Consumers have more payment options than ever, and companies in the accounts receivable management industry are trying to balance that convenience with everything else that goes on behind the scenes with respect to processing payments. A published report in The Wall Street Journal breaks down the different types of payments and offers the pros and cons to each, from the perspective of convenience, benefits, and security.
The report breaks the different forms of payment down into a number of categories — debit and credit cards, digital wallets, peer-to-peer payment apps, and bank transfers.
While credit and debit cards may offer consumers the most protection and rewards, credit cards accrue interest, which can make purchases more expensive over time. Paying off a balance of $1,000 in 12 months at the current average annual percentage rate of 22.16% means paying $103 in interest, compared with $77 a year ago, according to the report.
Digital wallets, like PayPal and Apple Pay, may offer the safest and most convenient payment experience because consumers don’t have to enter in any card information — they just have to log in using their email address and password — but don’t offer rewards like credit card programs.
Peer-to-peer apps like Venmo and Zelle are rapidly gaining in popularity for their convenience and ease of use, but aren’t as heavily regulated as debit and credit cards and therefore don’t offer consumers the same protections. One expert advises using the apps only when paying people you know and trust.
Bank transfers are also gaining in popularity because the transactions are cheaper to process than debit or credit cards, but again these types of transfers don’t offer the same levels of protection. But bank transfers might be a better option than using a peer-to-peer app because transfers often take days to settle, giving consumers more time to try and stop a transaction before the money leaves your account, according to the report.
