Consumers have embraced paper to digital
Robbins believes the move to digital payments benefits consumers, who enjoy a smooth, effortless process, with many digital options. They enter their information once and use that for all future purchases. And options like one-click order systems or peer-to-peer payments make the payment process feel less transactional, and more about the customer’s connection to the brand, retailer or friend. Today’s options enable almost everyone to be digital, even the 7% of American adults who remain unbanked have the option of using a phone to pay — “and virtually everyone has a phone now,” Robbins says.
Merchants win through better data, security and processes
For merchants, the switch to new digital payment methods can pay off in multiple ways:
- More speed: Getting the cash and the checks out of the system speeds payments, provides faster reconciliation and reduces labor costs and processing fees, Robbins says.
- More data: Digital transactions and digital payment platforms can generate data for merchants, allowing them to harness the important marketing trend of personalization (while still being mindful of customers’ privacy concerns). “Merchants gain an edge when they are able to retain customer data,” says Robbins.
- Enhanced security: Robbins says with end-to-end security and tokenization, digital transactions can be one of the safer ways to transact. “You never see that credit card number until it’s settled with the bank,” he says. “E-commerce can be an amazing way to be more secure, versus the days where you had a physical card that could be lost, or merely used in a card reader—where a criminal could access that card reader and grab that card number or that PIN.”
- Fewer declined transactions: Digital payment systems and the data bases they create and access can help merchants and banks cut down on the number of declined transactions. “A huge percentage of declined transactions are from invalid card data, like replaced or expired cards, for example,” says Robbins. “With a digital payment, if the system recognizes a transaction was declined, it can go into the database to see if the customer has current card data and, if so, resubmit the transaction with current card information to obtain a transaction approval. That saves the sale for the merchant, avoids customer service interruptions and allows the banks and merchants to focus on the actual bad actors.”
Digital payments are not just for traditional retail operations. Bank of America has worked to create a similar payment system in healthcare, with a healthcare-specific portal designed to enable digital, paperless, contactless options to pay. “The gateway allows the healthcare customer to swipe a card or store their payment information, so that it becomes part of the patient’s permanent record, integrated with the hospital system, the provider and the insurance company,” Robbins says.
A fast-moving payments world
What comes next? “The pace of change is incredible. I almost think that we are getting to a place where changes happen monthly, so we have to think about digital advances in the context of months, not years,” Robbins says. “We will have a conversation a year from now and I’ll be telling you 20 other things that we’re doing that we didn’t do 12 months ago,” he says. “That’s how fast the pace is changing.”