Whatever you sell, having a convenient payment solution for your customers and giving you the best value is critical to your overall business success. In today’s technology-driven and interconnected world, several opportunities are available to small businesses to help them grow and succeed while adequately serving their customers.
Running a small business is challenging, but accepting payments should not be one of them. New and existing methods of payments innovatively designed to help small businesses accept payments are now available. Here we look at a few ways you can receive payments and grow your small business.
Small businesses usually have their preferred method of payment. But with the coronavirus, small business owners had to look beyond their preferred payment methods and switch to convenient ways for buyers.
Offering payment options to clients can help boost your revenue. So it is essential to provide as many as workable alternatives to your customers. But Several factors come into play when you are considering the methods of payment to accept. So, pay attention to those factors.
Payment Methods for Small Businesses
Payment systems can be physical or electronic. There are five payment types that a small business can choose from. They are:
- Cash payment
- Credit Card payment
- Check payment
- Mobile payment
- Online payment
Some would say cash is the king of payment. But then, technology and eCommerce now mean that you can not actualize all fees using cash. Until recently, cash had been the dominant form of payment. But that is changing as digital payment methods become the norm. The primary benefit of cash payment to a small business is that it is received immediately, and there is no fee attached to accepting payment. But a significant disadvantage of running a cash-dominated business is the risk of theft and mismanagement of cash.
Credit Card Payment
According to a consumer payment study, 77% of consumers prefer to make payments with their debit or credit cards. This is connected to the convenience that using a card brings. From the benefit of usability on multiple channels to processing large amounts, cards are versatile, and any small business is expected to accept a type of card at least. While this type of payment offers the benefit of direct and often quick transfer of charges to a business’ bank account and a broader customer base, it comes at a cost to the small business in the form of transaction processing fees.
Whereas the cost is a significant factor for any business. A small, growing business using services of a card processor or merchant account provider, for example, would want to consider one that is free of misleading and hidden fees as this helps to get rid of losses, hence reducing overhead costs.
In addition, a small business should consider the total cost of ownership and not just the upfront cost of an e-payment system to be considered. You should know exactly what is charged for the different categories of transactions you can carry out.
Checks authorize your customer’s bank to transfer funds from their account to your account. This payment method is no longer relevant as it used to be in the 20th century, with more people now preferring to use electronic forms of compensation. However, eChecks have gained popularity in some business spaces as the adoption of paper checks gradually fizzles.
With the rapid growth of eCommerce and increasing access to mobile devices such as smartphones and tablet PCs, mobile payment has become an unavoidable payment method. Mobile prices include a range of payment options such as USSD transfer, banking app, digital wallet, and payment that utilize mobile card readers and near-field communication technology, and more. Online shopping, for example, has developed to become particularly attractive due to the ease of access to online marketplaces and the availability of gadgets and technology that ease payment.
Online payment systems utilize a payment gateway to enable and authorize different payment types, including debit cards, credit cards, and eChecks. This can be used irrespective of where the purchase is conducted, whether online or at a physical store. Online payment can involve using digital wallets or apps that store card information on a mobile device.
Payment from digital wallets such as GooglePay and Apple Pay are becoming more popular. Many consumers now use their smartphones to make payments via online payment instead of a card. A small business that is mindful of growth must put in place strategies to incorporate online payment methods.
Factors To Consider When Choosing A Payment Method
How a small business receives payment used to be a simple decision between cash, checks, or credit cards – but with several mobiles and online options to pick from today, there are several factors you want to consider when deciding which payment method(s) to adopt as a small business.
How Easy And Smart Is It?
Getting on a payment solution as a small business should be easy and not require complicated paperwork. Also, your payment system should be smart enough so you can create the best experience for your customers.
How Flexible Is It?
A payment system under consideration should be flexible enough to allow your customers to choose whether to use their card or do a bank transfer.
How Secure Is It?
As a small business, you will undoubtedly want to consider how secure your payments are. Be attentive to what a payment solution offers security features under consideration.
Conclusively, customers usually prefer to shop with businesses that accept their preferred method of payment. The payment methods you embrace as a small business will largely depend on your customer preferences and growth objectives. But those methods should save you cost and give you the best value.
Important to note is that the shift to online and mobile payment options will continue into the coming years. According to a recent report, online payment processing solutions are expected to grow to $120 billion by 2025.
This includes digital wallets and emerging methods, as well as cards and ACH transfer. A small business needs to offer multiple payment options, including mobile payment, as consumers continually seek more convenient ways to make payments.