What is Digital Banking?

Digital banking lets you manage your business finances entirely online. No branch visits or paperwork required. From sending payments to checking your balance or moving money, everything can happen from your phone or computer. 

Here’s what that looks like day to day.

• Online only: With no physical branches, you can manage your finances anytime, anywhere — right from your phone, tablet, or computer.
• Flexible access: Digital banks give you 24/7 control over your money. That means instant and unlimited access to your funds, real-time balance updates, bill pay whenever you need it, and extended customer support hours through chat and in-app help.
• Cost-effective: By operating without the expenses of physical branches, digital banks often reduce fees and pass those savings directly to you, offering greater value for your money.
• Innovation-driven: Powered by the latest financial technology, digital banks often offer real-time business insights, intuitive tools, and integrations that help you stay ahead, with many also supporting alternative currencies like Bitcoin and other emerging payment methods.

At their best, digital banks are designed for how businesses operate today: fast, flexible, and fully connected. But whether digital, traditional, or something in between is right for you really depends on how your business runs day to day. Source

Selecting the Right Credit Card Processing Company

The right merchant account provider is crucial to implementing an efficient surcharging program. When evaluating potential providers, there are several factors to consider...

• Transparent pricing: Look for a merchant account provider that offers transparent pricing structures and clearly outlines their fees.
• Flexible contract terms: Seek providers that offer flexible contract terms. That means no lock-in long-term contracts or hefty termination fees.
• Payment processing services: As well as credit card surcharging, the provider must also have strong payment processing services for alternative payment methods, including debit card transactions and a point-of-sale solution equipped to accept cash.
• Security and compliance: Verify that the provider adheres to industry standards, such as Payment Card Industry Data Security Standard (PCI DSS) compliance, to protect sensitive customer data and minimize the risk of data breaches.
• Customer support: Look for providers that offer responsive and knowledgeable support teams through multiple channels (phone, email, and chat).
• Competitive processing rates: Seek a merchant account provider that offers competitive processing rates for non-credit card transactions.
• Quick and easy setup: Opt for providers that offer seamless onboarding and setup processes to minimize disruptions.
• Integration capabilities: Consider whether the provider offers integrations with your existing business systems, such as e-commerce platforms, point-of-sale (POS) systems, or invoicing software. This ensures compatibility and smooth data flow between different systems.
• Reporting and analytics: Look for providers that offer robust reporting, analytics, and integration tools for valuable insights into transaction volumes, revenue trends, and customer behaviors.

It’s also important to highlight that the size of the business, type of business, and sales volumes will all contribute to determining which provider can offer the best solution. High-risk merchants (those with low sales volumes) will have to consider which provider offers not only the best service while they’re small but which will grow with them as their sales volume increases.

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Understanding Surcharging

Surcharging refers to the practice of adding a small fee or surcharge to a customer’s transaction when they choose to pay with a credit card. Merchants get the lowest fees for credit card processing by passing on the costs associated with processing that particular payment method.

Benefits of zero-fee processing (through surcharging):

• Cost recovery: Surcharging offers a means to recover credit card acceptance costs.
• Competitive pricing: Surcharging lets business owners offer competitive pricing to customers who choose to pay with alternative methods, such as cash or debit card transactions.
• Financial flexibility: Businesses can gain the financial flexibility to allocate funds towards business expansion, enhance products or services, or improve customer experience.
• Payment method diversification: Surcharging incentivizes customers to explore alternative payment methods, such as cash or debit cards, which do not incur high fees.

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Payment Gateways: Everything you need to know

What is a payment gateway?

A payment gateway creates a secure connection between a merchant’s e-commerce site and the payment processor. It encrypts the data that’s passed with every card transaction, verifies its authenticity, and ensures it’s sent securely. Payment gateways are typically the last stop for payments before they are routed to a payment processor.

Payment gateway vs payment processor: what’s the difference?

The difference between a payment processor and a payment gateway lies in the fact that one—payment the processor—is the service provider facilitating the transaction, while the other—the payment gateway—is the communication channel responsible for securely transmitting the payment data to the payment processor and credit card networks. Another critical difference is that for purchases made at a physical location, the POS terminal supplied by the payment processor is all that’s needed to verify the authenticity of a card, while in card-not-present transactions (like those made online), the payment gateway will authenticate the card before securely sending its details to the payment processor. Naturally, the riskier nature of card-not-present transactions makes security an utmost priority when verifying and transmitting card details. That said, credit card transactions are still one of the most secure B2B payment methods.

Should payment processing companies have proprietary payment gateways?

Short answer: yes.

Payment processors should consider bundling all the services a merchant needs to accept payments, including equipment and support for setting up a merchant account. In some cases, the payment processor will also have their own proprietary gateway. The value in this is that the processor can control the entire transaction flow—they’ll facilitate payment acceptance, securely send payment data to card networks and banks, fund the merchant, etc.—rather than bringing in another third party.‎

Long answer: still yes, but here’s more context.

Merchants rely on third parties to help with their payment processing needs. Commonly outsourced components include shopping cart plugins, customer portals, and of course, payment gateways—some payment service providers even outsource the process of tokenizing transactions to ensure PCI compliance.

The problem with this lies in its impact on the overall customer experience. Customers are at the heart of payments, and payment processors are feeling pressure to create more seamless transaction flows.

When payment information is passed between multiple vendors—many of whom are not privy to the merchant’s business needs or have not built relationships with the merchant—the transaction flow feels fractured and lackluster. The merchant loses a significant amount of control, and the payment processor is unable to oversee the entire customer experience. Unfortunately, few payment processors supply a holistic suite of merchant services—proprietary payment gateway included. Those that do ultimately perform payment facilitation in-house can ensure a more seamless payment experience for customers and greater back-office efficiencies for merchants.

Payment processors that operate as gateways can control the entire transaction flow without experiencing downtime by having to depend on customer service, onboarding, or any other myriad third parties. Outsourcing degrades the customer experience, and there lies the value of developing and controlling every facet of a transaction.

What are examples of a payment gateway?

Popular payment gateways include:

• Beanstream / Bombora
• Chase Paymentech (Orbital)
• Heartland Payments
• USAePay
• CardConnect

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Credit Card Transaction Processing: Key Components

While credit card transactions are typically processed very quickly, what happens behind the scenes is complex. The process requires many components that collaborate with each other to ensure that funds move securely and efficiently.

Here’s an overview of the parties that participate in this process:

Cardholder

The cardholder is the individual who owns the credit card and uses it to make purchases for goods or services.

Merchant

The merchant is the business or service provider that accepts credit card payments from customers in exchange for goods or services.

Point-of-sale (POS) system

The POS system is the hardware and software the business uses to accept and process credit card transactions and includes terminals, card readers, and software applications.

Payment gateway

The payment gateway is a service that securely transmits transaction information between the business’s POS system and the credit card processor.

Credit card processor

The credit card processor, also called the “payment processor,” is a company that works with the card networks and issuing banks to authorize, authenticate, and settle credit card transactions on behalf of the business.

Card networks

Card networks—such as Visa, Mastercard, American Express, and Discover—facilitate communication between the credit card processors and the issuing banks and set transaction rules and standards.

Issuing bank

The issuing bank, also called the “issuer” or “card issuer,” is the financial institution that issues the credit card to the cardholder. It authorizes and approves transactions, and it provides the funds for the purchase.

Acquiring bank

The acquiring bank, also known as the “acquirer” or “merchant bank,” is the financial institution that has a contractual relationship with the business to accept and process credit card transactions. It settles funds with the issuing bank and deposits the funds into the business’s account.

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Why is Payment Processing Important?

Payment processing allows for transactions to be quick and effective. Information is sent securely from merchant terminals to consumer banks, and back, in a matter of seconds.

These systems handle all communication between issuing banks, credit card networks, and financial institutions — and they do it without requiring the cashier or customer to understand or get involved in the process. This ensures a more streamlined customer journey and experience. With e-commerce and digital transactions increasing, payment processing is no longer a helpful tool, but a necessity — especially when preparing a digital storefront for peak season.

According to Deloitte’s trends and insights report for 2025, checks are gradually moving to extinction, and the use of cash is declining. Credit and debit card transactions, including peer-to-peer (P2P) transactions, will continue to grow in place of check payments. In the US, digital payments have now surpassed traditional payment methods, with 9 in 10 consumers reported to have made a digital payment in 2024.

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8 Reasons Why Consumer Spending Patterns Change

There are many drivers behind the changes in consumer spending habits. While some are predictable, like time of year, other real-world factors can cause these patterns to break. 

Here are 8 of the top reasons consumer spending patterns change:

1. Seasonality

Spending patterns change throughout the year, varying from industry to industry. For example, spending in retail peaks during the holiday season. Travel spending typically ramps up closer to the summer, as people spend more on vacations and experiences, and then again during the holiday season, according to SpendingPulse™. Within travel, different sectors exhibit different patterns. Spending on airfare increases before travelers go on vacation because customers pay when booking their flights. In the hotel sector, customers typically pay once their stay is over, so spending lags slightly.

2. New products

New product launches and fads can also contribute to fluctuations in consumer spending. Over the years, releases of new technologies like phones and headphones have generated significant buzz and heightened consumer spending. The release of blockbuster video games can also drive a surge in entertainment sales and influence the broader economy. As one example, Call of Duty: Modern Warfare II surpassed $1 billion in worldwide sell-through in the first ten days of its release.

3. Commuting

Changes in when and where people work can have a sizeable impact on consumer spending patterns. As return to office mandates continue to be implemented, brick-and-mortar sales in major commuting cities may bounce back in response. Spending will tend to be concentrated on certain weekdays. For example, Tuesdays through Thursdays have seen increased lunchtime activity in parts of New York City, according to the Mastercard Economics Institute. At the same time, other workers have remained hybrid or fully remote, which has driven an uptick in online shopping.

4. Macroeconomic conditions

The broader economic landscape will always play a hand in how consumer spending ebbs and flows. A strong labor market and high employment confidence can drive increased consumer spending. On the other hand, high price inflation does not empower consumers to spend.

5. Fiscal policy

Fiscal activity at the national, state or local levels can also influence consumer spending behavior. Consider the stimulus checks that were provided during the COVID-19 pandemic. These large spikes in available cash and spending power drove boosts in consumer spending over time.

6. Stock market performance

When the financial markets are in flux, consumer spending patterns react. During the Great Recession of 2007-2009, for example, consumers were worried about job stability and savings, and spending slowed in the U.S. Stock market performance is a strong indicator of consumer confidence, so shocks like these can affect spending behavior.

7. Fuel prices

While prices in general can dissuade or encourage consumer spending, fuel prices in particular can impact spending. This is because fuel prices influence consumer mobility, which refers to how people get from place to place. When people are more likely to jump in their cars to head to the mall, brick-and-mortar sales at retailers and restaurants go up.

8. Demographic changes

Finally, the changing composition of populations over time can stimulate different consumer spending trends. For instance, global birth rates have been falling and are expected to continue falling through 2100. This decrease in the child population can have ripple effects in the broader economy, especially in the addressable market for children’s products.

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