Electronic payments are a seamless, fast and simple way for making and accepting payments. The ease of use and the widespread opportunities tied to electronic payments are among the most appreciated features. In this article, we are focusing on the three main advantages that electronic payments have over cash to both merchants and consumers.
Lower costs
As surprising as it may sound, cash payments are not free. On the contrary, they are rather expensive. In fact, the costs related to cash handling such as distribution, deposit, counting and transporting are higher than those for electronic payments. Cash payments require significantly more manual work, infrastructure and logistics to make these possible, whereas electronic payments don’t.
Let’s do a simple simulation of the transaction cost between an electronic payment with a debit card and a payment with cash. For a payment of €20 with a debit card, the transaction cost is approximately €0,13. If the customer pays the same amount with cash, the transaction cost can be up to approximately €0,30, or three times as much (source: UNIZO; April 2022).
The cost difference between both payment methods is even more stark when thinking of longer distance transactions. Sending cash even only a few miles away implies some cost and organizational hassle. This could rapidly become daunting. For electronic payments on the other hand, the same pricing applies for payments to both your neighbor and someone living on the other side of the world. It can be done quickly, inexpensively and with ease.
Also, the great variety of payment solutions helps to bring down the costs related to electronic transactions. The range of possibilities in terms of pricing model (customized Classic offer or a flexible solution), payment method (with card or mobile) or type of terminal (fixed, mobile or cash register linked) are tailored to the situation of each merchant’s business. This way, we make sure that you only pay for what you need and use.
Higher security
Electronic payments are considered much safer than cash, because of the multiple layered security measures such as encryption, tokenization, etc.. Whether you are making a transaction with your bank card or with your mobile phone or smartwatch, there is nearly always a stringent verification process such as a PIN code or biometrics data request. Something that is completely missing when using cash.
Also, the risk of loss or theft is much lower compared to cash stored in a cash register or bag. Even though your electronic payment means can be stolen as well, the possible damage caused remains more limited. Cash stolen from your wallet is gone, usually forever. A lost or stolen bank card or smart device however, can be blocked quite instantly.
In addition to these security measures, the feeling of safety should also be taken into consideration. Would you feel comfortable with €100 cash in your pocket? Yet nowadays every purchase quickly reaches this amount. With an electronic payment method, consumers are less limited in their spending.
Furthermore, electronic payments have proven to be more secure than cash from a health perspective due to the lack of physical contact.
Greater flexibility
After pricing and security, comfort is also a major concern of consumers. Unlike cash money, electronic payments are more convenient for many reasons. First of all, payments can be made and accepted in no time. Your clients don’t need to find a bank office or to queue up at a cash distributor. They don’t have any constraint of time or location, which provides a very appreciated sense of freedom. This is in turn beneficial to your business.
Also, you can easily track your transactions at the end of the day through our daily report sent by email and accessible on our online platform. These transaction reports with pinpoint accuracy have proven to be very useful for accounting purposes.
Electronic payments allow for more control and peace of mind for consumers too. They can check their expenses within seconds on their payment app.
Questions about electronic payment solutions?
FAQs
Electronic payments are a seamless, fast and simple way for making and accepting payments. The ease of use and the widespread opportunities tied to electronic payments are among the most appreciated features.
Why is electronic payment better than cash? ›
Reduced risk of theft: When you carry cash, you are at risk of being mugged or pickpocketed. With cashless payments, there is no physical cash for someone to steal. With cashless payments, you don't have to worry about losing physical currency, and your money is stored in a secure digital wallet.
Which is better online payment or cash payment? ›
Digital transactions make record-keeping and credit-building easier since they create a clear trail. In addition, they have security features like biometric authentication and PINs, which lower the chance of theft as compared to cash.
What is the difference between e payment and cash payment? ›
Digital payments offer increased convenience, speed, and ease of use compared to carrying cash or visiting a physical bank branch . However, cash provides anonymity, which digital payments do not offer . Digital payments also allow for more efficient online transactions, while cash cannot be used for online purchases .
Why are electronic payments better than checks? ›
Increased Payment Security: Electronic payments offer inherent security advantages over paper checks, with methods like virtual cards providing additional protection against fraud. The top e-payment systems incorporate advanced features like card tokenization, PCI Compliance to secure the payment process further.
What is an advantage of electronic payments? ›
What are the advantages of electronic payments? Customers can pay as soon as they feel the impulse to buy. This can work especially well if you offer the customer a product or service in real time, such as a ticket.
Why is cashless payment better than cash? ›
Cashless society: advantages
When people are handling less cash, bank robberies, burglaries and corruption drop. Because cash is essentially untraceable, it's a useful tool for criminals, where digital currency is less easy to exploit, and can be shut down quickly if it falls into the wrong hands.
Why is digital money better than cash? ›
Digital money streamlines financial infrastructure, making it cheaper and faster to conduct monetary transactions. It can also make it easier for central banks to implement monetary policy.
Why are digital payments better? ›
Digital payment methods have the advantage of being faster, safer, easier to collect, and less expensive to the business. By incorporating electronic payment methods into your business's account payable process, your AP department can realize saving on every invoice.
What are the risks in an electronic payment system? ›
Security Risks: Despite strong security measures, electronic payment systems are vulnerable to hacking, data breaches, and identity theft, potentially exposing customers' sensitive information.
Disadvantages of Online Payments
- Technical problems. ...
- Password threats. ...
- Cost of fraud. ...
- Security Concerns. ...
- Technological illiteracy. ...
- Limitations on amount and time. ...
- Disputed transactions. ...
- Loss of smart cards.
The commonly noted advantages of e payment systems are cost savings due to more efficient payment processing, quicker and more accurate payment processing, improved access to data and reporting, and flexibility and safety with making payments.
Why is electronic payment safer than cash? ›
Higher security
Electronic payments are considered much safer than cash, because of the multiple layered security measures such as encryption, tokenization, etc..
What is the most popular electronic payment method? ›
Which are the most popular online payment systems? It's no great surprise that the most widely used payment method worldwide is still the credit card. One reason why alternative payment methods are not more successful, is that their adoption rate is usually very slow.
What is a disadvantage of using electronic forms of payment? ›
Exploring the Disadvantages of E-Payment Systems
Security Concerns: E-payment systems are susceptible to cyber threats and hacking, posing risks of unauthorised access, data breaches, and financial fraud.
What are the advantages of electronic money? ›
Advantages of Electronic Money
The use of electronic money brings increased flexibility and convenience to the table. Transactions can be entered into from anywhere in the world, at any given time, with one click of a button. It removes the hassle and tediousness involved with the physical delivery of payments.
What are the benefits of making electronic payments of? ›
These payments can be made completely online, so they are the top pick for many consumers today who handle much of their shopping online. Additionally, electronic payment is much quicker and easier to track than traditional snail mail, which makes it an easy choice for many consumers and businesses alike.
