dematerialized means of payment and their advantages

Electronic means of payment are becoming more and more important in our daily purchases. They take many forms with their pros and cons. Here is an overview.

The last few years have seen the biggest revolutions in the banking world. Whether it’s the emergence of online banks or neobanks or the explosion of payment technologies, an entire industry has had to adapt its offers according to the expectations of their customers in terms of means of payment.

Inevitably, in the batch comes the dematerialization of the means of payment, a logic which naturally follows the trend in terms of daily consumption: music, films/series or even more and more invoices and other administrative documents. The banking sector has also had to develop dematerialized means of payment beyond the simple bank card to compensate for the loss of the use of cash. The latter moreover represents only 59% of payments in France, according to a study by the European Central Bank.

What is a dematerialized payment?

When we talk about a dematerialized payment, we commonly refer to a transaction carried out without having to resort to cold hard cash or to resort to a bank card in store. Unlike traditional payments that involve the use of cash, checks or plastic credit cards, paperless payments are made online, via smartphone or smartwatch.

We no longer present the popularity of these payment methods, as they offer many advantages, such as speed, simplicity and security. Let’s see what are the different existing dematerialized payment methods and their advantages.

What are the dematerialized payment methods?

The ephemeral virtual card

Even with the famous 3D Secure system which adds additional authentication during a payment transaction, zero risk does not exist. Banks have therefore developed virtual bank cards to add a new level of security, especially when it comes to online purchases. They are more generally called e-credit cards and are therefore not physical cards, but only numbers generated randomly by algorithm and referring directly to a bank identifier. The idea being that these card numbers are available on a temporary basis and are often used to carry out a single transaction. A very practical way to make online purchases without fear that the card numbers (this time very real) are kept by this or that site, and thus potentially hackable. The only downside: still too few banks offer these cards and even fewer for free, apart from N26, Revolut and Fortuneo.

Some banks have bet on physical cards with dynamic visual cryptogram which have an integrated screen instead of the three digits of the cryptogram written on the back. This screen powered by a very thin battery displays a new code every hour.

What are the benefits of virtual bank card?

A card that disappears after a purchase;
Potentially impossible to hack;
Perfect for online shopping.

Contactless payment (NFC)

Contactless payment has become a very popular payment habit. It is not strictly speaking a completely dematerialized payment, since it is generally linked to a bank card. NFC for Near Field Communication allows you to pay for purchases without having to insert your card, or even without a card at all thanks to the chip of the same name embedded in smartphones and connected watches. This system is closely linked to the electronic wallets detailed below. The main problem with payments via NFC or “contactless” concerns the amounts authorized by the banks for this type of payment (50 euros maximum in France currently).

What are the benefits of NFC?

Speed of payments;
Ease of use.

Electronic wallets or e-wallets

Electronic wallets, also called e-wallets, have taken an important part in all online payments. They derive their source and their strengths from the desire to offer secure dematerialized means of payment using SSL encryption technology, in addition to being used today by most e-merchants. Universal in their nature, they also make it possible to make and receive transfers, from a computer, a smartphone or a tablet, in an ultra-efficient way, much more than by going through a bank transfer for example. They also have the advantage of being usually free and easy to access: it only takes a few minutes to create an online account on PayPal, for example. It is also an area in which the tech giants have played a major role: Google Wallet, Apple Pay, Samsung Pay, etc. Some e-wallets even allow you to store more than money, such as identity papers or car keys, for example. The current problem with e-wallets comes from the banks themselves, which are not necessarily compatible with all solutions of this kind.

What are the benefits of e-wallets?

No income criteria required;
Securing transactions (no card);
One-click payments.

Micropayments by telephone operators

Micropayments were designed for online purchases and, by definition, they correspond to small amounts. It is a well-known means of payment in the world of video games in particular. If they can be settled by several means, it is above all payments via additional invoicing with the telephone operator or the Internet service provider that are popular, particularly in France. The big downside is the very nature of micropayments, which largely encourage consumption and excess.

What are the advantages of micropayments by operators?

Convenient for small sums;
One-click payments.

Cryptocurrencies

Inevitably, cryptocurrencies have a very special place in the category of dematerialized means of payment. These are virtual currencies, which do not depend on any state or any bank. Since they do not exist in physical form, it is indeed a dematerialized means of payment centralized around a blockchain, a decentralized data storage register. However, it is possible to convert them into the currency of your choice, whether through a digital wallet like Coinbase or through certain neobanks that accept cryptocurrencies as a currency in their own right and allowing their exchange. Major problem: cryptocurrencies are still little accepted as currency, especially in France and their uses are still very limited, even on the web.