With the easy availability of digital payment solutions, both merchants and consumers nowadays prefer digital transactions that can be done quickly with the click of a few buttons. Not only is this efficient, but it also helps to save a lot of time, effort, and energy for everybody involved. Advances in technology have brought about many digital payment solutions in the form of Internet banking, e-wallets, and the use of debit/credit cards, to name just a few. According to a recent study conducted by the Atlanta Fed, US customers made 57% of their payments using credit, debit, and prepaid cards and only 25% of their payments using cash and checks. Despite the benefits of such digital payment solutions, there are specific challenges that both customers and businesses face. Let’s look at what some of the barriers to digital payment solutions are:
1) Digital payment services may charge a fee for online transactions below a certain minimum amount
Businesses that provide online payment services may charge additional fees for carrying out digital transactions. This is because those businesses have to pay the payment processor a certain amount of money to process the transaction. Venmo, for example, charges a 2.9% fee for all payments done with a credit card. As a result, the end customer often has to bear these 2.9% fees unless the transaction is above a certain minimum amount of money. In this scenario, many customers may prefer opting for checks to save on such costs. Furthermore, nowadays, customers do not have to go to banks to collect checks anymore. Many online platforms allow consumers in the US to purchase checks online inexpensively and safely. Read more about how to order checks in 2021.
2) Merchants may need to integrate additional software to accept online payments
Digital payment solutions are undoubtedly helpful if you have an online business and target consumers from all across the globe. However, you may have to invest in different technologies that help you accept online payments from your customers. This could be an expensive and time-consuming process. Furthermore, it may entail substantial time and effort to integrate online payment solutions into your website or app. Also, you should keep in mind certain things if you’re looking to facilitate digital payments from your customers. These extra costs, even though necessary, might be a burden for small businesses.
3) There is a possibility of fraud
Online transactions often mean that you have to share or save your bank account details or credit/debit/prepaid details on websites and mobile apps. Therefore it may be dangerous to purchase something through unknown websites/mobile apps as you may be a victim of fraud. The usage of security measures such as two-factor authentication and one-time passwords (OTP) does help reduce the risk, but cybercriminals may find a way around them as well. It has been reported that online fraud has increased during the pandemic. Hence, while digital payment solutions make it flexible to carry out cashless and cardless payments with minimum hassles, you are still at a high risk of losing money if unauthorized transactions take place.
4) Other resources may be needed to carry out payments digitally
If you are not technologically savvy or happen to travel in areas where internet connectivity is a problem, digital payments may not be the right option. Digital payments increase your dependency on gadgets and the internet to carry out payments. Even with fast-changing times, many stores and businesses still rely on cash or check payments. Many people in the US still prefer cash over digital payment solutions.
Digital payment solutions have transformed how business is done these days. However, despite all the convenience and speed, there are still a few barriers to the universal adoption of such payment solutions. This article touches upon a few of the barriers.