Payment Methods for Small Businesses: Online Payments

Business is about earning money. So, starting a smaller company that will sell some products or provide any type of services for money, you need to think about how your firm will receive the payments. Tried and tested cash is always a good option, but it’s not always convenient for customers. Meanwhile, small-scale businesses dependant on suppliers and logistic chains often lack revenue volumes to make use of a credit card alternative. And what about online payments? In the world of the digital economy, this option opens a lot of opportunities for smaller ventures and startup projects making them more attractive to customers and, thus, enhancing their positions against bigger competition. Let’s take a deeper look at this. 

Small Business Payment Methods: Different Types to Try

The more payment methods you offer, the more flexible your company is for a customer. Payment methods versatility allows engaging customers and revenues through different resources. Besides, it makes your business open to different types of clients. Some prefer bills and coins while others favor credit cards. With sales largely moving online, Internet payments are also on the rise. All of these methods are available for smaller businesses, each bringing some opportunities and having its limitations. 

Cash Payments

Cash used to be a primary payment method, and it will never “go out of fashion” so to say. Using this type of payment, you’ll immediately obtain cash, and there are no associated costs and expenses. It’s a great choice for smaller businesses with lower margins and a whole host of other responsibilities. 

On the flip side though, this payment method is suitable only for offline sales. Besides, cash flows are more difficult to manage and account for. Closer and more thorough control is a must. It’s not to mention that this type of payment might be simply inconvenient for some customers who tend to use credit cards. 

Credit Cards

Following the latest economic studies, nearly 80% of consumers give preference to this payment method. Card payments are easy, convenient, and safe. A customer can make bigger purchases without keeping big sums of cash in the wallet. For a smaller business, card payments enhance credibility and expand a customer base. Quickly debited to your bank account, they will boost up your cash flows accordingly.  

The downside to this payment type is the bank fees for performing transactions and processing the payments. 

Payment Checks

Widely popular back in the 20th century, checks authorizing money transfer from the client’s account to a seller’s account are not that popular today. Paper checks are getting replaced by electronic checks that are used for Internet payments. Today, common checks are rather used by service providers than sellers. 

Online Payments

Modern digital payment systems allow you to go shopping with only your mobile phone at hand. All money transfers are performed electronically via dedicated apps or e-wallets. Meanwhile, companies can accept money using special gateways that can process different types of payments. This way, electronic payments are a choice not only for online businesses but also for offline ones operating in brick-and-mortar places. For a recipient, online payments still come at a cost, yet service fees are fairly affordable and much lower than those for credit cards. 

Understanding Online Payments

Online payments are a modern method that has occurred in response to tendencies and demands of a modern consumer market and resulted from achievements in the sphere of digital technologies. This payment method gives customers an opportunity to shop around from the comfort of their own homes and even make international purchases without even going outside. In the meantime, any business can easily expand its presence and boost up its brand without opening affiliate offices and points of sale here and there. Considering this payment method from the vendor’s or supplier’s standpoint, there are several aspects you need to look into when choosing an online payment system for your business: 

• Processing Speed: With online payment systems for smaller businesses, it takes from 12 to 48 hours to process the payment. Yet, smaller ventures are more sensitive to daily cash flows than their bigger competitors. To cover ongoing expenses, they need to have the ability to estimate their revenue streams. So, search for a system that offers predictability and relatively fast processing times; 
• Security: You want to make sure your money is safe, and an electronic payment system should ensure this security to you. Your solution should provide solid protection against fraud and shield identity data. Give preference to multi-stage protective algorithms; 
• Control Flexibility: As a business owner, you should have full control over your payment system and be able to track all transactions and operations. Besides, modern systems allow adjusting the servicing fees depending on your revenue volume. And there are systems with built-in tools for further integration with your banking and accounting software if you seek to add credit card payments. All in all, you should be able to stay on top of your electronic payment system to closely track your finances and keep an eye on all your transactions. 

How to Configure Online Payments for Small Business

If you want to adopt an electronic payment system for your business needs, there are several types of online methods you can choose from:

1. Card Payments: You can make use of this option by adding a simple form to your business website. The payment will be made via a service provider that ensures its safety and allows tracking it afterward; 
2. e-Check Payments: This way, customers will be enabled to make direct payments from their bank accounts. The method is realized nearly the same way as card ones while incurring lower processing fees; 
3. Automatic Bill Payments: Those who accept card payments can add this option to their menus to enable customers to schedule their regular payments and make them automatic. It’s a perfect alternative for services provided on a weekly, monthly, or quarterly basis;
4. Click-to-Pay Solution: It’s an option for those who use cloud-based accounting. A customer gets an email with an invoice and an active payment link in it. It will take your client less than a minute to review it and make a purchase;
5. Mobile Payments: By purchasing a mobile card reader and connecting it to your smartphone, you’ll be able to receive payments in person, wherever you are. 

Advantages and Disadvantages of Online Payments

Though online payments are gaining popularity, this method is still not perfect and has both benefits and downsides to it. 

Pros:

• Faster processing speed: Online transactions are processed faster than those made via e-checks and cards;
• More options for clients: You can apply several payments options to give your clients choice and let them pick the most convenient method. Not only will it strengthen your relations with current customers but also it will allow you to engage new ones; 
• Improved security: Online payments bring peace of mind both to you and to your clients since electronic gateways usually use multi-tier protection systems to secure the payer’s personal data and make sure the money safely gets to the recipient’s bank account; 
• Ultimate Convenience: With this payment method, you can both sell products online and open offline points of sale. Meanwhile, clients can conveniently reach you on both markets. 

Cons:

• Service fees: Third-party online payment services providers deliver their services on a payable basis. Usually, there might be a monthly fee to pay and per-transaction rates; 
• Cyber Attacks: Though digital payment systems boast extremely high security and protection levels, they are still continuously exposed to attacks of cybercriminals;
• Dependence on the Internet: As the name suggests, online payments are available only through the Internet. Should any connection problems arise, your system will lie flat;
• Technical Issues: Lags and malfunctions in supportive software can also disable your online payment system. 

What Is the Best Online Payment System?

Certainly enough, there is no one-size-fits-all online solution. The best Internet payment system is the one that matches your budget and business needs to a tee and will be convenient to use for your clients. The criteria to estimate are:

• Cost: What are the service fees and rates? And how are they charged?
• Built-in Features: What does the supplier offer? 
• Flexibility: Is it possible to choose different payment options?
• Efficiency: How will the software work with your business banking and accounting systems?
• Protection: Will the payments be secure? 

Most popular online payment processors for small businesses include PayPal to process credit and debit payments, WePay to synchronize with your website, Apple Pay to convert your Apple gadgets to POS systems, Venmo to deliver to street vendors’ needs, etc.