Digital transactions are defined as transactions in which the customer authorizes the transfer of money through electronic means, and the funds flow directly from one account to another. These accounts could be held in banks, or with entities/ providers.
As the needs of investors and financial service users become more complex, there is a demand for effective tools to simplify the processes and transactions carried out by end-users. It is inevitable that financial institutions would have to increase the number of digitized services and offerings, given a rise in the use of automated services.
Implementing technology in the financial industry is a necessity for the survival of businesses as customers seek lower-cost alternatives to traditional financial services. Fintech companies have led the revolution in transforming the financial sector by digitalizing the end-client’s transactional eco-system.
How digital transactions work
A digital transaction converts a traditional cash-operational society to a cashless one. It can be anything from paying for goods at a brick-and-mortar store to transferring money online to making investment trades.
Here’s an example of an everyday transaction that looks quite simple but is actually embedded with digital intricacies every step of the way:
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