As we carry out more and more transactions online and as more of those transactions take place using mobile devices, the issue of making payments safely and securely is a major concern. While payment cards are still the preferred option for many, security worries surround their online use.
Individuals and businesses alike are increasingly turning to the use of e-payments systems and virtual wallets which allow them to make payments without exposing their card details directly to the retailer.
There are various options to choose from, the best known being PayPal, Apple Pay and Google Pay, all backed by major brands. So, what are some of the key pros and cons of using e-payments?
Quick, simple and secure
Whether you are buying items or services online, transferring money between accounts, or simply buying your morning coffee, e-payments are quick and simple in comparison to using cards or cash. Payments can be completed in a few seconds, and there is no longer a need to risk carrying a lot of money around.
When shopping online, there’s no need to enter your card details each time, making it a safe and secure process.
Whether payments are for personal or business purposes, using e-payment systems helps you to stay in control of transactions. The account shows all transaction details, including the date, amount and the name of the retailer. It’s therefore easy to see where your money is going, and you can check transaction details without waiting for a monthly statement.
Although most retail businesses still take cash, overall, its use is declining. If your business doesn’t accept e-payments, you risk falling behind and losing customers to competitors. Offering several alternative payment options helps companies to attract more consumers.
Although e-payment platforms have high levels of security in place, as with any technology-based system, they run the risk of hacking and fraud. Although systems may not come under direct attack, cybercriminals are likely to use phishing techniques to obtain IDs and passwords. Once a hacker has these details, e-payments make it possible to process multiple payments before the genuine account holder notices.
However, security is improving with the availability of additional verification methods such as two-factor authentication (2FA) or biometric identifiers.
Another drawback of e-payments systems for merchants is that although they are generally free for the consumer to use, however, the merchant pays a charge to the payment provider to finance the system. This may eat into profit margins, especially on smaller transactions.
Another issue is that if payments are in foreign currencies, then the user will usually have to pay a transaction fee.
As with any system that relies heavily on technology, e-payments put businesses at the mercy of the machinery. Internet connection failure can leave companies unable to make or accept payments. Payment gateways may suffer technical issues or cyberattacks that leave them unable to approve transactions. For the consumer, these issues are frustrating; for businesses, they can mean a significant loss in revenue.
For businesses, handling payments electronically can mean additional costs. These are relatively minimal when transactions are managed online, but if with a physical store, it may be necessary to invest in terminals to accept payments. These need to be kept up to date and secure.
There will usually be back-office costs involved in storing customer data and keeping it safe. Although the payment provider does most of the work, companies still need to ensure that transactions are handled safely within the organisation.
Cash is in decline, and electronic payments are gradually taking over. For small businesses, this means that they must adapt to using the new technology or risk being overtaken by competitors. In 2018, over 60 per cent of UK transactions used some form of electronic payment, indicating the growth and the importance of this sector in the future!