Modern Payment Systems Replacing Credit and Debit Cards

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Paying for goods and services one way or another has been a vital part of human civilization history, and there have been different forms of payment methods employed in various places across the world at a different interval. While the traditional method of using cash is slowly being replaced by digital methods, there are still many reasons to keep some cash in your front pocket wallet. But the limiting factors of cash and the rapid advancement of technology brought about the development of the electronic payment system, which is cashless and far more convenient. 

Over the years, the fast, secure, and convenient electronic payment system is gradually replacing the traditional payment method. One of these quick and secured electronic payment alternatives is the credit and debit card payment option, which happens to be the most prevalent and commonly used payment method used by many individuals across the world. But due to certain risks attached to the use of credit and debit cards, especially for online transactions, people are starting to turn to other modern alternatives that are more secure.

Limiting Factors of Credit and Debit Cards

Although credit and debit cards are the most commonly used form of payment method employed by many people globally, it has become apparent that some limiting factors make it less advantageous compared to other modern payment systems. Some of the limiting factors of Credit and Debit cards include:

  • Exchanging Credit or Debit card information over the internet opens it up to security risks.
  • Credit/Debit card does not allow/support individual-to-individual payment transactions.
  • Due to credit history, some individuals don’t have access to credit cards.

Modern Payment Methods

When it comes to making online transactions, many payment methods are available for individuals to use. These payment methods can be easily accessed and processed with mobile devices, making it very convenient and easy to use. Plus, users can use it anytime and anywhere they are. The major forms of modern payment systems can be categorized into three different classes: digital wallets, online banking, and cryptocurrency.

Digital Wallet

The Digital wallet, which is commonly called e-wallet, is a form of prepaid account where a user can store money to make online transactions. It can link users’ bank accounts and pay directly for online transactions, and users don’t have to submit personal sensitive banking details when they want to make payments. It is convenient, effective, and more secured than the credit and debit card option. The use of e-wallets is becoming a trend, and the number of people using it is rapidly increasing. Popular digital wallet providers include;

Online Banking

Online banking, also known as internet banking or web banking, is another electronic payment system, and it allows users to conduct online transactions through a bank or other financial institutions. It involves making payments directly from users’ accounts without having to enter credit or debit card information. To set up the online banking system, users just need to download a preferred online banking software and link it to their credit or debit card. The payment is made and approved within the online banking platform or banking app. This modern payment system has been widely adopted and grown significantly in many countries. Popular examples include:

  • iDEAL
  • Trustly

What few people know is that the Swedish FinTech companyTrustly was developed about ten years ago as a response to the fast-growing online casino industry in Europe to meet the demands for quick financial transactions by the Swedish casino players. Today Trustly is used all over Europe and in both Sweden and Germany it has even resulted in online gambling websites, called Pay n Play Casinos built specifically on the financial technology offered by Trustly to guarantee both safe online identity verification and instant financial transactions to and from the casino and the players’ bank account. 

Cryptocurrency

Unlike the other modern payment systems, this payment system is not widely used or accepted yet, but we will be remiss if we don’t mention it. Cryptocurrency is an internet/online-based form of exchange that makes use of cryptographic functions to carry out financial transactions. The system is made to be secure and, in many cases, anonymous. The most widely known, and commonly used form of cryptocurrency is Bitcoin. Bitcoin is the first blockchain-based cryptocurrency launched in 2009, which uses peer-to-peer technology to execute instant payments online. Some benefits Bitcoin provides to its users include;

  • Discretion and autonomy
  • Elimination of bank charges
  • Low transaction fees for international payments
  • Easy accessibility

Many merchants have not adopted cryptocurrencies like Bitcoin because of its volatility, which tends to rise and fall every time.

If you are a fan of the card system but want a safer way of making payments and transactions, you can opt for Bank pre-paid cards. The bank prepaid card is a type of payment instrument you can load money on to use to make purchases. And unlike the debit card, it is not linked to a customers’ bank account. Online merchants and even physical stores are already employing modern paying systems to accept payments, and it is gradually replacing credit and debit cards.