How does digital payment work?

New technologies emerge around the world every day, and with payment systems it's no different. The biggest trend of the moment is digital payment and it's here to stay.

Digital payment is also referred to in the market as mobile payment, as it is mostly carried out by this type of device.

Throughout this article you will learn:

• what is digital payment;
• where it comes from;
• the advantages;
• how it works in theory and in practice;
• if it is safe;
• and more!

Check out what we have prepared below and get to know all the topics!

What is digital payment anyway?

Digital payment is simply the biggest trend worldwide when it comes to shopping. We are living in a time of true digitalisation of our money, and this way of paying makes that explicit.

Basically, mobile payment is a versatile model that can be carried out from anywhere, provided you have some necessary equipment and/or application with internet access.

The potential of this type of technology is immense, mainly because it excludes the need to rely on large and expensive equipment, such as debit and credit card machines.

In Brazil, this is a reality that is growing and seeking expressiveness in the market, in order to reach the same level as China, where the process of change in the way commerce receives payments has changed dramatically, about 90% of payments are made by specialised apps.

This point ends up also manifesting a reflection on the environment, as the use of mobile devices for payments can help us to extinguish the cards, which are nothing more than pieces of plastic that continue to pollute the planet.

At a time when the concern with sustainability is increasing, this point cannot be left aside.

The origin of digital payment

Throughout human history payments have been present. We started with barter, then materials of value. In the modern era, we moved on to paper money (our famous paper notes) and finally arrived at the iconic cardboard industries.

The first digital wallets - forerunners of our mobile payment system - were created by PayPal in 1998. We had, in 1999, payments made via SMS torpedo.

However, it was only with the advent of the Internet of Things (IoT) that we really found the contemporary era. Today, we are connected to everything. Our watches, bracelets, glasses and more, all connected to the web.

These systems can provide unique experiences for their users, including when it comes to payment methods. We had Bitcoin and, in 2014, biometric authenticated payments through ApplePay.

Payment by QR Code started being used in the same year and hasn't stopped growing! Although the technology is old - it was created in the 1990s - it was difficult to use because of the need to have a mobile device (something that was not widespread at the time). Today, there are no more impediments for the full development of this technology.

This QR Code is nothing more than a two-dimensional code that, when scanned, turns into text. It can also be a payment link.

The trend, therefore, is that physical money really will cease to exist. After all, we have developed so many things over the years that it simply makes no sense to rely on pieces of paper to pay for everything we do.

Did you know that Sweden has a plan to end all circulation of physical money by 2020? That is, in a very short time! The country has been working towards this goal for a few years now. In 2018, for example, less than 1% of transactions were made with paper payments. Incredible, isn't it?

What are the advantages of the system?

Digital payment is a trend, and if you've got this far, you must have understood that point very well. However, is it clear in your mind what the advantages are for those who opt for this method? Check what we have prepared below:

• sustainability, because it reduces the use of plastic and paper and, consequently, their disposal in the world;
• practicality;
• speed, as it only needs to be scanned and the payment validated;
• security;
• there is no need to have a card machine.

Functioning in practice

You already understand what digital payment is, but you still don't know how it works in practice, do you? It's very simple! To pay, a specialized application generates a QR Code on your account - all safely and securely.

The person on the other end scans this code with another mobile phone or specific equipment for this purpose and then, that's it! The payment was made in a simple, easy and fast way. Don't worry about positioning the camera, because the app helps you do it the right way.

Anyone who is not yet convinced that digital payment is a good idea needs to bear in mind that we are going through a time when paper money is used less and less, simply because it is not worth it. There is a lot of momentum in the trend towards digitalisation of our money.

The question: is it safe?

One of the biggest reasons why users are reluctant to use this type of payment is security. Because of the simplicity that this type of system offers, there is a lot of mistrust.

However, those who think this way are mistaken. The QR Code is an extremely secure technology because it usually goes through several checks before the payment is actually confirmed and debited.

Imagine that, to access your smartphone, you must have a password or have the biometric recognition system. Then, to access the payment app you also need to enter your login and password, and only from there can you request a payment.

As QR Code is a unique code, it is only used once by the payment system, which prevents fraud and duplication.

We cannot forget that, according to a survey conducted by the Getúlio Vargas Foundation (FGV) in the year 2018, Brazil already has more than one active smartphone per inhabitant. Yes, we have more mobile phones than people in our country, which also contributes to the immense potential of this method here.

Why bet on digital payment?

After reading this complete content, surely you already understand a lot about digital payment, right? Betting on this type of system means staying ahead of the game when it comes to consumer trends, and if you want to be one step ahead, you can't wait to start using it.

In addition to making/receiving payments anywhere, the digital payment system works 24 hours a day, seven days a week, eliminating the use of card machines, heavy equipment and phone line calls.

The bureaucracy is minimal, you don't need the fastest internet and you don't walk around with large amounts of money in your pocket. Not to mention the agility, speed and practicality.

Summarising

In this article you have learned what the concept of digital payment is, how it works, its advantages, origin and even if it is safe to be used by the population.

Those who bet on the use of the tool are helping our country to modernise technologically! Did you like this subject? Remember that here on the Alymente blog we always have content like this for you to keep up to date!