How Digital Payment Solutions Help Grow Economies
Did you know that economies with a focus on digital payments, as opposed to cash transactions, grow faster?
In fact, stats tell us that a switch to digital can impact the annual GDP by as much as 3 percentage points. Cashless payments have been dubbed economic propellers – not because there’s more money in the system, but because it’s just so much simpler to manage it.
We want to understand more about this and how digital payment solutions benefit our fair country, and our businesses.
The Case for Digital Payment Solutions
Cash isn’t going anywhere soon, we know that, but it is becoming less and less necessary to use cash. The growth of cashless payments brings with it three major benefits:
Undermines the Grey Economy
What is the grey, or shadow economy?
“The shadow economy refers to all work activity and business transactions that occur ‘below the radar’ – economic activity that is undeclared and for which taxes that should be paid are not.
“Also known as the informal sector, the black economy, the underground economy, or the grey economy, the shadow economy includes criminal activities such as drug dealing and smuggling, as well as legal jobs, such as gardening, working in construction, or selling products to car drivers at traffic lights.”
When cash changes hands, nobody needs to know. It’s impossible to track and is incumbent on one of the parties to declare it as income – which often doesn’t happen. This flow of revenue not only supports illicit enterprises but robs the economy of millions in taxes which should be used to build and support the country.
Digital payments are never cash-based and are entirely trackable from beginning to end.
Boosts Online Commerce
The move towards operating online has grown exponentially since COVID kept us all at home. Businesses large and small needed to focus on their digital presence and make sure that they were providing a frictionless journey for customers.
This major shift has resulted in a host of newer, better, and faster payment systems to satisfy different customer needs and a variety of platforms. Reduces Fraud
Security and compliance with evolving privacy legislation are essential for digital systems. That’s a good thing. It means that online cowboys and fraudsters are less likely to catch consumers because the various financial institutions have just made it so much more difficult.
Spoiled for Choice
Once you recognise the compelling reasons to choose digital payment solutions, you’ll no doubt see with fresh eyes, the choices available to you.
Physical POS Devices
POS transactions have soared over the past few years as consumers move to the safety and convenience of plastic. Evolving from a frustratingly temperamental dial-up system back in the day to the tap-and-go solutions that we enjoy today, these are an essential starting point for any customer-facing business.
Sturdy GSM connections act as a valuable failover when the internet falls over, or when you’re taking payments remotely.
Online Payment Gateways
The list of fast, secure payment gateways available to all sized businesses in South Africa grows longer by the day. We have seen these become much more user-friendly with far fewer hoops for merchants to jump through.
The pricing models of the payment gateways differ, so it is important to pick one that suits your business model and affords the features and security that will ensure that buyers can easily and securely use your online store.
Mobile (USSD) Payments
USSD transactions may look like a line of computer code (which they are…) but once you know the formula they are a quick and secure way to move money around. Banking, payments and transfers are all catered for.
There’s very little margin for error with USSD, as the input required is super-simple and guided by redefined menus.
Mobile Money
Business Live tells us, “In 2018, four out of five South Africans — 80% — had bank accounts, according to non-profit research organisation FinMark Trust. On the face of it, it seems that financial inclusion is making steady progress. On closer examination, that 80% figure doesn’t tell the whole story.”
Around 40% of these bank accounts are dormant or “mail boxes” – used simply for quick deposits and withdrawals.
Far from dying a slow death in South Africa as was predicted a few short years ago, mobile money is flourishing. It is a cheaper and far more convenient way to move money around, pay bills and purchase airtime and utilities. Withdrawals are straightforward and secure from cardless ATMs.
“In the future, you can expect to see mobile money overtake banks as the most widely used money management tool. Banks right now cannot compete with the flexibility, convenience and freedom that mobile money offers.” (Source)
Let’s Get Digital
Digital payment solutions certainly have the reach and the technology to make them a viable addition to your payment stable. Secure, trackable, and increasingly user-friendly options are ready and waiting for you to plug into your system. All you need is a fast and secure internet connection, a robust failover, and a team of dedicated professionals to work alongside you.
Call Huge – let’s connect.
