Commerce has no borders, and customers and revenue can come from anywhere.
According to McKinsey’s 2021 Digital Payments Consumer Survey, in 2021, more than four in five Americans used some form of digital payment — and this has been a growing trend.
So, offering diverse online payment methods is necessary for small banks and credit unions. This is to cater to their customers’ changing preferences and stay competitive in the digital era.
In this article, we’re going to answer questions like:
The COVID-19 pandemic accelerated the rise of online payment methods and the shift towards digital transactions.
In the latest PwC Payments 2025 & Beyond report, 89% of the interviewed respondents said the shift towards eCommerce would continue to rise.
Also, banks said that 90% of their most helpful customer data comes from online payments.
From these numbers, it’s evident that the momentum behind these trends will continue to shape the future of financial transactions and reshape how we engage with commerce.
So, how can your credit union adapt its online payment methods to meet these evolving needs?
“Online payment methods are ways to pay online using an account, a card, an eWallet, a bank transfer, or a cryptocurrency.”
Luckily, with the rise in digital payments, there’s a range of online payment methods at your disposal to meet the diverse needs of your customers.
Offering a variety lets you accommodate diverse needs and enhances customer satisfaction. Here are some of the more popular payment methods:
Credit and debit cards are widely accepted online payment methods. Diary of Consumer Payment Choice study states that in 2021, 28% of all payments were made using credit cards.
Examples of digital wallets include Apple Pay, Google Pay, and PayPal. These wallets are linked to credit/debit cards or bank accounts. However, you can also link store gift cards, membership and loyalty cards, coupons, event tickets, plane tickets, and more.
ACH (Automated Clearing House) transfers enable the electronic funds transfer between bank accounts. ACH transfers are widely used for direct deposits, bill payments, and business-to-business transactions.
Alternative payment solutions encompass emerging methods like cryptocurrency, prepaid cards, and mobile payment apps like Venmo or Alipay.
These methods cater to specific customer segments seeking unique payment options.
Remember, the suitability of each payment method for different customer segments also varies.
For example, credit and debit cards are good for customers who want to earn rewards or who need to make large purchases. Digital wallets favor customers who wish for convenience and security. Bank transfers are the best for low-cost payments.
Customers can pay anytime, anywhere, with an internet connection. This accessibility allows customers to manage their finances conveniently, improving their banking experience.
Funds are transferred almost instantaneously, resulting in quicker payment confirmations and improved customer cash flow management. It’s also easy to set up automatic payments.
Offering online payment methods aligns with the changing expectations of customers who seek digital solutions for their banking needs.
Providing convenient and secure payment options enhances customer satisfaction and fosters loyalty toward the financial institution.
Online payment methods reduce the need for manual handling and paperwork. This results in improved operational efficiency, reduced administrative costs, and increased staff productivity. Automating payment processes also minimizes errors and reduces the need for manual intervention.
To settle on the best method, ask yourself these questions:
A system that inconveniences customers becomes even worse when not offering online payment methods.
So, how do you ensure the online payment method you choose satisfies your customers?
Before you launch the online payment method:
Collect the customers’ input on the user experience, ease of use, and any challenges encountered. This feedback will help you identify areas for improvement and make necessary adjustments.
Offer robust customer support channels to assist customers with any inquiries or difficulties during the payment process. Promptly respond to customer inquiries and provide guidance.
Alliant Credit Union offers online banking services, including online bill pay, mobile check deposit, and person-to-person payments.
This credit union mobile app has received high ratings for its user-friendly interface and convenient features. NerdWallet rates it top for the best mobile banking at a credit union.
One satisfied user commented, “The app is so powerful I almost never need to call the super helpful, always available customer service! The only time I needed to call this year was to make a change to the terms of my CD during the final month of its term. Good app. Great service.”
With technology, you must keep up with it or risk offering outdated payment methods.
To put this in perspective, according to Moore’s Law, the processing capacity of technology doubles approximately every 18 months. This rapid pace of technological advancement means that what may be cutting-edge today could become obsolete in a relatively short period. This applies to online payment methods as well.
Let’s look at some key areas that are driving the future of online payments:
Contactless payments gained momentum, particularly in response to the COVID-19 pandemic.
Contactless payments are facilitated through NFC technology or QR codes. This trend will continue as customers increasingly seek touchless payment options for safety and convenience.
Blockchain’s decentralized and secure nature eliminates the need for intermediaries. This enables faster and more transparent transactions.
Blockchain technology has the potential to streamline cross-border payments, reduce costs, enhance security, and increase trust among participants in the payment ecosystem. As blockchain matures and gains wider adoption, it will likely reshape the future of online payments.
The Internet of Things (IoT) connects many devices to the internet.
IoT-enabled devices, such as smart home appliances, wearables, and connected cars, can initiate recurring payments autonomously based on predetermined triggers or user preferences.
This enables frictionless payments in various contexts, such as smart retail, transportation, and healthcare. IoT payments are expected to become more prevalent as connected devices grow.
The present and future of online payments are filled with exciting possibilities. As we saw from the numbers, more customers are demanding their financial institution offer online payment methods.
However, setting up infrastructure from scratch and integrating online payment methods is complex and challenging for small banks and credit unions.
The solution? Partner with a payment processor.
By collaborating with a trusted payment processor, you leverage their expertise, infrastructure, and resources to streamline the integration of online payment methods.
For example, at iCG Pay, formerly known as iCheckGateway.com, we provide comprehensive payment solutions for small banks and credit unions. Our platform offers seamless integration, user-friendly interfaces, payment portals, and intuitive payment flows.
Partner with us today to offer innovative payment solutions to your customers.