Until recently, most customers had two payment choices — cash or card. Although that made payments simple for business owners, it was often inconvenient for shoppers. For instance, what if you left home without your wallet? What if your bank locked your card unexpectedly, and you couldn’t complete a purchase? Or your spouse borrowed that last $20 without telling you?
Now, advances in payments technology are introducing fast, convenient options that give consumers more choice and flexibility over how they pay.
So, what does the payments landscape look like today, what types of payment technologies should you be considering integrating to meet changing demand, and what even newer payment methods are coming down the pipe tomorrow?
In this article, we’ll take a closer look at the payments landscape and explore three key types of payment technology including:
- Credit and debit cards
- Advanced, tech-forward options like digital wallets
- Next-gen payments tech, like instant payments and cryptocurrencies
Credit and Debit Cards: Payments for Everyone
Traditional card payments are a must for every merchant. According to the U.S. Federal Reserve’s 2024 Diary of Consumer Payment Choice, debit and credit cards continue to dominate, making up 30% and 32% of all payments, respectively. Cash is a distant third at 16%, making it clear that even the smallest businesses must accept traditional cards.
Swipe, Dip or Tap
For direct, in-store card payments, customers can pay in three main ways: swiping, dipping or tapping.
- Swipe: Swiping a card is now so out-of-date that customers often see it as strange or unsafe. If your payment hardware requires customers to swipe, it’s time to upgrade
- Dip: Europay, MasterCard and Visa (EMV) based chip cards are standard for in-store card payments, and merchants should consider EMV-compliant readers the minimum. These cards use a chip and PIN in place of an easily forged signature, significantly boosting security
- Tap: Contactless card payments use a Near Field Communication (NFC) transmitter inside the card to allow customers to tap-to-pay. NFC transmits the card data to the reader wirelessly, but it only works over a very short distance, keeping the transmitted data safe. Tap payments are fast and convenient. They’re also more hygienic, which encouraged their mass adoption during the pandemic. Tap is what the majority of businesses should be offering today
Merchants who want to sell online, in addition to a traditional storefront, will need a payment gateway. Some platforms offer built-in gateways, but most merchants get their own through an independent sales organization (ISO) partner or SaaS provider. As with merchant accounts, getting a gateway from an ISO or SaaS partner provides more choice and flexibility in how you take payments. They also sometimes offer lower (or more negotiable) fees.
Modernized Payment Acceptance Methods: Targeting Early Adopters
Advances in payments technology are introducing new options for both in-store and online payments, and tech-savvy consumers are noticing. Some, like digital wallets, make card payments frictionless. Others, like buy now, pay later (BNPL), allow customers to pay over time with low or 0% interest rates.
Adopting modern payment types will keep you at the leading edge of payments and ensure you’re offering the best experience to your customers — especially younger consumers.
Digital Wallets
Digital wallets allow users to store digital copies of their payment and loyalty cards on their devices, such as laptops or smartphones. Rather than pulling out their wallet or entering their card details online, customers can tap their phone or automatically fill out their digital checkout details.
Wallets like Apple Pay, Google Pay and Samsung Pay now come preinstalled on every mobile device (and most computers). That means nearly every consumer can access a digital wallet, whether they realize it or not. This payment method is one of the fastest and most convenient on the market, so much so that in 2023, when 50% of Americans tried a new payment, digital wallets were at the top of the list.
Luckily for merchants, adopting digital wallets as a payment method is easy. If you already have a tap payment terminal, then you’re set; your customers can tap their mobile devices like a payment card. If you sell online, adding payment buttons for top digital wallets is as simple as turning on the feature in your admin dashboard.
Buy Now, Pay Later
Buy now, pay later is a modern version of the old-time payment plan; it’s an installment loan issued right at the point of sale, either in-store or online. That means that instead of paying for a purchase in full, the customer pays a portion upfront and spreads the rest out over multiple installments.
One of the biggest draws of BNPL is that it usually comes with 0% interest, assuming customers pay on time. That makes it especially convenient for consumers who need to spread out costs during economic hardships.
Thanks to providers like Klarna and Afterpay, integrating BNPL into your checkout isn’t difficult. But, it does come at a cost to you — generally between 2% and 8% of the total purchase amount.
RTP, Crypto & More: The Digital Payments of Tomorrow
Adopting payment methods like digital wallets and BNPL is a great way to give customers more choice and flexibility. However, there are even newer options that, today, are only in their infancy (at least in the United States). Options like real-time payments (RTP) and cryptocurrencies are quickly gaining attention, and although there’s no rush to adopt them, it’s still a good idea to keep them on your radar.
Real-Time Payments
Real-time payments (RTP), or instant payments, go directly from the payer’s bank account to the payee’s using bank connections. With RTP, a payment can be initiated, transmitted and settled in seconds, at little to no cost to the buyer or seller.
RTP has long been popular in places like the U.K. and widely adopted in emerging markets like India. But the U.S. is behind. In America, RTP has traditionally only been used for peer-to-peer (P2P) payments through apps like Cash App or Venmo. However, B2B and B2C instant payments are coming. The new FedNow RTP rail, launched in July 2023, aims to bring the U.S. in line with its peers in the U.K. and EU.
Cryptocurrency Payments
Cryptocurrency enthusiasts have talked about crypto payments for years. In the past, slow speeds, unstable values and enormous transaction fees made these payments impractical. Today, that’s changing.
Fast, low-cost blockchains, like Solana, are making it possible to process huge numbers of transactions per second without increasing fees. Major card networks like Visa are taking notice and launching crypto pilot programs to leverage the many benefits blockchain technology can offer payments.
User hesitancy and technical limitations have pushed back consumer adoption. However, businesses are taking notice, and most retailers intend to incorporate stable cryptocurrencies — known as stablecoins — as a payment method in the future.
Everything Payments
The evolution of payments is good for everyone. The problem is, keeping up with changes in payment options and consumer preferences can be exhausting for payment providers and merchants alike. If you’d like to learn more about payments and how they work, take a look at our introductory payment glossary here.
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