HomeanalysisWhy Is It Important for Businesses to Be Digitalized Today?

Why Is It Important for Businesses to Be Digitalized Today?

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Virtually everything connected to real life is now connected to its online mirror image. From banking operations and utility service bill payments to catching up on the latest news and furry kitten pictures – the world is going digital and businesses are following suit with digitization.

The term “digitalization” first appeared in the last 5 years of the 20th century, when in 1995, the American computer scientist Nicholas Negroponte from the University of Massachusetts introduced the concept of a “digital economy”. In turn, the term “digitalization”, which followed suit, refers to the process of transition to the digital economy.

The digital economy itself is based on digital technologies with the transition of both goods and services, and the means of their production and sales into the digital environment. Classic examples include telemedicine, distance learning, sales of content like movies, TV programs, books, etc. Some experts believe that it is necessary to expand the concept of the digital economy to include chains of goods and services that are provided using digital technologies, including such phenomena as the Internet of Things, Industry 4.0, smart factories, fifth generation communication networks, engineering services of prototyping, and other types of concepts.

The Digital Economy

The modern digital economy that has been taking center stage with the lockdown imposed on physical retail outlets and other business establishments encompasses several key areas. They include e-commerce, internet banking, electronic payments, internet advertising and electronic access to government services. And though most users of such services take them for granted, the advantages of transitioning to a digital economy are many.

Among the key factors acting in favor of digitization are growth in labor productivity, the increase of competition among companies as a driver of progress, the reduction of production costs, the creation of new jobs, an increase in the degree of satisfaction of human needs, and the eventual decrease of poverty and social inequality.

Bill Gates, one of the first prophets and pathfinders of the digital economy, stated in 1995: “There will be two types of businesses in the next 5 years, those that are on the internet, and those that are out of business.”

His words ring true today as businesses are changing, with the greatest number of examples being seen in retail industries, where disruptive technology companies are starting to exhibit dominance. Airbnb, Uber, and other giants are being forced to change their business models to remain competitive. A textbook example is Amazon, which started out as a bookstore and evolved into a globe-spanning marketplace for any kinds of goods imaginable, all thanks to digitization.

In the early 2000s, companies had to sell websites and services online and it took time for businesses to realize the need for transition to the digital space and were forced to buy such services on their own. However, the pandemic has increased demand for new digital solutions and accelerated their development.

A more recent example is Digital Alliance Holding AB. The company has developed and implemented a solution called SoftPos under the tap2go brand, which is called upon to accelerate the transition of businesses to the digital environment. The innovative payment terminals that tap2go offers its clients can be installed on mobile phones, thus giving them the functionality of POS terminals that can be used for accepting both fiat and cryptocurrency payments instantly, while providing a host of other functions. Considering that over 46 million merchants worldwide accept cryptocurrencies and over 60 million new cryptocurrency wallets were created by mid-November of 2020, the prospects of such software packages for businesses are lucrative and cost-effective.

Such solutions are already finding great demand from global companies capable of spending on the instruments needed to continue their in-depth digitization processes. Apple is in the lead with its recent acquisition of Mobeewave Inc. – a startup that developed a technology capable of transforming iPhones into mobile payment terminals. By using the Near Field Communication (NFC) chips that have been installed on Apple devices since 2014, Mobeewave’s software allows buyers to make transactions at a tap. Apple invested about $100 million into the startup and the release of its Apple Card could signal that integration of Mobeewave could allow anyone with an iPhone to launch their own business without any additional expenses on terminal hardware.

Visa is gaining up with its renewed support of MagicCube to continue development of the virtual TEE-based platform. As part of the investment, Visa will be broadening its partnership with MagicCube to explore new use cases in the payments industry, including Tap to Phone.

To Conclude

The digital economy has developed by leaps and bounds in the last 20 years, helping businesses, states and people alike during the pandemic. Considering the events that are taking place, the process of digitization will continue along with the development of cloud technologies and the transition to remote work, heralding the end of the era of payment terminals and the rise of an age of digital payments.