How Alternative Payment Methods Are Transforming the Payments Industry
A Divido study explains the need for more convenient option of paying, as, for instance, 17% of UK-based consumers stress on the availability of different finance options as the most important factor, with 36% admitting they would shop again at a retailer offering it. At the same time, retailers are seeing benefits such as increased customer loyalty and repeat purchases, increased basket conversions, and sales uplifts of up to 30% by implementing customer finance.
Besides that, e-commerce system also associated with the service industry, such as online banking, transfer funds, or even pay the credit card bill. Along with the e-commerce continue to broaden, protection of individual treatment over the internet, and make your customers feel secure is the primary factors and necessary. In order to perform a secure and good service, internet security plays an important role to be enhancing in this situation. The objective is to establish rules and measure to use against attacks over the Internet. Internet information exchange on behalf of the invasion led to unsafe or high risk of fraud. For any expert in internet security will tell, e-commerce is actually much more secure than real world commerce. For example like when you leaved your credit card receipt in the shop, or accidentally give your credit card number to someone else, you are actually accepting the risk that the order which not order from you will appear on the next month’s credit card bill. However, when you enter a credit card number of e-commerce site, you are sent through a secure connection to a server access only to authorized personnel and protected against even the most determined intruders. Although some of the people believe that transactions over the internet are in fact safer than offline transactions, there are still a number of people believe that offline transactions are always better than online payment. For example like protecting the credit card detail, company need to prevent the card info from customer or the privacy of the customer found by a third party. Typically, this involves the company network security and how the company provide a strong and secure system on the internet.
Could we have a loss of confidence in these networks that makes consumers afraid to make payments processed over them? Are policymakers regulating or monitoring the networks to avoid such an outcome? These issues warrant attention. Policymakers also face the challenge of being prepared for sudden shifts in the demand for various payment instruments. For example, in the days before a hurricane is expected to hit an area, cash withdrawals rise as insurance against a loss of electricity that limits the ability to use other payment instruments. Central banks can anticipate that shift in demand. But in an economy where very little currency is used, will policymakers be sufficiently prepared for the demand for cash that might arise in the aftermath of a more major disaster? In an economy where few checks are used and processed, are we prepared to handle a major and sudden shift back to checks some day? The question of how consumers make payments and why they choose the payment methods they do has long intrigued scholars. While we are coming to know a lot more about how consumers make payments, we still know fairly little about why they choose the payment methods they do. With better data from the point of sale and better theoretical models of consumer payment decisions, future research holds the key to unlocking the answers. The existing literature on network effects and two-sided markets could be useful in addressing this challenge (for example, Farrell and Saloner 1985, Katz and Shapiro 1985, Schiff 2003). Like the empirical literature, however, the theoretical literature that incorporates frictions and generates a demand for payment instruments also misses answering the question of how or why consumers choose which payment instrument to use at the point of sale. Some papers take as given the set of payment instruments and assume the set is small, limited to one or two instruments (e.g., Schreft (1992(a), 1992(b)).
New methods including bank-based payments are convenient and typically have lower fees. This has been made possible in Europe by Open Banking, which created an opportunity to make bank-based payments a reality for all European customers. These payments settle faster and carry a lower risk of fraud and chargebacks (they use Strong Customer Authentication by default).
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