Entrepreneurs who are either just starting out or operating small businesses are wholly dependent on their cash flow. A big part of that is making sure that you get the payments from your customers as seamlessly, safely, and consistently as possible. Being able to guarantee quick and easy payment processing for all transactions is crucial to earning both steady income and the trust of your customers.
There are viable options you can consider for your online business–all of them having dependable practices, as well as various methods of security to ensure customers that their transactions are safe.
Being able to pick the best payment method for you may require a bit of mental gymnastics to work out all the details involved, including what type of company you are running and how you conduct your business.
If you are still confused about it, the following could help you choose by looking at the intricacies of various payment methods.
Credit Card and Debit Card
The most logical option for most people is payment through card due to convenience and having banks doing a lot of the busywork for you. It is said that businesses these days can never get by without being able to accept card payments as they have become ubiquitous all over the world.
In order to accept credit and debit card payments, it is recommended to use a merchant account from a service that acts as a middleman in processing card transactions, which ensures that the money is appropriately withdrawn from the right place through the right card. Upon confirming the transaction, the money can then transferred from the merchant account to the business’ regular bank account.
You can just forgo the use of a merchant account if you wish, but it may be better to avail of the security and convenience of having one. There are different kinds of merchant accounts for card payments, including retail merchant accounts, Internet merchant accounts, and mail or telephone order (MOTO) merchant accounts. The purpose of each is clearly stated through their names, and online businesses will most likely benefit from Internet merchant accounts.
Of course, making use of such a service is not free; monthly fees and transaction fees are included. However, if your business is to earn most of its revenue through credit and/or debit card payments, then it is recommended that you use one for your transactions.
Direct Deposit and Direct Debit
The direct deposit method requires a bit more work since customers transfer money directly from their own accounts to your business’ account through a bank deposit. As for direct debit, it is mostly the same as the former, but done through an automated electronic fund transfer. The customer must give a proof of payment, usually the receipt and/or date of transaction and transaction number, in order to complete a purchase.
These transactions do take 24 hours to clear and require you to give your business’ bank account details. It also means that you must consistently practice caution by keeping a record of references to every transaction so you can track them when needed. This is needed to protect your business from fraudulent transactions, which is likely through this payment method.
This option is good if most of your customer base is within your local physical area where you operate, which lets customers have the option of going to the bank to make their payments.
Online Payment Services
While credit and debit cards are convenient, not everybody can get them. That is why online payment services are regularly used to shop and transfer money online since anyone of legal age can register a free account for one. Services such as PayPal have become synonymous to online transactions, and they can go hand in hand with card payment options for online businesses both big and small.
In order to receive money from customers through an online payment service, you will most likely have to register a merchant account as opposed to a personal account. This is to prevent having your account frozen when the service detects multiple accounts sending money to you in quick succession, as well as to make use of additional features that may prove useful to your business.
Cheques and Money Orders
By now, this option has become rarer due to the prevalence of online payment methods. Cheques and money orders take time to send, receive, and process, which is not favorable for online businesses.
However, some customers may still prefer this payment option due to security and personal reasons. Similar to direct deposit, you have to exercise extra caution by making sure that all payments include references to easily identify the corresponding transaction.
Now that you have seen your options, which of these are you planning to use for your e-commerce site? Let us know in the comments section below.