Borderless Payments – Is Contactless Payment the Future?

With the Covid 19 pandemic ensuing, we’re seeing commerce frequently relying on the web, which in turn further transitioning the conventional banking industry to become digital- mobile banking and cashless transactions leading the way. The Pandemic, if not anything else, made us realize that we could go cashless and help spread the curve, whereas relying on digital money transfer methods.

Perhaps, that is the future ahead of us.

What is Borderless Payment

Borderless Payment is basically the idea of sending and receiving payments globally.

Through globalization leads to lower trade barriers; as a result, banking and transactions remain decentralized at the same time.

Why-People-send-money-abroad
Credit: Mastercard

There are multiple payment gateways available today that facilitate borderless transactions, alongside blockchain technology accompanied by cross-border banking services.

Before we elaborate further on the specifics, let us entertain simple statistics revealing the most common reasons for sending money abroad.

Contactless Payments For Reducing CoVID-19 Contraction

In 2020, the number of Global Internet Banking users is approximately 1903.2 million and has the potential to reach 2551.8 million by the end of 2024.

Another report shows 76% of bank users in Great Britain used internet banking.

Since 2019, this trend is observed across the Americas as well as European nations like Norway, Denmark, Finland, and Sweden where online banking penetration rates were over 90%.

All these digital transactions are made via E-payment methods despite the rising inflation persisting in the US economy.

Active-Online-Banking-Users-2022

Some commonly used Electronic Payment methods are mentioned below –

1. ACH Debit Pull

Used commonly for online payments, direct deposits, and other digital transactions, ACH Debit pulls credit directly from the payer’s account.

Pulls can take several days to process and are usually low cost, however, are less secure than wired payments.

2. ACH Credit Pull

Commonly used for vendor payments. ACH Credit pushes funds outwards from the payer’s account.

ACH credit costs are comparatively lesser than Credit Cards but are less secured compared to wired payments.

3. Credit Card

Credit Cards are generally used to make retail purchases while enabling the cardholder to borrow money up to a certain credit limit.

Credit card payments are relatively faster and personalized at the same time.

4. Debit Card

Debit cards, much like credit cards, are used for merchant payments as well as retail purchases.

Unlike credit cards, the fund gets deposited directly from the payer’s account.

5. Commercial Card

Organizations sometimes issue credit cards to employees to pay for business purchases using a corporate line of credit.

Some examples are vendor purchase, travel, and food expenses, and other kinds of recurring payments.

6. Virtual Card

Non Physical cards that allow businesses to generate a 16 digit number authorized for a single payment.

Virtual cards come bearing no costs for the payer, are fast and secured.

7. Purchasing Card

Purchasing cards allow companies to purchase without using traditional invoices.

A type of Company Credit Card that comes with an expenditure limit and a few restrictions. P-card payments are hard to audit, however, low cost with fast transactions.

8. Wire Transfer

Wire Transfers are a quick way to transfer money electronically between separate bank accounts, domestically or internationally.

Wire transfers are trustworthy, secured, and fast; however, costs are relatively higher than other E-payment methods.

Financial Technology or FINTECH

Finance Technology is largely responsible for automating financial services.

Fintech is evolving the scene of monetary transactions and simplifying them by the use of specialized algorithms and software based on computers and smartphones.

Fintech has made cross-border payments easily accessible and within the range of our fingers.

Here’s a list of apps commonly used for borderless payment systems

  • CurrencyFair
  • Western Union
  • Payoneer
  • WorldRemit
  • PayPal
  • Moneygram
  • OFX
  • Remitly
  • TransferWise

The Blockchain Movement

Blockchain allows us to store and process information in and from a shared database (usually run in a group of computers).

Blockchain-Technology-Money-Transfer-MCA-Leads-Pro
Blockchain technology allows users to act as their own bank

The blockchain movement and cryptocurrencies facilitate contactless payments between individuals without the necessity of banks or third-party apps.

It’s a revolution that has created a stir in the global economic status quo.

The fact that individuals can send and receive money that does not have to go through the slow validation process (that banks offer) and surpass the additional fees for transactions is HUGE.

We’re already on the verge of the Fourth Industrial Revolution (the data revolution), and everything we can think of today is on its way to a digital or data metamorphosis.

With that in mind, Blockchain and decentralized, data-driven payment methods are the future.


EndNote

As transformations in technology, from Fintech to Infotech and Biotech - shape our realities, it’s truly hard to say what the future beholds for us.

However, one thing that can be certain about the merchant cash advance industry is how effortlessly capital can be transferred from one part of the world to another by leveraging borderless payment system. Trends in acceptance of Crypto go on to support such claims.

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