How Digital Payments Have Influenced Traditional Banking

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Hi Friends,

Today, I want to address digital payments. I am sure you have heard of Apple Pay or Google Pay. You open your digital wallet, authenticate the purchase, hold it over the payment terminal, and boom—you just paid with your phone! We use this process to pay for a speedier checkout. The improvement of digital payments has made accepting payments and paying easier.

Digital payments have increased security for consumers and banks. This is because if someone were to steal your debit card, they would just go to a store and tap and you would lose a lot of money. However, if you decide to use Apple Pay or Google Pay and the thief steals your phone, you would be safer. But, they would need Face ID authentication or the password to get into your phone. True, you could get that by changing the password, but it would require a security delay. This would cause the owner of the phone to erase the phone remotely and the thief could not buy things on your card.

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This increases security by so much. Also, most phones and devices allow you to erase the phone remotely so that you can do it before the security delay expires if your phone is stolen. Digital payments also allow you not to have to get out of your wallet at every single purchase. If you use Apple Pay; double-click the lock button and authenticate with Face ID. Then simply pay. This can make the checkout process so much easier. Also, you don’t have to worry that all your cards won’t fit in your wallet since there are unlimited cards.

If you need to see what purchases were made with a digital payment service versus a debit/credit card you can see which ones are in the digital wallets’ transactions or your bank statements. This is helpful if you get your card stolen and don’t know which card was stolen or are trying to get a charge off your credit card. In Apple Pay you click the 3 dots, then click “card details”, and then you can see your specific card number associated with your digital credit/debit card.

Digital payments have greatly influenced banking. First, it has decreased operational costs for banks. Banks can reduce costs by decreasing physical operations as we transform into a more digital world. Second, consumers love them. Consumers love simple ways to pay for things they need and want. So many people use services like Apple Pay or Google Pay because they are so easy to use!

Also, I want to discuss startup businesses taking payments. In the very early stages of a business, you need to be able to accept payments for your business. With digital payments, it is a lot easier to take payments. You can use payment software like Stripe or Square and enable a feature called “tap to pay”. This feature allows you to accept payments with nothing but your phone. Especially, with payment terminals costing $300-$1000, it is nice to be able to get an affordable way to take payments. Especially since most startups do not have big starting capital.

Another reason that digital payments have helped banks is that some people don’t trust regional or local banks. After all, they are small and sometimes risky. But with digital payments, they can put their cards in a digital wallet. Registering new or startup banks to services like Apple Pay & Google Pay can greatly increase their reputation. This makes the load of so many regional/startup banks a lot easier to get off the ground because most people do not trust startup banks. They just go to the bigger banks because they have more capital and therefore are more trustworthy. Especially since a lot of startup banks are not FDIC-Insured when the big banks are. As a general rule of thumb, make sure whichever bank(s) you use are FDIC-Insured up to $250,000. This means if the bank goes under you will receive up to $250,000 from federal deposit insurance.

Anyway, thanks so much for reading this article on Friday Finance. Also, a big thanks to our subscribers for being part of Friday Finance! If you have any feedback or something else to share, please message the Friday Finance Whatsapp group. If you do not already have it, the link is on our website: fridayfinancedc.beehiiv.com on the article A New Look At 2024: The Financial Summary Of 2024. Thanks for reading, and see you next week.

Thanks,

Jacob Gans

Friday Finance