and effort spent in receiving and collecting money.
This positively affects economic activities so that you can devote yourself to some administrative processes and internal organizational matters in exchange for the time and effort spent on collecting and paying money in the usual way.
This is also reflected in the purchasing cycle and the sales cycle in organizations so that the time spent in collecting and paying money decreases, which increases sales operations thanks to the use of time.
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Digital Payment Methods
There are many digital payment methods, and here are the most important ones:
- Bank cards
They are the digital payment methods used, like debit/credit cards, or prepaid cards.
Bank cards are preferred by many because they are convenient, portable, easy to use and also more secure.
It is also the most popular method of digital payment in both online and physical transactions.
- Mobile wallets
It is a type of wallet which you can carry cash but in a digital format, and there are two ways that customers can link their accounts to, where:
- Linking their bank accounts or bank cards to the wallet.
- Add money to Mobile Wallet and use the existing balance to transfer funds.
- Online Banking
Online banking allows customers of a particular bank to make transactions and conduct other financial activities via the bank’s website.
Most of the banks have launched their online banking services and in fact it has become the most popular means for online transactions.
- Mobile Banking
This means carrying out transactions and other banking activities via mobile devices, usually through the bank’s mobile application.
Most banks have their own mobile banking applications that can be used on mobile devices, and sometimes on computers.
In fact, such services are the future of banking services, thanks to the ease, convenience and speed that they provide.
- Micro ATM
It is a device for Commercial Correspondents (BC) to provide basic banking services to customers,
Through which instant transactions are made, through the use of a device that allows you to transfer funds through your bank account.