If you have a small business, then it is important to have a good payment system. Because one of the most important things to captivate your customers and make them come back to you another day is to deliver them a good service with a pleasant attitude. So if you want to do this, it is necessary for your business not only to be reliable but in addition, with a modern form of payment.
With so many business owners still not taking advantage billing and payment online, online payment system is a great way to smooth the way your customers pay you. Efficient, free and easy to set up, online business payment solutions will save you time, costs and energy. There are different types of business payment systems available in the market. Based on your business needs and budget, choose an appropriate payment system for your business.
Types of small business payment methods
The first thing you’ll need to decide is which types of payment your business can accept. Generally speaking, there are five payment options to choose from
- Check payments
- Credit card payments
- Online payments
- Mobile payments
Consumers make cash payments with bills and coins. Typically, you manage cash payments from a point-of-sale system. Until recent years, cash had been a primary form of payment, but digital payment options have steadily increased in popularity.
The benefits of accepting cash payments include receiving payment immediately rather than waiting for a transaction to clear. Cash payments also cut down on overhead costs because there are no fees associated with accepting cash from customers. For small businesses with slim profit margins, credit card fees can be costly.
Running a cash-only business may help some small businesses improve bottom lines and simplify responsibilities. But it’s important to note that this type of payment comes with drawbacks. With a cash-only business, you may run a higher risk of theft and mismanaged money. There’s also a chance you could also lose business by inconveniencing customers who only have a card.
Regardless of your industry, if cash is your preferred payment method, you can avoid an audit with diligent accounting.
Checks are documents that authorize banks to transfer funds from your customer’s bank account to your business bank account. Checks document the payment amount and date and the payer’s account number and signature to authorize payment to the recipient.
Paper checks piqued in the 20th century. But they have lost some of their popularity with the widespread adoption of electronic payment systems. EChecks, electronic alternatives to paper checks, are now commonly used to make online payments.
But checks aren’t entirely outdated. They’re common among small business owners who own rental properties and lawn service companies, for example. All you need is a business account to start accepting check payments. But the SBA suggests creating a policy for your protection.
Standard practice is to accept check payments written in the exact amount and issued by major banks in your state. A third-party company can help verify the legitimacy of each check. But if a check bounces, you could wind up in small claims court or using a collection agency to recover your losses. Both results can be expensive and don’t guarantee repayment.
According to TSYS 2017 Consumer Payment Study, 77% of consumers prefer paying with a card. Whether it’s a debit or credit card, plastic has become the primary way consumers pay for purchases today. Paying with cards is convenient and can facilitate a smoother checkout process. Plus, it allows people to finance large transactions, so most customers expect businesses to accept at least one type of card.
This type of payment benefits small business owners, too. Card payments broaden your customer base and legitimize your company. And in most cases, card payments deposit into your bank account quickly, so they can help improve your cash flow. But this type of payment method comes at a cost for small business owners.
The Durbin Amendment be caps debit card transaction fees to help make processing debit card payments more affordable to sellers and consumers. The Durbin Amendment set the fee cap for debit transactions at 0.05% of the purchase amount, plus 22¢. However, the amendment doesn’t impact credit card transaction fees, which can cost sellers significantly more.
Credit card transaction fees, flat fees, and incidental fees can significantly impact your bottom line unless you pass the expense to consumers. Each company sets its rate, with Visa and Mastercard leading the way, followed by American Express and Discover. You’ll need to cover the costs of the physical equipment and pay for merchant services and PCI compliance charges. And you might face monthly minimums.
Consumers have the right to dispute credit card charges if they’re unhappy with your product. Chargebacks can debit your account without warning, and when margins are tight, they can send your small business into the red. Some banks hold merchants responsible for credit card fraud, which adds another expensive liability, especially if your reputation is tarnished as a result.
Despite the drawbacks, credit card payments have some benefits compared to alternative payment methods, particularly security, hygiene, and customer preferences.
Online payments transfer electronically. They use a payment gateway to facilitate and authorize several types of payments, including eChecks, credit cards, and direct debit payments.
Online payments aren’t restricted to online businesses. Online purchases can occur in brick-and-mortar stores using digital wallets, or apps that store credit and debit card information on a mobile device.
Online payments seem to be the way of the future in terms of cost and convenience. They offer a cheaper and faster way to get paid, and they give consumers options when they check out.
Cash and credit card sales require you to tally up the total price, including taxes. But the best online payment methods do this automatically, saving you time and reducing the risk of error. You’ll need to pay fees to accept payments online. But these fees are generally more affordable than those charged by credit card companies.
E-commerce online payment services often utilize a virtual shopping cart to calculate the total with shipping costs. That’s in addition to collecting the customer’s shipping and payment information. Several providers offer free shopping cart services to small businesses. You must have this type of payment to sell products or services online. But the ease and affordability have made them more popular among brick-and-mortar retailers, too. Digital wallets, as well as smart debit and credit cards, can enable contactless payments, which use near-field communications to facilitate in-person payments.
TSYS found that paying from digital wallets, like Apple Pay or Google Pay, is going mainstream, especially among younger consumers. If your small business doesn’t accept this type of payment, you could be missing out on a significant portion of revenue. Their data reveals that 51% of consumers use their phones over a payment card when checking out at a store. The change indicates a tipping point for online payments wherein the advent of digital wallets is around the corner.
Mobile payments use mobile devices, such as smartphones or tablets. Mobile payments can encompass a range of payment options, including:
- Payments made through digital wallet apps and near-field communication technology
- Money transfer apps
- Payments using a mobile card reader to swipe debit or credit cards
Mobile payments facilitate mobile transactions using a method of payment, like cards or electronic money transfers.
Are you ready to expand your small business payment options? Here are nine types of payments to accept and how to set them up successfully (with no more paper trails or file cabinets!).
1. Accept Credit Cards Securely
To accept cards, you’ll need to ensure a secure process. Look for a small business payment system that ensures PCI compliance at every step of the transaction so you can keep your customer’s information safe. A PCI certified company will handle all of your credit card processing, transaction history storage, and credit card account storage.
It’s important to mention that the best small business payment systems have roles and permissions functionality. This feature allows you to control who on your staff has access to view secure payment details preventing unwanted security breaches.
2. Explore Mobile Payment Options For Small Business
Many small businesses are jumping on the mobile bandwagon and for great reason! More people are spending time at home, but still want to enjoy certain services.
From in-home massage services to pet grooming, mobile payment options for small business are crucial. Use a mobile card reader to swipe your customers’ debit or credit card and instantly collect payment.
The best mobile point-of-sale system will also securely store important customer information making future payments a breeze. This data can also send automatic receipts for your customers’ records!
3. Offer Affordable ACH, or eCheck, Options
Some small businesses require costly or more frequent payments, like home contractors or childcare providers. In these cases, one of the best small business payment options is through a direct withdraw from your customer’s bank account using an eCheck through ACH payment processing.
This small business payment option allows your client to input information from a paper check (routing and account number) into an online payment form. The payment processes electronically, without the physical presence of a paper check.
One of the biggest perks of ACH is that the information does not expire which can happen with credit and debit cards.
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4. Add Easy Email Invoicing
Are you a service-based small business? Perhaps you work as a chiropractor or house cleaner, or you own a landscaping business. In cases like these, email invoicing is one of the most efficient small business payment options.
Click-to-pay invoices gives your customer the ability to see how much they owe and instantly enter their payment information. Even better? They will automatically receive a receipt in a matter of seconds. When you have a fully integrated system for your payments, all of your financial reports and data will be conveniently saved in one location.
No more fumbling over paper invoices after an appointment or chasing down checks!
5. Set Up An Online Storefront
An online storefront allows you to sell one-time and recurring products and services. You can even accept event registrations or donations.
The advantage here is the ability to generate business online 24/7, freeing you up to focus on your passion. Whether you’re selling weekly meal plans or providing subscription-based services, an online storefront makes the process seamless for you and customers.
6. Create An Online Payment Gateway
Likewise, for service-based businesses with fixed rates, an online payment gateway offers features that make it easy to sell your services online. Mobile car detailers, dog walkers, and many other small businesses can reap the benefits.
This is how the process looks. Potential clients visit your website, book an appointment, use a simple online payment form, and can even save their information for future purchases. It’s really that easy! By offering online payments your clients are given complete flexibility in the payment process which is a big win for your business revenue.
7. Make It Easier With Recurring Payments
Let’s face it, everyone is busy nowadays. The ability to “set it and forget it” is incredibly valuable to your customers and clients.
Recurring payments allow for ACH or credit/debit payment on a routine basis. For businesses like dance studios, gyms, and daycares, this is perhaps the most crucial of small business payment options. Once your clients choose the payment plan and frequency from your options they’re all set! Not only will they love not having to handle another payment to-do, but you’ll never have to chase down a missed payment from them. A win-win!
8. Consider Payment Plans For Small Business
Many families are on a budget. When it comes to costly services, such as contractor services or learning academies, payment plans for small business can help.
Some software solutions for small business payment options make it easy to divide up payments. For example, if a class is $500, families can pay it over six months, a little bit at a time. The key for a small business though is in an automated solution. As a business owner, tracking and following up for payment plans can be a challenge. Instead, find a payment tool that will automatically debit clients or send invoice reminders.
Your customers or clients will appreciate this increased flexibility, which means you can attract more business and reach an even wider range of clients.
9. Integrate These Payment Options Into Your Custom Mobile App
If you’re a small business that has developed a mobile app then you understand how valuable it is to provide a complete experience to users. If accepting payments through your application is missing then both you and your customers are missing out. Instead of pushing customers to another solution or a website from your app, considering integrating payments with PaySimple.
By integrating payments within your mobile application, customers will be provided with a streamlined and secure payment experience without ever leaving your solution. This capability not only delivers more value to your users, but also organically increases revenue for your business.
Time for you to consider upgrading your payment systems for you small business so that your sales and revenue can keep growing.
We’ve examined the different options for small businesses: from PayPal and Google Wallet to Square and Stripe, just to name a few.
Ultimately, the payment methods you accept at your business will depend on your business model and your customers. The best payment solutions for your small business should be affordable and capable of integrating with your accounting software. Offering a variety of payment options to customers may help boost your cash flow,
You can back your business with powerful tools using QuickBooks Payments, paired with Intuit’s best-in-class accounting software.