By Michael Seaman, CEO & Founder, Swipesum
In today’s online world, digital payments have become essential for businesses looking to thrive in the competitive market. With smart devices and the convenience they offer, embracing mobile payments and other contemporary forms of payment is crucial for maximizing business success.
Digital payments bring speed and efficiency to payment processes, providing businesses with a seamless and streamlined way to manage their financial transactions. Unlike traditional payment methods, such as cash, digital payments eliminate the need for physical currency, and with a few taps of their smartphone or credit card, customers can quickly complete their transactions, saving valuable time. With 256 million digital customers in the US, businesses have a vast market to reach.
Here are four ways businesses can tap into this large customer base and improve the effectiveness of their digital payments strategy.
Accept multiple forms of payment
Digital payments provide numerous benefits for businesses, allowing them to streamline their operations, enhance customer experience, and boost their bottom line. Companies can simplify their payment processes, automate reconciliation, and reduce administrative overhead by adopting multiple digital payment solutions such as mobile wallets, buy-now-pay-later, and PayPal, as well as peer-to-peer payments such as Venmo.
With an array of digital payment offerings, businesses gain access to a wider pool of customers, with digital wallets accounting for over a third of POS purchases and a half of all ecommerce. In addition, digital payments can contribute to a more regular and consistent cash flow for companies by allowing for faster processing times. While ACH payments, for example, may take several days to process, certain digital payments can appear the next day. This improves operational efficiency and productivity and can save businesses valuable time that can be redirected toward other core activities.
Another key advantage to providing multiple forms of digital payments, such as mobile payments, is the speed and efficiency they bring to transactions. A Deloitte report stated that digital payments can be more than 50% faster than traditional purchase order processing.
Monitor for fraudulent activity and security risks
While digital payments can increase profits, they see some of the highest fraud rates among all payment methods. Transitioning to digital payments has been a significant part of the digital transformation journey for businesses, and while the benefits are clear, there are challenges in preventing security risks, maintaining regulatory compliance, and fulfilling infrastructure requirements that build consumer trust.
In addition to advanced encryption technologies and secure authentication methods, many businesses are turning to artificial intelligence to help prevent fraud. AI can analyze large quantities of transactional data. From there, it can predict customer behavior and aid in identifying unusual patterns or abnormalities to block potentially fraudulent transactions from being processed.
Avoid redirects for online transactions
For online digital payments to be effective, offering customers a completely frictionless payment process is crucial. According to the Baynard Institute, the average shopping cart abandonment rate for 2024 is just over 70%. While it’s inconvenient to re-enter personal information while being redirected during the payment process, customers may also have security concerns when taken to third-party sites. To avoid this, try to incorporate payment methods that can be embedded on your website whenever possible. In addition to ease of use, avoiding redirects during the payment process gives brands more control over checkout design, which can lead to increased brand awareness and loyalty.
Provide incentives for customers
Lastly, customers love rewards. Adding incentives to your business’s payment strategy can help elevate customers’ attraction to your brand and increase the use of beneficial digital payment methods.
The goal with incentives is to extend the customer life cycle. Companies should find ways to create value for customers when making digital payments, such as online through a brand’s website or mobile application. To maintain customer loyalty through rewards and incentives, businesses must implement these tactics as part of a larger loyalty-management strategy. Whether this is providing discounts, cashback, loyalty points, or even freebies, the reward should remain consistent and ultimately add value to the customer experience. According to a 2022 survey from Statista, seven out of ten Americans consider loyalty programs a leading factor in their loyalty toward brands.
Over the last several years, digital payments have emerged as a game-changer for businesses, offering speed and efficiency throughout the payment process. Businesses have a massive market to explore by embracing digital payment solutions and can strategically enhance their processes to provide operational efficiency, increased profit and reduced manual labor.
About the Author
Michael Seaman is Co-founder and CEO of Swipesum, a comprehensive payment processing and merchant services consultancy delivering innovative auditing solutions to businesses nationwide. Seaman founded Swipesum in 2016 with his brother, Stephen, to serve as Chief Payments Officer for businesses nationwide, combining industry knowledge, AI and proprietary software to create a transparent payments strategy that optimizes payment processing fees. The company has been recognized by the Inc. 5000 as one of the fastest-growing privately held companies in the US.
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