What is the Best Payment Method for Small Business?
Some might think cash is the best payment method. Others rely heavily on their plastic. The truth is that business payment options have changed throughout the year. So many people are beginning to wonder, “what is the best payment method for small business?” We will discuss shortly to help you out.
There are a lot of different payment methods. So, what is the best? The answer depends on a group of factors, such as the transaction size, your accounting system and who is taking the payments. Keep on reading for options that will help you answer the question for your business.
Payment Method Types
While new methods seem to be emerging frequently, we’ll discuss the options of cash, checks, credit cards and online payments.
Cash
Despite how popular digital payment options have become, cash had been the most important payment method until recent years. Some of the upsides of receiving cash payments include not having to wait for a transaction to clear and not paying fees for receiving the money. However, there’s a risk of theft and losing customers who only have a card.
Checks
These documents authorize banks to transfer funds to the recipient’s account from the payer’s account. However, this payment method lost its popularity since the creation of electronic payment systems. Unfortunately, if a check bounces, using a collection agency or ending up in small claims court could both be expensive solutions that don’t guarantee repayment.
Cards
Today, the primary way consumers pay for purchases is credit or debit card. It can be more convenient and can help the checkout process go smother. It can also help people finance large transactions. There is an expectation that most businesses will accept some type of card. There are also the benefits of increased security and hygiene as well as customer preference.
When it comes to small businesses, card payments improve cash flow, legitimize companies, and broaden customer bases. There are, of course, associated fees and charges to be considered.
Online Payments
What is the best payment method for small business? Online payments can be seen as one of them. Online payments can include several payment types including credit cards, eChecks, and direct debit payments. Online payments are increasing in popularity offering businesses a cheaper and faster way to get their money while giving shoppers options at check out.
Online payments can be used for online purchases as well as in store purchases by using such things as digital wallets and apps that store credit and debit card information on a mobile device.
If you sell products or services online you must utilize this option. One method is using a virtual shopping cart that can not only calculate the total sale but also capture shipping information and costs. Many providers offer free shopping cart services to small businesses so make sure to explore your options.
If you are not accepting online payments in one or several of its many forms, you could be leaving money on the table.
Moreover, digital wallets like Google Pay or Apple Pay have become highly popular among younger consumers, who might be unhealthy for eating late, but they’re still good buyers. This means you’ll miss a significant portion of revenue if your small business doesn’t accept this payment method.
Online Payment Methods for Small Business
To find the right solution for your needs, it’s helpful to compare the best online payment methods. When doing so, there are some main aspects to pay attention to; which are price, flexibility, features, security, and functionality. Perhaps you could try to find the least expensive way to accept credit cards before proceeding with one of the below options.
PayPal
Its big reputation has provided them with millions of consumers’ and businesses' trust. PayPal is a simple and fast way to begin accepting payments, and it’s probably the best option for e-commerce businesses. However, it’s necessary that your site and PayPal checkout are compatible, so make sure to check that out with your shopping cart provider.
PayPal users can pay using a bank account, a credit or debit card, their PayPal account balance, or their PayPal CREDIT. In terms of costs, you’ll have to pay a merchant fee of 2.9% of the transaction amount and a 30¢ fixed fee if you’re selling services or goods in the U.S. However, there’s a fee of 5% of the transaction amount and a fixed fee based on the currency when the payments are under $10.
Venmo
Not only does it process payments, but it also helps to build brand awareness by allowing users to comment and like each other’s purchases. This payment method works great for street vendors that need to accept cashless payments. All they need to do is to link their business account to a QR code that users can scan later to send their money. It can also be an instant payment for your app or website featuring your food menu, for instance.
It’s necessary that users link their debit cards or bank accounts to pay with Venmo. If they use credit cards, there will be an additional charge. Although there aren’t any subscription costs, setup fees, or costs for payments, there’s a fee for electronic withdrawals. Using the Instant Transfer feature to immediately access your money will cost you a fee from 25¢ to $10 (1%).
QuickBooks
This dynamic online payment method calculates sales tax, process the payment, creates a sales receipt, and records the transaction when you complete a sale. It offers you a virtual credit card terminal to accept credit card payments over your phone, and you can accept payments from anywhere using their app.
Although you can choose how your customers pay, QuickBooks enables them to pay with debit or credit card, or ACH transfer. What makes this method one of the best options for small businesses is that it charges one rate when using the card reader: 2.4% and 25¢ per dip, tap, or swipe for Mastercard, Visa, American Express, and Discover. You receive your funds in your bank account the next business day, and there aren’t any hidden costs or termination fees. Also, you get to choose your rate and discounted fees if you go for a monthly subscription.
Which Payment Method is Best for You?
Besides sharing your business contact info on your website, offering them a variety of payment methods can improve your business. So, when you wonder, “what is the best payment method for small business?”, that will be determined by your business model and your customers.
