How do you envision an ideal digital world? A world where all financial transactions are carried out through non-analog means in a cashless society where payments are faster, better, and more secure. Fortunately, a major portion of our ideal digital world, which might have been manifested decades ago, is a fully functional reality with the advent of digitization. From the inception of the Electronic Fund Transfer (ETF) to the present-day digital banking landscape, we have come a long way.
Such a transformation didn’t happen overnight, and there were a series of financial phases prevailing in different eras. One of the significant advancements in one of these phases was the advent of the GIRO payment system. Originally introduced in Europe, GIRO is the abbreviation for General Interbank Recurring Order, and this system is a fine testament to early innovations in cashless transactions. Although it has its roots in Europe, it is still considered a mode of payment in some parts of Asia, apart from most nations of Europe.
GIRO has played a significant component in building the paperless payment infrastucture. It is an electronic payment system where banks directly debit the amount from the payer’s account to credit it to the payee’s account. They are much more swift and secure than the standard paper checks and operate both in the domestic and international financial markets. With the onset of the illuminating dawn of the digital age, we observe a plethora of other cashless options emerging as a beacon of hope and a formidable arsenal for entrepreneurs who are looking forward to making the most of this digital revolution.
Let us wrap our heads around the fact that going cashless matters for businesses.
- Convenience is the king: Having the feasibility of making and receiving instant payments on the go is a substantial boon for business owners because it saves a lot of time and effort on their part. No more need to carry cash, queue up at ATMs, and check paper receipts while filing tax returns because payment apps keep track of all your incoming and outgoing funds.
- Security is non-negotiable: Another significant reason for opting for a digital mode of payment is its robust security that comes in various forms such as encryption, two-factor authentication, biometric detection, etc., that eliminates the need for carrying cash and provides an extra layer of security.
- Discounts & perks are unmissable: It is simply hard to ignore the influx of redeemable coupons and discount vouchers these online payment platforms offer to their corporate customers. Governments in many digitally aware nations are encouraging individuals and organizations to switch to the digital payment mode by offering discounts and incentives in the form of waivers on cashless transactions. Next time you may receive such an advantage on buying fuel, train tickets & toll tickets or insurance schemes.
- Cashless payments boost the overall economy: Undoubtedly, cashless transactions are considered economic stimulators because they facilitate the consumption of goods and services by making payments easier and faster. Businesses have a handful of cost-saving opportunities with minimum manual reconciliation and cash handling. Governments also do not operate under the pressure of producing more hard cash.
- Macroeconomic perspective of going cashless: If a central bank operates digital money based on several currencies, then the volatility and currency exchange risk can be avoided. Similarly, central banks can use digital currencies to control and regulate economic activity, and they are spared from the necessity to produce coins and notes.
Do traditional banking systems need to rise to the challenge?
There is always an ongoing debate – whether legacy systems can replace traditional modes of banking completely. It is surprising that observing the decline in the number of physical bank branches and ATM outlets, we still need confirmation that the world is welcoming digital banking with open arms. For most global organizations, it is no longer a question of whether they want to switch to digital mode. Still, it is about how they set on the safest, fastest, and most reliable route of making cashless transactions.
It has taken only a few decades for digital payment solutions to transform from rare to standard practice, and the profound implications it has on businesses, society, government & and the overall economy promise an upward trajectory in the forthcoming years. At the same time, technologies like blockchain, mobile wallets, and instant payment platforms act as the catalyst to keep the digital wheel churning in, transcending the imaginable realms of speed, convenience, and accuracy. But it is also pivotal to recognize that technological implementation like GIRO laid the foundation of paperless transactions, which also eased the shift of global markets, setting a perfect example of how some traditional systems can intertwine seamlessly with modern innovations, leading to financial progression.