The recent explosion in popularity of digital payments can be attributed to many things--from a younger and more tech-savvy generation of consumers becoming more financially stable to the rise of eCommerce and beyond. Regardless, 2/3rds of adults worldwide now make or receive digital payments regularly--a trend that shows no signs of slowing.
But what are digital payments in a more precise sense and why are they something your credit union should explore? The answers to those questions are straightforward, but they do require you to keep a few key things in mind.
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Digital Payment Options: Facts and Figures
The concept of digital payments in general can be further broken down into two related ideas: digital payment applications and digital wallets.
- A digital payment application would be something like Zelle, Venmo, or Cash App. Here, people can use their smart devices to send and receive money as needed via an application that is connected directly to their bank account.
- Digital wallets also exist on mobile devices, but they can contain so much more than just digital versions of your credit or debit card. They can also securely store information related to rewards programs that you might participate in, memberships that you have to brands, and even identification cards in certain situations.
They've also become overwhelmingly popular--to the point where one recent study estimates that the total transaction value in all digital payment segments will reach an enormous $9.4 trillion by the end of 2023. Additionally, that transaction value is expected to continue to grow at an annual rate of 11.8% between now and 2027.
Why Digital Payments Have Become So Important
The biggest reason why digital payments have become so critical to credit unions in particular can be summed up in a single word: choice.
Members flock to credit unions in the first place because they don't want to be told how to handle their financial lives. They want to be able to manage their accounts where they want, when they want, and on whatever device they want.
Digital payments are a natural extension of that, allowing people to stop carrying physical cards in favor of a secure device that has all the same flexibility that they were already carrying around with them in their pocket all day long.
The Major Benefits of Digital Payments
As an extension of that, it should come as no surprise that a significant advantage of digital payments for credit unions has to do with control. Members simply have more control over how their funds are being used. They can also enable granular restrictions via their mobile banking platform of choice.
Most people also love the added transparency and visibility that comes with digital payment options, too. For example, every transaction made with a digital card is tied to a separate identification number. Therefore, it becomes easy for both credit unions and members alike to track not just overall balances, but also individual transactions, in real-time. In addition to cutting down on the possibility of fraud, this makes investigating the rare instances of fraud that do occur easier and much more straightforward.
Believe it or not, this is just the tip of the iceberg in terms of the major benefits that digital payment flexibility brings with it. To learn more, check out Part II of our Complete Guide to Innovative Digital Payment Options. Likewise, be sure to click the button below to view our Digital Account Services eGuide to find out about even more forward-thinking ways to give members the tech-driven experiences they crave.