Aug 26, 2013 Dave King
Though traditional transaction methods such as cash, credit card and check are still very much in play, prepaid cards and other electronic payments are becoming more popular by the day. Younger demographics and a variety of other types of consumers have seemed to approach new payment methods with far more excitement than older models.
Businesses need to invest in the necessary technology to accept these transactions, especially as more economists are forecasting the end of cash as the reigning king of commerce. To capitalize on this shift in the payments market, though, decision-makers should first understand the impetus and finer points of the global transition.
Critical factors driving electronic payments
PYMNTS.com recently listed some of the biggest catalysts of electronic payments growth, as well as several factors that are expected to continue shifting the digital landscape in the coming years. For example, the source explained that cloud computing has become more popular, and as such has encouraged companies to switch systems into virtualized environments.
This has represented a challenge for many retailers, but is also a massive opportunity to reduce waste from payment processing procedures and drive customer engagement. Electronic payments come with the ability to better track and predict customer preferences and behaviors, better positioning the business to maximize retention and loyalty.
According to the news provider, traditional loyalty programs are on the way out, as fewer customers will prefer a paper card over a digital application. Additionally, PYMNTS.com pointed to the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well other goings-on in Washington that are pushing businesses away from traditional credit and debit card strategies.
This has been one of the fundamental reasons why prepaid cards have become so popular in the past three years. Not only do underbanked households and younger demographics prefer them to credit card accounts, so too do financial services providers and businesses, as interchange fees are not assessed for this method.
Mobile payments already changing
The Telegraph explained that mobile payments are rapidly shifting away from smartphones acting as cards, and toward application-based transaction capabilities. Since this market is so young, it will likely continue to change shape for years to come, with providers of such services and device manufacturers adjusting to the emerging preferences of the common consumer.
Companies can capitalize on the rise of electronic payments by launching associated strategies as soon as possible.