Today, we live in a cashless era, where cashless transactions are becoming the norm, dominating all aspects of commerce and trade. Moreover, it is an era where businesses are needing to be more flexible in accepting cashless payments, as more and more people are ditching cash for cards and digitization.
This societal overhaul has indicated that transactions must be easier, faster, and more practical, this dictum not only applying to Micro, Small, and Medium Enterprises (MSMEs), but to all businesses, from micro to globalized behemoth. This article will discuss what cashless payment tools can be used for today’s MSMEs.
Firstly, payments using an Electronic Data Capture (EDC) machine are made by swiping a bank-issued debit or credit card, the payment process occurring when the customer hands over their card to the cashier, who then swipes the card on the EDC machine, with the transaction being authorized by the customer entering a six-digit PIN to complete the transaction.
Another payment process is the automatic teller machine (ATM). An ATM card is a dedicated payment card issued by a financial institution, such as a bank, which enables a customer to access their financial accounts via its, and others’ ATM s, or point-of-sale (POS) terminals. ATM cards are NOT credit or debit cards, although most credit or debit cards can also act as ATM cards, and since 2010 has been the most common way that banks issue cards.
The main difference between an ATM card and a credit card is that an ATM card can be used at an ATM to withdraw money, and deposit or transfer funds, whereas a credit card cannot. Moreover, credit card payments are initially covered by the provider, the bank, which the user will pay back later, with interest, at an agreed time, with determined transaction amount, whereas an ATM or debit card can only use the customers' available funds to complete transactions.
Additionally, other advantages of using a debit card includes its capacity to make large transactions, cash withdrawals, and immediate payments - not in installments, which helps users maintain a budget, avoiding unnecessary debt. However, the downside of an ATM card is that it doesn’t offer its users many promotions, as well as their being limitations on EDC machines that are supported by specific banks at certain merchants
On the other hand, credit cards offer advantages such as convenience and the ability to access funds covered by its issuer for emergencies, although the drawbacks of using a credit card include their costs, such as annual fee and interest rates, as well as the risk of accumulating avoidable debt if payments are missed. Moreover, the user needs to be cautious with their credit cards because they are vulnerable to hacking or theft if the card is lost or stolen, as the card's details are compromised at the users detriment.
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Secondly, at first glance, E-money may seem similar to an ATM or credit card, however e-money is the currency that exists in banking computer systems that may be used to facilitate electronic Moreover, although e-money’s value system is backed by fiat currency and can be exchanged into a physical, tangible form, e-money is primarily used for electronic transactions such as toll payments, where e-toll has become quite widespread.
For example, in Indonesia, e-money is not limited to tolls, rather, the many types of e-money available there can be used for various purposes, from taking public transportation like busways, commuter trains, and the MRT (Mass Rapid Transport) to shopping at various connected merchants. Additional examples of electronic payment cards, or e-money in Indonesia include TapCash BNI with a maximum balance of IDR 1 million, Brizzi from Bank BRI, Flazz BCA, e-Money Mandiri, and Indomaret Card, with the average maximum balance for these cards being IDR 1 million.
However, before e-money can be used, users must first top up, or load funds onto their nominated card, and then, the card can be simply tapped when paying tolls or boarding a train at the turnstile, whereas if shopping, the card can be swiped and used on an EDC machine.
Thirdly, electronic banking (e-banking) is a blanket term that, that includes internet and mobile banking, and used to indicate a process through which a customer is allowed to carry out, commercial or personal banking transactions using electronic and telecommunication network, making online payments convenient for anyone with an account that offers internet banking or mobile banking services, anywhere, anytime, as long as the user has an internet connection. .
However, the difference between internet and mobile banking is that with internet banking transactions are done through a web browser whereas mobile banking users must first download its mobile app.
Today, with the advancement and development of mobile technology, and the proliferation of Smartphones more people are using mobile banking because of its convenience and ability to bank anytime and anywhere, by simply logging into their bank’s app, and verify their identity by activation through a branch office for security reasons, or entering a PIN, password, or by using biometric technology. This simple process enables the user to conduct a variety of tasks, from transferring funds to purchasing credit, paying bills and topping up other balances, services that are typically freely provided by banks.
However, the downside of e-banking regards concerns about data security, and its vulnerability to privacy breaches, as well as the need for a constant, uninterrupted and secure internet connection. Fortunately, today, most banks have implemented security procedures to prevent cyberattacks and data theft, although there are still occasional data and privacy breaches using the e-banking service from fake banking websites, hackers, or having minimal security measures.
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An electronic wallet (e-wallet) is an application, a digital wallet that facilitates online transactions and cashless in-store payments, run on mobile computer devices and Smartphones. E-wallets operate in a similar way to an electronic card or e-money, with the point-of-difference being that an e-wallet does not have a chip card or physical, tangible form. E-wallet users can connect their bank accounts, and credit and debit cards to their e-wallets to make purchases on the go without having to run to an ATM, as well as allowing contactless in-store purchases and online payments. Moreover, e-wallets store more than bank accounts, credit and debit cards - in a digitized form they store boarding passes, identification cards, membership cards et al., in one convenient and secure place.
To use an e-wallet, users must first download the app on their Smartphone through app stores like Play Store, App Store, Get Store, et al.
Then, after downloading the app and creating an account, users must top-up the e-wallet with funds, to be stored as a balance.
Payments can be made using the app, typically by entering a six-digit PIN, password, or even via fingerprint or face recognition. If the payment app is linked to make a transaction from another app, the security of the transaction can be ensured by sending an OTP code via SMS to the verified phone number. Nowadays, e-wallet transaction processes are much faster, because users can also use a barcode scan provided by the seller, without needing to find physical cash or count money to match the balance per se.
However, e-wallets do have their limitations. Currently, not all merchants accept this type of payment, although in the foreseeable future, the number of merchants that do accept e-wallet payments will only continue to grow. Conversely, there are some e-commerce platforms that have their own e-wallets, like Shopeepay, and from this example, it is anticipated that other e-commerce platforms are likely to follow this trend.
Today, there are a variety of e-wallet applications available online. This, in part, was hastened during the pandemic, where contactless transactions were necessary, and people needed practical and secure payment methods.
The following are some popular and accepted examples of e-wallets widely used in Indonesia today: Gopay, Ovo, Dana, and Link Aja, as well as Octo Go Mobile, iSaku, JakOne Mobile, Doku, Sakuku, and Paytren.
For example, payments using Gopay from the Gojek app can be done using QRIS codes. The app can also be used to pay bills or transfer funds to other Gopay accounts or bank accounts, their transfer fees cheaper than direct interbank transfers, whereas the OVO app offers rewards through OVO Points and various other promotions, and similar to Dana, can be used for online shopping on platforms like Bukalapak or in-store shopping at minimarkets. However, these e-wallets have their own limitations. For example, in Indonesia, the average maximum balance for an e-wallet is IDR 2 million for unverified accounts and IDR 10 million for verified or premium accounts.
In conclusion, while there are some challenges that still exist in the implementation of these payment methods, such as the limited availability of EDC machines for card payments or the MDR (Merchant Discount Rate) on every transaction, online payments like e-banking or e-wallets are becoming easier to implement, especially with payment methods like barcode scanning or QRIS.
Just like consumers, MSMEs and other business owners, now accept cashless payments via apps because it's convenient, fast, and practical, simplifying the business process.
In Indonesia, Youtap is an app that is being embraced by merchants for cashless payments. Since February 2020, Youtap has had 50,000 merchant partners and over 1 million transactions, where merchants can receive payments using barcodes or QRIS.
So, make your cashless payment process easier today by using Youtap’s POS Digital Cashier App.
Not only does it facilitate cashless payments, but it automatically records transactions, providing your business with real-time sales analysis and data now!
Wisma 46 Kota BNI Lt. 29 Jend. Sudirman Kav. 1 Jakarta Pusat, 10220
e-mail: halo@youtap.id
Whatsapp: 08111 500 523
Direktorat Jenderal Perlindungan Konsumen dan Tertib Niaga Kementerian Perdagangan Republik Indonesia
WA/Telp: 0853 1111 1010
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