How digitizing payments can boost business growth?

As digitization continues to revolutionize the way we live our lives the scope of falling behind has never been greater.


The benefits that businesses are reaping courtesy of digitization and global digital payments are helping organizations grow at a pace never seen before.


Entrepreneurs are scrambling over who can digitize their payments best and fastest.


Electronic payments for business are not only transforming the way we pay for and buy things but also the rate at which businesses grow.


Digitizing payments offers high potential payoffs to businesses and at the same time helps improve society by opening up the formal financial system to more people.


In the face of this, digital payment solutions have become a necessary step for organizations looking to stay ahead of the curve.

How do digital payments work?

How digital payments work exactly will differ across providers. The usual process, however, entails payment networks that leverage different payment rails to have money sent via intuitive and straightforward digital payment tools.


Generally speaking, payment rails involve a variety of channels and processing modes that make cashless payments possible.


It is because of payment rail systems that digital payments are so fast and effortless. Some examples of payment rails include the SWIFT network, cards, blockchain, etc.


The process of making a digital payment itself is actually quite simple. You start by registering with your digital payment tool of choice.


You then get to choose the payment modes you intend on using. Recipient information will also have to be entered on the platform. Everything that comes after you input information is handled by the digital payment platform.


Once you’ve initiated the transfer your payment provider will execute it via the required payment rail.


Since the whole process takes place on a digital platform you’ll be able to maintain constant visibility over the transaction in real-time.


After the fund transfer is complete both the payee and recipient are notified accordingly by the platform itself.

What are the different types of digital payments?

The rise of digital payments has also brought with it a range of different ways in which you can make cashless payments.


Each of these has its own pros and cons and is therefore suited for different use-cases.


Before you decide which form of electronic payments for business is best for you it makes sense to go over what the other options offer as well.


You could either choose one of these or design a system that uses a combination of some of them.


1. Cards


Pros:


Most commonly used, easy to access for businesses


Available as both debit and credit card.


Transaction records maintained by payment networks



Cons:


Card number theft and related security concerns are a major concern


SMBs may find interchange costs to be high.


2. Local payments


Pros:


These are banking institutions that process payments via payment rails like Automated Clearing House (ACH).


Not much information reqd. and is fully digitized


Strong security measures, ideal for transferring large sums of money.


Bank-to-bank ACH transfers come at a very affordable cost.



Cons:


Payment processing may take time.


High frequency and probability of reversals and fund insufficiencies.


3. Digital cheques


Pros:


Work similar to their physical counterparts.


Easy to create, deliver, and direct. Can be done via emails etc.


Faster payment processing by the sender.


Direct deposit and cash-out transfers are also possible with other platforms.



Cons:


Depends on ACH and therefore can get slowed down.


Error-prone, easy to create spoofs and fraudulent transactions.


Float time between origin and deposit dates can be high.


4. Wallet payments


Pros:


Are hosted on digital payment platforms that enable transactions other wallets and normal bank accounts.


Purest form of digital payments.


Very easy to use.


Offers multi-currency balance and transfers.


Easily integrates with bank accounts and other bank products.


Offers constant, real-time visibility and control.



Cons:


Payee and recipient often need to both have accounts on the same platform.


Transfers from wallet to bank accounts may take time.


5. Wire transfers


Pros:


A commonly used payment method for international money transfers.


Transfers occur via a bank’s SWIFT network or other third-party wire transfer services.


Suitable for large fund transfers.



Cons:


Detailed recipient information is required.


Low payment process transparency.


Per-transaction fees can be high


Payment reconciliation is difficult.


Can take anywhere from 3 to 7 days for the transfer to complete.

How do digital payments help in global business growth?

The incorporation of digital payments comes with a number of direct and indirect boosts that can catapult an organization’s digital business growth trajectory to a whole new level.


Given below are a few examples of this along with brief explanations of how digital payment solutions help organizational growth on an international stage.


Reduced transaction costs

Cut down on the manual processing and management costs associated with physical transactions by going digital.


Digitizing payments helps you unlock the revenue that has been allocated towards processing physical payments for so long.


No longer do resources have to be spent on mundane admin tasks like invoice processing, expense approvals, etc.


Just get a digital payments app that does it all for you.


Multi-currency wallets

Digital payments also solve the problem of not being able to hold or pay in different currencies with a physical payment process.


Digital payment tools are often equipped with the capacity to hold multiple different currencies at the same time.


Traditionally, operating businesses with a variety of currencies would mean wallet-burning forex rates, tedious payment processes, unexpected delays, and a whole lot of admin work. 


Now, however, you can forgo all these disruptions just by getting yourself a digital wallet that is capable of holding multiple currencies, without the added obstacles.


Digital multi-currency wallets not only free up resources but also help your company grow by letting you hold more funds in different currencies than you previously could.

Streamlined cross-border payments

With digital payment solutions you’re not only getting a service that lets you hold multiple currencies but one that makes cross-border payments with these currencies a breeze.


Living in the era of globalization means businesses must expand internationally for organizational development to truly hit its highest.


In relation to this, onboarding global digital payments can do wonders for businesses operating internationally.


Not only does it make payments easier but it also reduces the time and effort required by accounting teams to consolidate all the expenses made by teams across countries.


Faster cash flows

Electronic payments for businesses work at a fraction of the time their physical counterparts take.


Faster payments equal faster reconciliation and consequently a much faster, more efficient cash flow.


Improving cash flow will also have a domino effect on working capital management which in turn gives you an improved chance to earn transaction volume rebates and maintain better control over disbursements.


Actionable data analysis and insights

Most digital payment tools come with a dashboard that works as a control center for your digital wallet and all payments made digitally.


These dashboards are fitted with software that tracks and consolidates all your digital transactions in real-time and gives you analytical insights on your payments data that you can actually use.


These insights are actionable in the sense that they give information that you can use to take appropriate actions that contribute towards overall organizational growth.


Reduce risks of fraud

Digital payment solutions let you maintain control over who gets access to what. By giving control only to the right people you can reduce the probability of fraudulent activity.


It also lets you set up special parameters for approvals, purchase orders, etc., and works as a fraud screening system that cannot be bypassed.


Related read - How to protect your business from credit card frauds

What are the benefits of digital payment in a business?

Increase in revenue

Digital payments for small businesses demand reduced transaction costs, multi-currency payments, global payment wallets, faster cash flows, increased security, and analytics.


These are all features of digitizing payments that contribute towards increasing the revenue generated by businesses, a factor that is especially important if your organization is a small business.


Better access to credit

Digital payment tools can automatically generate a qualifying credit score based on your payment history.


This can help expand the availability of credit to people and businesses by eradicating the difficulties that arise with creating a credit score for yourself.


Higher transparency

Digital payment solutions give you a degree of transparency that could’ve never been possible with manual payments.


Most digital payment tools give you constant updates on the status of your transaction as well as detailed information of what exactly is going on in the process.


This results in a boost for how transparent your payments processes are and therefore also contributes towards streamlining payment management.


Enhanced efficiency

Digitizing payments offers you the opportunity to never have to go back to the hassles and inefficient processes associated with manual payments.


Never again do you have to worry about manually processing invoices, running after gatekeepers for approvals, checking for errors, etc.


With digital wallets at hand, you get a payments service that handles most of the admin tasks for you and at the same time ensures efficiency is kept at a maximum.

Factors that will drive the growth of digital payments

The rate at which digital payments have grown over the last two years is not going away anytime soon.


If anything, the technological innovations our world is seeing every day are only contributing to its momentum.


Here are some of the most important factors that are likely to drive the growth of global digital payments even further.


1. Simplified and embedded payments

The more effortless payment processes are the better it is for a customer’s purchase journey.


Subsequently, the easier a customer finds to pay for a product the better that merchant’s business will perform.


While QR codes, buy now pay later, pay by bank, etc. are already being adopted by businesses at a rapid pace, developing the technology related to these is going to be a significant driver for the growth of digital payments.


Simplified and embedded payments are the future and the faster they develop the easier it will be for businesses to reap benefits from them.


2. Standardization and open data

Integrations between and across platforms built on standardized and free, open data are critical to the growth of digitized payments.


The development of interoperability and partnerships between platforms is making the payment experience so much easier because customers no longer have to input data separately on multiple platforms.


3. Flexible payment options

Digitization has transformed the way businesses and customers interact with each other.


Customers now expect merchants to offer a variety of payment options.


Payment options are becoming increasingly flexible and the need to input card numbers and other tedious information is soon going to become redundant.

Grow your business with Volopay

Digitize payments with a payment tool that is truly digital. Get Volopay and start revolutionizing your payments systems with just the click of a few buttons.


With Volopay you get an air-tight and easy-to-use digital wallet from where you can transfer funds, allocate budgets and at the same time manage forex transactions with zero hurdles.


Volopay also offers smart corporate cards - physical and virtual - that can be issued to your employees. You can use these cards to make easy and secure payments, no matter where you or your employees are in the world.


Moreover, all transactions are linked with Volopay’s analytics and insights software that consolidates and interprets all your purchase data to provide actionable insights.

Automate and manage vendor payments, both domestic and international