If you are starting a business and you haven’t opened a bank account before, you probably don’t know that it can be an overwhelming process to have a bank account in the name of your business. Depending on where you reside and register your business, many requirements must be fulfilled, ranging from capital expectations, insurance, partners, proof of employment, citizenship, and more.
If you are in a large country or live in a remote location, going to a brick-and-mortar bank takes time and money. Not to mention it could become an everyday chore to do so.
How Digital Banks Are Widening The Market for E-Commerce
E-commerce businesses could take advantage of much more than just one benefit of using digital banks. Digital banks operate with the help of innovative, quick, and easy-to-use mobile applications for devices like smartphones and tablets. In addition, the mobile applications are constantly updated, updated, and on par with the best security standards.
While in the United States, only about 5 percent of the population has never used a bank account in their lives, there are regions like South America, where this number reaches 70 percent. In addition, in large countries like Russia, China, and India, more than 20 percent of their population is not using any banking system, according to Statista.
If you’re wondering how this is connected to E-commerce, it’s simple. People who have no banks have no way of paying you online. So they won’t be your customers. However, digital banks are steadily changing this since opening a digital banking account online in two minutes is much easier than walking into a physical location carrying documents with you.
Why Are Digital Banks Efficient For E-Commerce?
With the help of digital banking, just from your phone, you can instantly get funding, and credit services, monitor and manage personal finance, pay bills, schedule transactions and even pay salaries on a monthly or weekly basis to your employees.
The registration process is simple and concise and mostly only requires proof of ID; you’re done with a new bank account.
E-commerce grows rapidly, but so do fraud and online attacks. To stay protected from credit card fraud, loyalty and refund frauds, account takeovers, and social engineering, digital banks have implemented a smart variety of tools you can use.
One of these is the so-called VAN or virtual account numbers, which are temporary and can be changed with each transaction or after a certain amount of time. So, for example, you can use a one-time debit card number for different payments. This ensures identity theft can’t happen, and even if someone gets hold of your information, it would be useless to them.
Digital Banking Provides Flexible Ways to Pay
Every single customer expects a seamless checkout process and a good experience. So, of course, you should be accountable for optimizing the smoothness of the user interface and experience; however, the more payment options there are for your customers to choose from, the more inclined they would be to finish the payment if they see their preferred method being available.
Aside from increasing the number of viable payment options, the usage of digital banks also allows an E-commerce business to pay bills electronically through a system called EBPP and send electronic invoices to customers and partners alike.
Saves Potential Fixed Costs
One thing is having to rely on expensive accountants and accounting software to know whether your finances are in place. Another is having a digital banking app on your phone, which can tell you all the information in a matter of seconds.
Of course, every business should get an experienced accountant at some point, but when you’re just starting an E-commerce business, you won’t get the best return on investment from hiring an accountant. Instead, focusing on product development and marketing expenses would be better. A digital banking software could open this opportunity cost for you.
Aside from saving costs by replacing employees and expensive systems, neobanks are a way to save money from charges. For example, Brick-and-mortar banks with physical locations have to pay a lot of money to maintain their staffing and offices and manage reports and data. On the other hand, neobanks don’t have such expenses. Instead, they invest in improving their products and services and charge less because they don’t have so many costs.
With the rise of digital banking, more people who had no interest in opening bank accounts are starting to do so. This greatly benefits E-commerce, as these people are now potential customers. Stay informed, know which payment methods are preferred in the region of your target market, and provide these to your customers. Having a digital banking account can save time and cost and make things more convenient.