Putting Cash in the Past

The demands of modern business have virtually dictated that companies not only should, but must, use digital payments.

With the onset of the Covid-19 pandemic, business operations were forced to shift online practically overnight. Work-from-home became the new normal, which created contactless environments for communication and workflows. Payments quickly followed suit in this contact-free, digitized framework. In fact, according to Statista, the value of cashless payments will reach nearly $200 billion by 2023.

As businesses have quickly adapted to digitized operations, payment methods such as paper checks and cash—still commonly used in real estate, health care, education, and government transactions—are becoming a thing of the past. However, with 1.8 million stimulus relief checks being sent last year, there is still much room for improvement.

With the swift adoption of digital payments, businesses will see long-lasting impacts from the multitude of benefits they offer. Not only do digital methods of moving money cost less, they are more efficient and improve an organization’s overall resiliency.

No longer can businesses rely on simply upgrading their legacy payment systems. Instead, they need modern payment technology in today’s evolving business-to-business landscape. The most appealing and scalable technology must offer flexibility to customers with the various payment options and respond promptly to changes in the industry.

The Case for Digital Payments

As we prepare for the future in an increasingly digitized world, data and analytics companies, such as Global­Data, predict that some countries will lead the way into a truly cashless society. In fact, the firm believes the United Kingdom, Finland, Sweden, China, South Korea, and Australia have the most potential to be the leaders in truly cashless payments in the next decade.

As a result of this transition, banks are continuing to slow down their building of brick-and-mortar branches to make the shift in going fully digital and speeding up transaction times.

Overall, payments play a vital role in helping companies deliver optimal internal and user experiences, whether the business is growing or its customer demands are evolving. Thinking through the different opportunities, there are three fundamental reasons why your business should use digital payments to support and enable growth:

1. Tailoring Payments to Suit Your Needs

Organizations need solutions that grant customers the ability to easily move funds and the flexibility to shift money across numerous payment rails. With real-time payments, businesses reap the benefits of sending and receiving money within seconds, aiding companies whether they are in a time-dependent or emergency situation.

Some 146 financial institutions already participate in the The Clearing House Payments Co.’s Real Time Payments (RTP) Network, which reaches 70% of demand-deposit accounts (DDAs) in the United States. In 2020, the U.S. logged 1.2 Million RTP transactions, ranking it the ninth-largest market for real-time payments.

Another digital-payment channel that offers expected and dependable connections for transferring funds between various bank accounts is the ACH network. In the first quarter of 2021, the total volume in transfers increased 11.2% from the first quarter one of 2020, rounding out at 7.1 billion payments worth $17.3 trillion. ACH transactions enable businesses to initiate disbursements quickly for substantial payouts.

The flexibility of accessing a variety of payment networks offers different advantages, but tailoring payments according to your specific business needs, accounting for things like transfer speeds, costs, and support, remains an essential advantage to many businesses and their customers.

2. Enhancing Data Transparency

Digital payments are lauded for providing greater transparency, allowing organizations to add and track contextual business information in real-time. An example of this is when information that leads back to operations, such as invoice numbers, can be sent with the transaction instead of being stowed away in separate systems that require manual updates. With modern technology, businesses can automatically send notifications of a transaction’s success back to the sender and know immediately if a payment fails.

By utilizing these insights, organizations gain visibility into real-time cash flow, allowing them to anticipate and report spending with high-level confidence.

3. Bolstering the Customer Experience

As digital communications pervade the business landscape with both positive and negative feedback, organizations are more focused on the customer experience than ever before. Decisions increasingly revolve around customers’ wants and needs to warrant higher shareholder value. In fact, many businesses are taking an outside-in approach to shift their perspective and see their company through their customers’ eyes.

By allowing individuals to send and receive payments instantaneously, customer satisfaction is almost guaranteed. Through the elimination of paper processes and competitive pricing, customers can sit back and trust that their payments will go through faster and more seamlessly than ever.

And digital payments offer convenience not only for customers but also for businesses. Consumers will have a faster payment experience, while businesses are able to have greater control over cash flow. This creates a win-win situation for both parties.

Business Growth

At the core of every business infrastructure is the objective to scale. As organizations continue to develop cutting-edge products, boost competitive customer advantages, and adapt new technologies to propel success, payment platforms should not be a burden to progress.

Companies must have the ability to transition seamlessly into higher processing levels. A real-life example of this is the recent housing market boom, which required real-estate businesses to scale their capabilities to support the surge in mortgage payments and closing costs.

While some technologies can present challenges that your business must overcome, digital payments make the process easier. It is now as simple as connecting a bank account within seconds to start moving money in a seamless way that is more affordable than credit cards.

This ability to move money quickly and effectively allows businesses to centralize their focus on managing growth and preparing for the future, while still ensuring their customers are happy. Furthermore, digital payments enable businesses to advance their own goals and unlock potential for future opportunities.

More fundamentally, the Internet, cloud computing, and API-based applications have opened up a world of possibilities for more traditional businesses to embrace digital payments beyond just cards.

Now companies can deliver customizable solutions that fit the specific needs of their customers, no matter their preferred payment method or geographical location. Taking advantage of the ACH and real-time payments networks for lower costs, lower fraud, faster clearing, and optimal operational efficiencies will prove to be a competitive differentiator.

With their unique and flexible abilities to create scalable, reliable, and electronic business models, digital payments are the future of business transactions.

—Dave Glaser is the president and chief operating officer of Dwolla, Des Moines, Iowa.