Digital payments: What they are, how they work, and different types

Digital payments are electronic transactions that have transformed how businesses move money. They're popular for good reason—they're fast, secure, and more convenient than traditional methods. As demand grows for efficient, tech-enabled payments, digital tools are evolving to meet the moment, helping companies save time, reduce risk, and keep operations moving.

In this guide, we’ll break down what digital payments are, how they work, the types available, and the benefits they offer for modern businesses.

What is a digital payment?

Money moves directly between accounts using digital channels, enabling a completely cashless workflow. Here's what sets digital payments apart from traditional methods:

• They use electronic tools—like point-of-sale systems, accounting platforms, or mobile devices
• They process almost instantly—helping businesses pay vendors or bill customers faster
• They generate electronic records—making reconciliation, audits, and tracking much simpler

Common use cases include paying suppliers via ACH, collecting online payments from customers, or reimbursing employees through an expense platform.

Behind every digital transaction is a system that keeps things running securely and efficiently. That brings us to digital payment systems.

What are digital payment systems?

A digital payment system is the tech infrastructure that lets businesses send, receive, and manage electronic payments. These include connecting platforms, tools, and financial institutions that keep payments flowing smoothly and securely.

For businesses, a strong digital payment system can help you:

• Accept payments from customers (online, in-store, or mobile)
• Pay vendors, employees, and partners
• Automate reconciliation and keep your ledger up to date
• Monitor payment activity and cash flow in real time

Whether you’re using a full-featured platform or integrating with third-party APIs, the right system gives your team more control, better data, and the flexibility to scale.

What are the types of digital business payments?

Digital payments cover a broad range of methods—each with its own use case depending on business size, industry, and payment flow. From familiar card-based transactions to emerging mobile-first solutions, understanding these options can help finance teams choose the best tools for speed, security, and scalability.

Here are the main types of digital payments businesses use today:

Credit and debit cards

One of the most widely adopted digital payment methods, credit and debit cards are used for everything from customer purchases to vendor payments and employee travel expenses. They support both card-present transactions (via chip, swipe, or contactless terminals) and card-not-present transactions, such as online checkouts and recurring billing. This method is globally supported by payment gateways, processors, and financial platforms.

Electronic bank transfers (ACH, wire transfers, eChecks)

Core to B2B payments, payroll, and invoice processing, electronic bank transfers offer reliable options for moving funds between accounts. ACH transfers are favored in the U.S. for their cost-effectiveness and batch-processing capabilities. Wire transfers provide faster delivery, making them ideal for large or international payments. eChecks serve as a digital version of paper checks, commonly used in business billing workflows.

QR code payments

QR code payments let users scan a code to complete a transaction using a digital wallet or banking app. These are widely used in retail, food service, and hospitality settings to simplify payment flows without needing traditional hardware. They're also gaining traction in B2B settings that require flexible, touchless payment options.

Cross-border and foreign exchange (FX) payments

For businesses operating internationally, cross-border and FX payment solutions enable secure, compliant transactions across currencies and regions. These tools often come with real-time exchange rates, hedging features, and built-in regulatory safeguards—helping companies pay global vendors, support international teams, and manage currency risk.

How do digital payments work?

Digital payment processing for businesses may look instant, but there’s a secure, behind-the-scenes process involved. Here's what typically happens:

1. Initiate payment: A business triggers a transaction through accounting software, an ERP, or an online form
2. Authenticate identity: Systems verify credentials, often with two-factor authentication or secure API tokens
3. Encrypt payment data: Information is encrypted during transmission to protect it from unauthorized access
4. Process payment: The encrypted data passes through a payment gateway and is routed to the right financial institution
5. Authorize transaction: The institution verifies the payment—checking funds, screening for fraud, and giving the green light
6. Transfer funds: Once approved, the funds are moved between the payer and recipient accounts. Timing varies by method
7. Notify all parties: Everyone gets updates—via dashboards, emails, or system notifications
8. Keep records: All transaction details are stored in accounting software or ledgers for tracking and compliance
9. Settle funds: The final step matches transactions between banks and platforms, ensuring accurate reconciliation

Throughout the process, security features like tokenization, encryption, and access controls help protect your data and prevent fraud.

What are the benefits of digital payments for businesses?

Digital payments aren’t just faster—they offer real advantages across finance, operations, and growth. Here’s what businesses stand to gain:

• Stronger fraud protection: Built-in tools like encryption, identity verification, and anomaly detection help prevent unauthorized transactions and chargebacks.
• Smarter insights: Payment data can reveal spending trends, vendor behavior, and seasonal patterns—giving teams the info they need to plan better and act faster.
• Global reach: Digital payments support multiple currencies and methods, making international transactions more accessible and scalable.
• Greater efficiency: Automation reduces manual input, minimizes human error, and simplifies reconciliation. You also save time and costs tied to cash handling or check processing.

Together, these benefits help businesses work smarter, improve cash flow, and build stronger relationships with partners and vendors.

Are digital payments safe?

Yes—and in many ways, they’re safer than manual methods. Encryption protects payment data during transmission, while authentication methods like secure logins, one-time codes, or biometrics verify who’s initiating a transaction. Many platforms also use AI to flag suspicious activity, helping detect fraud before it happens. With added controls over who can send payments and how much, digital payment systems offer strong protection for your business finances.

While no system is 100% risk-free, modern digital networks are among the most secure tools available for handling business transactions.

Do digital payments require a bank account?

In most cases, yes—digital business payments typically connect to a corporate bank or treasury account. But there are some flexible alternatives, depending on your use case:

• Prepaid digital cards: Great for teams who need spending power without tying into a central account
• Mobile and retail loading options: Useful in industries with gig workers or remote teams, where digital wallets can be funded through partner networks

These options help businesses extend payment access without compromising control or security.

Run all your business payments in one place

Digital payments give you more speed, control, and insight—all while reducing the work it takes to move money. Whether you’re sending recurring payments, managing urgent invoices, or handling cross-border transactions, Ramp Bill Pay makes it easy.

With Ramp, you can:

• ACH (Direct deposit): Ideal for payroll, recurring vendor payments, and predictable disbursements. Ramp supports both regular and same-day ACH for faster delivery on eligible bills.
• Domestic wire transfers: Great for large, time-sensitive payments. Ramp enables same-day domestic wires for eligible transactions, with secure processing through the FedWire network.
• International wire transfers: Ramp supports payments to vendors abroad in U.S. dollars or payments to international vendors in their local currency
• Ramp cards: Pay vendors by card—either with your existing cards or one-time-use Ramp cards—to earn cashback for vendors that accept Visa
• Check payments: For US-based vendors who still prefer checks, Ramp can issue and mail checks on your behalf.

Ramp brings all your payment methods into one unified platform, so you can handle everything from quick card payments to complex vendor invoices—without switching tools or systems.

Whatever the need, Ramp Bill Pay helps you move faster, with fewer errors and better visibility.

Start paying smarter—with Ramp.