These changes have been more commonly seen in the past two decades where the concept of monetary transactions has changed significantly.
At present, money is transactions are conducted in a number of ways. Let's take a look at the different transaction methods people use nowadays:
External Transactions
External transactions are a form of trading where goods and money get exchanged. This kind of transaction can either be between two people or different organizations. Here, one of the members is the one who is selling something while the other is on the buying end. Such a transaction is called a business transaction.
Internal Transactions
Internal transactions do not have to include the buying or selling of any goods but it can be the purchasing of the services within an organization. For instance, the transaction of salary for your employees is called an internal transaction.
Cash Transactions
Cash transactions are the most common type of transaction. In this transaction, you can purchase goods or services through physical cash. These transactions can be both internal and external. The company can spend cash to buy things for the company itself or they can spend cash within the organisation to purchase anything.
Non-cash Transactions
There are different kinds of transactions that do not result in the buying or selling of anything, yet are called transactions. For instance, if you have bought something but there is a problem with what you bought and now have to return or exchange it. In this case, since there is no cash involved, these transactions will be called non-cash transactions and they do not include payments of any sort.
Credit Transactions
The biggest alternative to cash transactions is credit transactions. These kinds of transactions do not pay for something right away. They are known as deferred cash payments that are completed later than the actual transition. These transactions are usually made within 30-90 days. The duration depends on the company in question along with the industry.
What Are Alternative Methods Of Payment?
Cash is the biggest method of making payments but there are alternate ways of making payments that include a variety of different methods. Here are the alternate methods of payments used to transact money:
Credit Cards
Credit cards are a service offered by banks that allow people to buy something without paying cash upfront. With this method, people get a certain amount of money to spend before they have to return it and sign up for another month of credit. This payment method is used by a large population of people all over the world. Users are given cards that they can swipe to purchase various goods and services with ease.
Debit Cards
Debit cards also have a similar concept to that of credit cards. Users get different cards they use to make the necessary transactions. However, in debit cards, you pay the money directly from your account. The money is not a loan from the bank but is your own saving. This method is very similar to cash payments, the only difference is that the payment is not made through physical money.
Loyalty Program Points
Loyalty programs, in simple words, are a marketing tactic. Companies introduce different rewards and incentives that allow users to encash these rewards and get something or the other in exchange. Loyal customers have an exclusive right to these rewards as they are the ones, who frequent their business and generate sales.
Crypto Currencies
Crypto currencies are a digital form of currency that follows a decentralized structure. This form of currency is beyond the jurisdiction of governments and other central authorities. The blockchain technology used in cryptocurrencies safeguards the data and is unhindered by any sort of manipulation. These types of transactions are slowly but surely gaining a fair bit of popularity and being adapted by institutions across the globe.
Virtual Wallets
Different technological giants have launched their very own virtual wallets. These wallets extract money from the different bank accounts and payment methods users have. These payment methods offer users ease and they can purchase different things easily.
A Peek into the Future of Transactions
Technology will play a very vital role in the future of transactions. Companies are leveraging data and giving way to new payment transactions. The modes of transactions such as cash and credit are very commonly used at present and will continue to hold importance in the near future. However, the influence of technologies like cryptocurrency can make a worthwhile difference.
The biggest difference expected is the isolation of transactions from governing authorities. These policymakers might influence changes in transactions, resulting in massive change. According to predictions, different states may come up with their own digital currencies like cryptocurrency.
Since the states will come up with their own digital currency, it is important for all of them to reach a consensus on privacy concerns. Transactions will amalgamate with social domains and result in the removal of financial exclusion. These digital transactions are very likely to evolve into real-time payments, which could expand all over the world for countries of all economic backgrounds.
With the changing times, it is best for companies to stay on top of technological advancements. They might not be able to do it on their own which is why they should seek financial services consulting so they end up making the right decisions. A financial consultant will be able to guide you according to your particular situation.