The Different Types of Cashless Payment Modes and Their Benefits

Fredericka Smead

In the effort to minimize physical contact during this pandemic, many businesses are changing to cashless payment modes. Although IMPs and cheque remain common forms of cashless payments, other methods, including the following, have developed immensely: Banking Cards Bank cards are part of the everyday lives of millions of people. […]

In the effort to minimize physical contact during this pandemic, many businesses are changing to cashless payment modes.

Although IMPs and cheque remain common forms of cashless payments, other methods, including the following, have developed immensely:

  • Banking Cards

Bank cards are part of the everyday lives of millions of people. The key to their success includes simplicity, comfort, and convenience for carrying them around to make payments and purchases.

Payments or withdrawals with a bank card will result in an immediate change in the account’s balance. Most bank cards are also associated with either MasterCard or Visa. While purchases can be debited from a deposit account, you can make purchases as ‘credit’ anywhere that allows MasterCard or Visa.

Credit and debit cards are the most common types of banking cards, but some banks can also offer forms including:

  • Virtual cards
  • Deferred or revolving payment cards
  • Prepaid cards
  • USSD

Unstructured Supplementary Service Data (USSD) is a protocol that GSM cellphones use to communicate with service providers’ PCs through text messages. People commonly use USSD to check data balance and mobile airtime or receive PIN codes or one-time passwords.

This text-driven method also enables users to interact from their cellphones by choosing options from a menu. Unlike SMSs, USSD works in real-time – meaning it allows two-way communication provided the communication line remains open. This makes answers and queries virtually instantaneous.

Apart from working globally and enhancing client satisfaction, USSD is simple to use, reduces operating costs, increases revenues for businesses, and doesn’t need data or internet connection to work.

  • E-Wallets

E-wallets are a particular type of digital or virtual wallet that collects payment data using electronic devices. Customers or shoppers use mobile wallets to make in-store payments, and it is usually a convenient method compared to carrying physical credit cards or paying with cash.

You can integrate your wallet into a mobile device after downloading the application. Besides being a convenient and secure payment method, mobile wallets make checkout faster. This means, with Google Pay, you can unlock your smartphone and hover it over the payment terminal, using either of the following types of MW:

  • Closed wallets
  • Open wallets
  • Semi-closed wallets
  • QR Codes

QR code is a machine-scannable image, which you can read using a camera on your smartphone. Each code comprises several black dots and squares that represent certain information. It also works the similar way as barcodes in supermarkets.

The codes have become popular because many customers have learned how to use them. Consultants, restaurants, and retail businesses are also learning how to make QR codes to generate sales and get noticed.

Using the codes on print media can also allow users to engage in a manner that is error and quick-free, engaging with content, more informative, easy to save, and actionable.

  • Vouchers and Gift Cards

Discount vouchers and gift cards offer an alternative to cash when purchasing services or products from a participating business. In general, vouchers provide discounts on specified services and products. This may include a book of vouchers and shopper dockets. Companies offering vouchers should clearly state restrictions and conditions on how customers may use them to get discounts. Other than increasing brand awareness, reducing fraud, and improving sales, vouchers can be a great way to get new clients while retaining the loyalty of existing ones.

On the other hand, gift cards are treated as cash. They represent cost-effective marketing, which helps to keep the business top-of-mind. Connection with customers can start with gift cards, but it doesn’t end there. They can also open doors to additional advertising opportunities and deeper client engagement.

To Conclude

The global pandemic poses a lot of threats to financial markets globally. Businesses and retailers worldwide have started taking measures following the directives of WHO (World Health Organization) on prioritizing cashless payment methods to help curb the spread of this virus.

Although several retailers have started destroying or disinfecting banknotes to avoid getting infected with the virus, others prefer contactless payment methods, like USSD, banking cards, and mobile wallets, just to name a few.

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