digital payment transformation

By Dave Glaser, CEO, Dwolla

By now, when business leaders hear about digital transformation, they should think, “Been there, done that.” However, some major corporations are still lagging behind the technological curve and missing opportunities to gain a competitive advantage.

Previously, digital transformation decisions often took a backseat to other business initiatives. Many leaders failed to see the value-add digital transformation could bring—until it was too late. Now, with a better understanding of how emerging customer demands and tech trends sway business decisions and strategies, many companies have been more open about embracing change via digital tools and applications, especially startups and other small businesses.

Even so, enterprise-sized organizations have more difficulty digitally transforming their internal operations. Traditional organizations are more reluctant to make the transition since 70% of attempted transformations are expensive, time-consuming failures, according to Deloitte. Changing too much too fast won’t allow for the successful integration of new technologies, so these businesses must devise a plan to start digital implementation on a granular level.

Updating your banking and payment methods is an easy and extremely effective way to get the ball rolling.

The impact of digitally transformed payments

digital payments speed

A company’s investment in digital assets and business capabilities can accelerate growth and provide operational improvements – and this is especially true in incorporating tech-enabled payment options. Transforming a business’s payments segment increases its profitability and is a solid investment in seamless technology that can scale with a business.

Leaders who plan for future expansion build their companies with scaling in mind. The shift from antiquated financial transfers to modern digital payments is necessary to make that possible. Automation, streamlined payment processes, and frictionless experiences for customers help improve productivity and increase efficiency. Businesses that use outdated systems can see immediate benefits by focusing on faster A2A payments.

For example, take the freight and transportation industry, which heavily relies on legacy systems and manual processes. Well-established corporations in this sector are now being challenged to “digitally transform” areas of their company, including payments, because vendor, employee, and customer expectations have adapted to faster, frictionless processes.

Manual billing processes, like mailing invoices to only then collect paper checks, turn simple money transfers into a guessing game, costing more time and money than needed. The speed at which payments are deposited makes a significant difference for companies that work with vendor partners, like the freight and transport industry. The move from archaic systems to emerging technologies has become a requirement to survive in our fast-paced marketplace.

What about cybersecurity?

payments and cybersecurity

Cybersecurity is another reason businesses are hesitant about undergoing a digital transformation – especially one tied to transferring funds. As digital payment options gain popularity among companies and customers, the risk of data breaches and fraudulent activities rises.

Consumers seek fast and seamless transaction experiences but are unwilling to compromise their privacy and sensitive data. To tackle this issue, businesses must update security measures to combat sophisticated cybercrime. Implementing proactive strategies to prevent breaches and swiftly identifying and rectifying incidents are crucial. Through careful planning and rapid response, businesses can effectively mitigate fraud risks and protect sensitive data.

In the US, digital payment providers must comply with two crucial regulations: the Payment Card Industry Data Security Standard (PCI DSS) and the Electronic Fund Transfer Act (EFTA). The EFTA provides essential consumer protection, including safeguards against unauthorized transactions, liability limitations, and error resolution procedures.

For a secure digital transformation, businesses must adhere to these critical regulations. The good news is that cybersecurity and privacy technology have significantly advanced, alleviating many past concerns. By replacing manual payment processes, paper checks, and outdated systems with automated A2A payments, businesses can lower costs, expedite processing, enhance security, and improve record-keeping.

The future of digital business payments

digital business payments

The landscape of digital business payments is evolving rapidly, driven by transformations reshaping how transactions occur. Key trends include the rise of contactless payments, the growth of mobile payment solutions, increased utilization of online payments, and the adoption of embedded finance.

The days of cash and checks as the primary payment methods are fading, and embracing digital payments has become a crucial strategy for businesses to maintain competitiveness. A recent McKinsey study highlights that companies adopting digital payment methods can anticipate a substantial 7% increase in revenue, underscoring the significance of this transition.

To thrive in the future, businesses must adopt new payment methods and invest in robust security measures. With modern buyers demanding speed and efficiency, integrating financial technology or embedded finance becomes imperative to remain relevant beyond 2023. By embracing these innovations, businesses can position themselves for success, meeting the expectations of customers, employees, and vendors in the coming years. The future of digital business payments holds great promise, and companies willing to adapt will undoubtedly reap significant rewards.

About the Author

Dave Glaser, CEO, Dwolla

Dave Glaser was recently named CEO of global fintech payments leader Dwolla, previously serving as President and COO. He was formerly Senior VP Acceptance Solutions at Mastercard, Chief Product and Marketing Officer at WorldPay, and VP CyberSource Global Business Operations at Visa, in addition to senior project management, consulting, and engineering roles at Silicon Graphics, IBM and EDS.

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