There was a time in history when people did not have any idea about e-payments and even currency was not discovered yet; at that time, they used to trade or exchange things with a barter system where they give and take services and goods without using money, one of the greatest human discovery and invention that have been made till now is to conceptualize the idea of money, whether its in form of coin, paper and now the digitization of money, it revolutionize the sphere of business and trade industry. A different kind of currency has gradually developed and changed throughout human history.
As science and technology evolved over the epoch at an unparalleled rate and still continue to change every passing day, their way of living has also significantly changed, as well as the way we make payments or use money in our daily lives.
In the contemporary world, it is essential to learn and understand the different kinds of payment methods that people prefer the most. In the online competitive marketplace, there are a number of online payment methods available for online business and commerce; having thorough information about nearly many payment options paved the way to use them effortlessly.
Here’s the most used and popular online payment method that people utilize in e-commerce, businesses, and other forms of services and goods.
Most Popular Online Methods Over the Globe
A thorough research and over-estimated statistical report highlighted that in the current period of time, 49% of the total electronic expenditure worldwide is paid by using the digital wallet, giving it the best and top position in the online marketplace and among consumers from all over the globe.
Here are the important things you would need to know about the digital wallet.
Digital Wallet
Digital wallets are the most popular online payment tool, usually available in the form of an application; the digital wallet has access to and stores virtual sorts of credit and debit cards; it allows consumers to make payments without the physical availability of a card, a consumer doesn’t need to carry cards everywhere because it already stores the all necessary information that is required consumers to make an online transaction.
There are several digital wallet options and applications available to choose from to make an actual decision. It is important to note your requirements and needs. Here are some of the most popular digital wallets.
- Apple pay
- Google pay
- Amazon pay
- Paypal
- Samsung pay
- Ali pay
- Walmart pay
- Dwolla
- Venmo
- Cash app
Digital wallets also allow consumers to use payment methods in shopping using these apps and devices, so they don’t need to carry around the physical cards.
Digital wallets can also store:
- Membership cards
- Gift cards
- Coupons
- Loyalty cards
- Event tickets
- Transit tickets
- Hotel reservation
- Id cards
- License
Pros and cons of digital wallet
Digital wallets have gained so much popularity in recent periods, with so much easy accessibility and hectic free processes and methods that allow consumers to use their smart devices to make payments, but digital wallets also come with a few cons. Before we delve into the cons of digital wallets, it is important to know about the pros of them.
Pros:
One of the most significant advantages of a digital wallet is its convenience. Now, consumers do not need to carry around a physical wallet with multiple forms of cards, and cash payments can be made with smart devices. Secondly, most digital wallets have applications that they use for authentication, which is important to ensure secure transactions and keep the information safe, and it is secure if we compare it with traditional wallets. Lastly, digital wallets allow consumers to store their gift and loyalty cards in one place.
Cons:
Regardless of the increasing popularity of digital wallets, they also have some disadvantages, such as technical issues, it faces problems when the network is compromised and malfunctioned, and software bugs that can create a negative impact on online payments.
Since the digital wallet is completely dependent on technology and internet connectivity, it is problematic when consumers misplace their devices, and they may be unable to make any payments.
Credit and Debit Card
For businesses and consumers, debit and credit cards are the most popular methods at present. According to a recent survey research conducted by Statista Global Consumer, 52% of consumers have used a debit card online in the past year, and approximately 46% report using a debit card.
Thus, debit and credit cards are the second most popular online payment method in the digital market. It is still a commonly used method worldwide. Credit and debit cards are still the top choices of people from all over the world due to their convenience. It makes it easier for consumers to buy the things they cannot afford, and it is also best for businesses to sell goods and services.
Difference between credit and debit online payment.
Debit cards are directly linked to the customer’s bank account, and all the transactions and payments can easily be pulled directly through that account; banks will issue debit cards to their account holders as a part of the online payment system. The most prominent are Rupay and Mastercard. Visa Mastercard is the most acceptable card in the world. It is the easiest and most popular way for the consumer who is seeking an online payment system.
While the credit card does not have an actual bank account to withdraw the funds and other activities, as an alternative, it helps to count against the available credit limit. However, credit cards also come in different types, like MasterCard and American Express, which are the most well-known ones. The process and method of making payments are nearly the same, including authentication, authorization, and other steps.
Account-to-account payment system (A2A)
If we put an account-to-account online payment system in the very most straightforward way, the payment moves money directly from one account holder to another without any additional mediator or broker or any other payment instrument such as credit or debit cards. As we move forward to using more and more online payment methods, people use the traditional cash system very often. Due to this, the digital payment system has grown significantly. Account-to-account payment methods can support nearly all payment systems, including banks and digital wallets.
Types of account-to-account payment method
There are mainly two types of account-to-account payment methods.
- Push payments
This type of account-to-account payment is mostly used for the transfer of sums as it, on the requirement of the customer to process it manually, sends or pushes money to anyone. An example of account-to-account payments includes a customer making a transfer from one bank account to another or a direct debit. It is also useful for customers to prompt notifications.
- Pull payment method
This is the method by which businesses move payment out of accounts belonging to their customers. The use of this method of payment requires the customer’s prior authorization and permission, and this online payment method is usually used by companies and banks that have recurring transaction systems, such as subscriptions. The requirement for direct debit is a good example of this.
Buy Now, Pay Later Trend
The buy now, pay later payment method has been emerging as one of the most popular systems in the digital world of payment. Most especially after the year 2000, it became the center of attention and most usable among individuals and businesses as well. This payment system gains a boost in the economic disintegration and inflation. At that time, BNPL buy now pay later would be a very helpful option for the people.
Buy now and pay later is one of the best and alternative payment methods that allow consumers to purchase goods, products, and services without giving a commitment to the full amount of payment upfront. Therefore, it gave customers the ability and chance to instantly finance purchases and give them back in easy and fixed installments over a period of time. Keep in mind that some purchases may not be eligible for this buy now pay later financing method. Also, there are certain limits on the amount that you finance through this method.
Consequences of buy now pay later
After accepting the buy now, pay later BNPL loan; it’s important that you ensure that you have the minimal resources available in order to pay the fixed monthly installments. In the unlikely scenario that you do not succeed in making your monthly payment on the BNPL loan, you might face the risk of falling delinquent on it and suffering negative consequences on your credit record, score, and reputation.
Differentiating buy now, pay later, and credit card.
The most important difference between a credit card system and the buy now pay later method BNPL is that the credit card companies, banks, and beneficiaries commonly impose interest rates on any outstanding balances that have been carried over to the subsequent payment cycle. Whereas certain types of credit cards provide 0% APRs (annual percentage rates), this may not necessarily be the case all the time. It allows consumers to use their credit limit or carry a balance on a credit card for as long as they like.
Prepaid Cards
Prepaid cards, famously and most prominently used as an alternative to cash, are found to be a very safe and convenient method of payment in the online payment system. Prepaid cards are used to make purchases or pay bills, the same way you use your credit or debit card.
Compared to other payment options with prepaid card methods, prepaid cards provide numerous benefits and several advantages, including control over finances and your money, safety, and ease of use. To obtain a prepaid card, there is no requirement for a bank account, credit check, or minimum amount. You are able to utilize the card both online and offline without divulging any sensitive financial or personal data. Additionally, some prepaid cards give the same services and facilities as credit or debit card companies, such as protection from fraud and insurance.
Prepaid cards are really useful for consumers who don’t have traditional bank accounts. Consumers who can’t afford to pay the monthly low balance fees that banks charge may use prepaid cards instead. Guest workers may not have accounts with local banks that issue payment cards either.
Drawbacks of prepaid cards
While there are quite a few situations where prepaid cards might be very useful, they also come with certain disadvantages. Before using or obtaining a prepaid card, one must note the drawbacks of using them.
The amount you are going to spend, load, or withdraw with your prepaid card may have certain limitations. Prepaid cards are not able to store financial records and are not able to maintain reports. Prepaid cards do not improve credit scores. Prepaid cards would not help you to build credit, unlike credit cards.
How to select a best-prepaid card
Do considerable research and compare the numerous kinds and businesses of prepaid cards that are available on the market before deciding the type of card that best fulfills the requirements you have. Take into account the terms and conditions, services and assistance, and fees and taxes. Search out credit cards that provide discounts or fee waivers or those that have minimal or no charges. Verify that the card offers the benefits and services you need or desire. For a detailed understanding of your rights and obligations as a customer, thoroughly review the terms and conditions. Before determining if prepaid cards are the best option for you, compare their benefits and drawbacks to those of alternative methods of payment.
Cash On Delivery (CoD)
Cash on delivery is the traditional method of payment; it is the type of transaction where the customer pays for goods, services, and purchases upon delivery rather than using another mode of payment like a credit card.
Conditions and authorized payment methods differ in accordance with the purchase agreement’s payment clauses. Since delivery may accept cash, payment, or electronic funds transfers, “cash on delivery” is additionally recognized as collect on delivery.
There is a considerable risk while considering the method of cash on delivery, and it is possible that retailers take for granted a greater financial risk when giving cash on delivery as a method of payment; there is a chance that consumer changes their minds and decide will not to keep the product and send that product back to the retailer without paying the amount they have agreed on. Notwithstanding, the cash-on-delivery method is still appealing and making its way better among consumers, as they can thoroughly evaluate the product personally before purchasing it.
Choosing The Best Payment Method
With so many easily available resources and accessible online payment methods for online businesses locally and globally, it is quite difficult to choose the best and right option for the relevant payment method that is best for all marketplaces. There are a few factors that shape the online payment method in business, such as demographics, the means you are used to doing business, the flow of payments, and a few other things involved. Offering the right online payment method helps to unleash the new proceeds methods, create an effortless experience, and crystalize your position in the online marketplace.
For businesses and individuals, sometimes it isn’t easy to choose the correct option from all. There are plenty of cards and methods available to use for daily business to ease yourself: credit and debit cards, prepaid cards, prepay, and the list goes on. One must select an appropriate option according to their needs and demands, and it becomes pretty straightforward to ponder on one option.
Conclusion
The very first credit card accepted internationally was American Express, which revolutionized the entire way people made payments digitally. Technology has played a very pivotal role in this recent transformation.
As we are moving forward to more digitalization, it changed the way how we perceive traditional things, and significant changes in the method of paying for and purchasing goods and services have also shaped their way; nearly everything has transformed into a digital world now people don’t need to carry cash and coins they can use current several online payment options and fulfill their need and requirements. Everyone tends to utilize the popular online payment method, whether it is a big firm or company, small business owner, or even the individual, for their daily life routine; these accessible online payment methods ease the way for everyone. Despite a few drawbacks and negative impacts of using all these modes of payment, there are none if we accurately compare the benefits of these developments. No doubt, we have come a long way from the old traditional barter system to current online methods.
As you realize, you have several different choices regarding how you would prefer to receive or give the payment. Nevertheless, choosing the most advantageous option isn’t quite as important as figuring out how many multiple ways to make payments online.
