The saying “cash is king” is still true today. However, the use of physical currency is declining as more online payment options become available. The physical dollar, euro, pound, yen, and others are being used less in transactions. Instead, businesses are enabling customers to pay through digital payment processors. Why are businesses making the shift from accepting physical currency to digital payments? In the past, it was commonplace to see a sign on many storefronts reading “cash only.” During the COVID-19 lockdown, most storefronts shut down and converted their business online, eCommerce was booming. Now, with most storefronts opened back up to the public, many are opting to stick with digital payments. It makes sense to use online payment options because we live in a global economy, and digital transactions can help businesses reach consumers worldwide. However, online transactions don’t come without concerns, and some skeptics believe they could pose security risks. Luckily, different payment options are available that can help mitigate the overall risks.
Digital Wallets
According to Investopedia, a digital wallet securely stores users’ financial information through a software-based system. Digital wallets can be adapted by financial institutions and payment processors, such as PayPal.1 Banks can use digital wallets through mobile applications that allow users to deposit checks, transfer funds and pay bills. Payment processors make it easy and secure to pay and get paid through online digital wallets. For consumers, many payment processors offer buyer protection to help combat fraud, and businesses can invoice customers worldwide in all currencies with a click of a button. Most smartphones also have a digital wallet feature that allows users to store their credit and debit card information securely, so there’s no need to carry a physical card.
Cryptocurrencies
Cryptocurrencies are becoming increasingly prevalent worldwide, and many countries are considering ways to include them within local economies. An article from the Atlantis Press discusses how cryptocurrency uses technology that secures transactions making it difficult to falsify. This is accomplished through online transactions that include unique encrypted algorithms. Many countries, including Indonesia, are searching for ways to replace conventional money with cryptocurrency. Unlike traditional money, cryptocurrency is not created by a central bank or government, which prevents interference from the state.2 This is particularly useful for the developing world or unstable governments. For eCommerce, cryptocurrencies provide a secure way for consumers to purchase goods worldwide. The true potential of cryptocurrency has yet to be seen, but with online payments increasing, it’s bound to be a top contender.
Blockchain
Often blockchain is referred to when talking about cryptocurrency, but this digital transaction system can be used for so much more. So, what is blockchain? According to Forbes, blockchain can help prevent hacking and cheating because it uses identical copies of its database with each transaction. The blockchain digital ledger can store data from online payments, NFT ownership and smart contracts. Unlike traditional databases, blockchain is entirely decentralized.3 Blockchain can be used in many digital transactions, including cryptocurrency, traditional currency (dollar, euro, etc.) and asset transfer (inheritance, real estate, etc.).
Online payments aren’t going anywhere. The growing global eCommerce industry depends on having reliable and secure digital transactions for consumers. This is the time for businesses to expand their online payment options. Whether primarily brick and mortar or exclusively eCommerce, adding the ability to pay with cryptocurrency or through a digital wallet and blockchain will provide opportunities to attract new customers.
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