It would help if you had a small business that accepts payments online and in person. While accepting cash is always possible and free of credit card processing costs, small businesses must accept various payment methods. Only 36% of clients regularly carry cash on them; this poses a problem for the 55% of small businesses that do not accept credit card payments. And it appears that the COVID-19 outbreak will further accelerate this move away from cash. A recent poll found that 60% of participants thought the United States was headed toward becoming an entirely cashless society.
RECEIVING FUNDS FROM CLIENTS
It’s becoming more and more crucial for small businesses to accept alternatives to cash payments. Due to the high processing costs, accepting major credit cards or online payments may have been challenging for small business owners. Still, thanks to modern technology, it is now more feasible. Approximately 50% of customers use major e-commerce platforms to make purchases; therefore, providing a variety of payment methods is practically necessary to keep your company surviving.
Below, we’ll look more closely at four possibilities you might want to think about when collecting payments, regardless of whether you run an online store or own a small service business:
• Cards such as credit and debit
• Payment processing using the American Clearing House (ACH)
1. Debit and credit cards
Credit and debit cards are two of the preferred payment methods, both in-person and online. 75% of consumers claim that using debit or credit cards to make payments is their preferred method. Although accepting credit card payments as a consumer is a straightforward process, there are a few considerations to make as a small company owner when deciding which cards to take.
The processing fees for credit card payments and transaction fees charged directly by the card company should be two of your priorities. For instance, American Express often falls on the higher end, while Visa tends to be on the lower end.
Potential fraud is another item you should consider. Small company owners frequently outsource the task of monitoring for fraud to credit card payment processing businesses since they are more focused on running a business they are passionate about. This is also where the variations in rates come into play. The best option for your small business to take card payments ultimately depends on the requirements of your company and the volume of credit card transactions your company processes each month. Once you’ve made this choice, you should research some of the following tools to receive the payments:
- Point-of-Sale (POS) Software: This is a type of payment system that bills the consumer, offers the option of leaving a tip, gathers emails, keeps track of purchases, handles receipts, etc.
- Virtual Terminal: Small businesses can utilise a virtual terminal to input the credit card number into a computer or mobile device during checkout if they do not want to acquire a card terminal or reader.
- Card Reader: Many small businesses opt for this option because they can use a mounted swipe/chip/tap card terminal to read the customer’s card or attach the card reader to their smartphone.
2. Processing by an Automated Clearing House
Also common among small enterprises is ACH acceptance. The Automated Clearing House (ACH) Network is used in this form of payment to transfer money from one bank account to another electronically. This network serves as a hub for people to transfer money from one bank account to another and represents over 10,000 financial institutions.
Utilising ACH processing has several advantages for small businesses, including
- A relatively rapid and straightforward method of accepting payments.
- Simple setup using the customer’s bank account information.
- More secure than alternative payment methods like paper checks.
Even though ACH processing has many advantages, there are some disadvantages. Many banks have transaction limits that may affect how many transactions they can handle in a day or a month. Additionally, there can be a fee for repeated transfers. As a result, transaction rates are either zero or extremely cheap, typically ranging from $0.25 to $0.75 for each transaction.
3. Repeated Charges or Subscriptions
Offering recurring billing or subscriptions is another payment option, and many platforms are available to assist you in automating payments. Software for recurring billing takes some of the burdens out of receiving payments on time.
However, you must obtain the client’s consent and establish a payment schedule before automating invoicing. Once your consumer approves, you may set up subscription-based billing. The steps you should follow to create a recurring billing system for your small business are listed below:
- Obtain the customer’s consent to be enrolled in a recurring billing cycle and payment details (a credit card or bank account).
- Pick a billing system that is efficient for your company. Software like Stripe provides an easy-to-use user interface for managing and accepting payments. This software integrates a payment gateway and recurring billing software into one package to process card payments.
- Within the billing software, establish a price strategy and schedule how frequently clients will be billed.
- Test your billing system before distributing it to clients, and make sure your first recurring bill is sent out professionally.
4. Tools and Devices for Online Payment
You have many excellent options for online payment tools and devices as a small business owner. A reliable e-commerce payment service is crucial for everyone who sells products or services online. Debit and credit card payments are accepted by online payment systems, which typically charge a fee to do so.
PayPal – Accepting credit and debit card payments online is simple with PayPal. PayPal offers choices if you need to accept payments both online and offline. For customers, using PayPal for online, in-person, or mobile payments simplifies the purchasing process. While present, you can collect payments anywhere by converting your tablet or smartphone into a payment terminal.
When you first join up for a PayPal account, there are no setup costs. There are transaction costs, however. While in-store transactions are subject to a 2.7% plus $0.30 per transaction fee, online transactions are subject to 2.9% plus $0.30 per transaction costs. Although a transaction cost is associated with using PayPal, there are no ongoing monthly fees. This is one of the advantages.
Stripe – Small company owners may use a single piece of Stripe software to collect payments online and in person. Stripe processes payments throughout the world, whether you have domestic or international business. With this software, you can effectively manage payments, and Stripe Radar gives you peace of mind that your company is safeguarded against fraud.
Because it enables you to accept many payment methods, Stripe is especially beneficial for small businesses that want to go internationally. If you accept many payment methods, your company can grow to include other nations that accept various payment methods.
Square – For small business owners, the square provides a range of payment options, including credit card payments. They start by providing Square Point of Sale, a point-of-sale system that may be utilised in-person or online using a mobile device. They also provide a variety of user-friendly hardware choices, further streamlining transactions. Contactless and Chip, Register, Terminal, Reader, and Stand are some of these accessories and hardware. You may manage your business online with Square on a very user-friendly interface.
It is more crucial than ever for your company to accept alternatives to cash as our society drifts further away from this practice. You could lose out on additional sales if you don’t adjust to your customers’ wants. Fortunately, no matter your needs, there are numerous solutions for your company.