Digital payment methods are providing various benefits to citizens, governments, and businesses of smart cities by providing them with the convenience and transparency in their payments. As per statista, the spending on the smart city initiatives will reach at 189.5 billion USD approximately in 2023. This growth in investments shows considerable potential for digital payments.
Before getting into how digital payments create smart cities, we will look at its meaning first.
A smart city is a structure that consists of Information and communication technologies (ICT) like cloud computing, big data, multimedia, smartphones, etc., for developing and promoting sustainable development practices to approach new urban challenges.
The ICT framework collects the data of schools, citizens, municipalities, community centers, etc., and analyze it to resolve the problems in the cities like traffic issues, pollution, trash recycling, wastewater management, etc.,
In a nutshell, smart cities are an attempt to employ technologies and tools like AI, IoT, digital payment solutions, ICT, etc. for improving and simplifying the lives of the citizens.
What are the challenges of implementing digital payments in the smart city?
More and more cities are becoming smarter by absorbing digital payment systems in their daily transactions like the payment of salaries, customer spending, taxation, municipality bills, etc.
But deploying digital payments in the smart city can be a bit challenging. Let us look at the challenges of using digital payments :
1. The digitalization of the data is not so easy
Digitizing the existing data is a significant task as the businesses are separate, and the information sharing over the departments, divisions, and channels is minimal.
The absence of a unified strategic vision, well-managed governance framework, and a well-defined strategy for reconstructing the payment infrastructure is making the payment digitization efforts less effective.
2. Insufficiently trained staff
The operational staff did not get enough training for seamlessly delivering the payment services to the customer with special needs.
Moreover, people are hesitant towards accepting the advancements that come with digital payment methods.
3. People are not aware of the latest technologies
Many people do not possess enough financial knowledge to operate digital methods of payments. That’s why they don’t have trust in digital payment solutions.
The reach and the ease of transactions are also very less in the semi-urban and rural areas due to the insufficient internet connectivity.
What are the different implementations of digital payment solutions in smart cities?
1. Serve your customers directly at their doorstep
Digital payments are beneficial to the businesses in enhancing their user base by providing hassle-free services to their customers at their doorstep.
Your customer will get all the facilities right on their smartphones. Implementation of mobile money payment solutions in your business will save time and also build their trust in your services.
2. A single card for all services
It is very tiring for your customers to input the data of different id proofs for availing various services. Various businesses like food delivery, grocery delivery provide a single card for accessing all the functions quickly.
A citizen of the smart city can access all the services like banking transactions, light bill, water bill, income tax, service tax, etc., with a smart card.
Citizens can withdraw money or top-up their smart cards from any banks, or the government authorized outlets.
3. Transfer your money at ease
Money transfer used to be a very complicated and time-consuming process in the past. The mobile money solutions have made money transfers speedy by providing better user accessibility.
Now you can transfer money to your loved ones from any part of the world. The transactions will imply the exchange rates of the respective countries automatically, which will make your money transfer hasslefree.
4. Executing customer loyalty programs
Customer loyalty programs are useful for promoting cashless payment methods. If you provide some reward points to your user, it will attract them to use the digital mode of payment more and more.
For example, you can offer a cashback or discount to the customers who would opt to pay by digital wallet rather than cash.
The Customer loyalty program will strengthen your customer base as well as help you to grow your profits.
What are the growing digital payment solutions for smart cities?
After discussing the challenges and various executions of digital payments, let us look at the growing digital payment solutions for smart cities :
1. Biometric payment systems
Biometrics facilitates a customer for storing their fingers and retina for every transaction they want to make. The customer does not need to enter his fingerprint again and again for every transaction. The facility for saving the fingerprints will enhance the user experience of digital payment solutions by securely authenticating digital payments.
This secure authentication will increase the credibility of your digital payment platform by making the users feel safe.
2. Digital wallets
Digital wallets are the digital versions of a credit card or debit card saved on the smartphone. You just need to enter the required information for making the digital payments.
Digital wallets can also be accessible with any kind of social media plugin, which makes the login process easier and faster.
Your customers can also save the rewards and cashback they have got from various transactions in your wallet, and you can also recharge it at any time.
3. 3D Secure payments
3D secure stands for a three-domain structure, which consists of the issuer, the card owner, and the payment service provider.
In this method of payment, the users will enter their card information first. Then this information will be registered on the server, and the customer gets redirected to the 3D secure payment page where he enters his password or pin.
Later the data will be submitted to the payment service provider, and the customer will get updated about the status of his transaction.
Tokenization is a hassle-free digital payment method that secures the data entered by the user by replacing it with a sixteen-digit code.
Tokenization has a limited life-cycle as it can be deleted or suspended after the completion of the transaction.
5. Contactless payment methods
Contactless payments consist of digital payment methods like UPI, POS, USSD, IMPS, etc. which don’t need a human touch. It doesn’t require paper, which helps you to save the environment and decrease the wastage of stationeries in the business.
Contactless payments also reduce your business expenses as you don’t require any staff or selling points to execute it.
Smart cities are the need for the technological revolution in the future as it will help the developing nations in achieving sustainability and economic freedom. The smart cities have the potential to create a cashless economy that will enhance the lives of its citizens. Keep following this space for more such useful information like this.