Ways to Accept Online Payments for your Small Business

Are you wanting to increase your payment options for your small business? If your answer is yes, then you’ll be making things much easier for yourself and for your customers to pay you. When you accept online payments for your small business, you’ll limit the amount of paper trails and find all your financial data more smoothly. Plus, with so many options available, it’s more affordable to take payments online just by a click of a button.

While there are many different ways to accept online payments, it’s hard to know which ones will best suit your business. Here, I outline what you need to start accepting payment methods and choose some of the most popular options on offer.

1. What is payment processing?

Payment processing refers a series of steps to transfer and authenticate funds of a transaction between a merchant and numerous parties who are also responsible for processing it. Using a company that enables electronic payments, such as a credit card or digital wallet, will facilitate businesses to accept payments. Payment processing companies will deal with all the backend administrating details between credit card companies, merchants and banks.

1.1 What Is a Merchant Account?

A merchant account refers to a commercial bank account whereby it allows you to accept various payment types and process electronic transactions. In general, it allows you to accept credit/debit card transactions online, by phone and in person. That said, you don’t have direct access to a merchant account. Instead, it acts like an intermediary account in which a payment processor drops the funds into the account and processes it within three business days.

1.2 What Is a Payment Gateway?

A payment gateway refers to those physical card readers found in a brick-and-mortar shop to accept debit or credit card payments. However, it can also accept online payments too. Put simply, it’s a point-of-sale terminal where a customer swipes a card or more recently, taps a phone onto the device. Alternatively, for e-commerce shops, it’s the checkout page when a customer enters their banking details.

2. How can I accept online payments?

So you can take payments online, you need to register with a merchant account and a payment gateway. Alternatively, you can register with a payment processing company, such as PayPal or Stripe who will deal with every aspect of payments. In general, payment gateways have a tendency to be cheaper so are possibly the best option for small businesses, particularly during a recession. Carefully research the types of transactions you want to integrate, especially credit card processing fees as these can vary enormously.

3. What payment methods are available?

3.1 Credit/Debit Cards

In order to accept cards online, for example, Visa or Mastercard, you’ll have to put a secure process in place. This is to ensure that a customer’s data is safe for every step of the transaction process. Therefore, you need to make sure that the payment certified company is PCI compliant. You should also note that a reliable payment system will have a feature which allows you to take control of which staff have permission to view any payment details.

A PCI certified company will handle all of your credit card processing, transaction history storage, and credit card account storage.
You’ll need to have a merchant account to accept card payments so they can facilitate funds from their account into your business bank account. You’ll also need to have a third-party payment gateway to allow you to accept online payments via the card data. Again, you should research which provider fits your business the best and choose ones that charge lower rates.

3.2 Payment processing companies

PayPal is one of the most widely used and trusted companies for both domestic and international use. While it’s free to sign up, they charge for each transaction. However, they provide the tools to set up a secure gateway for customers to your website and quickly accept payments.

Stripe supports all the main credit cards, mobile paying apps and much more. It offers you a customisable checkout, recurring payments and subscription features. Furthermore, it’s ideal for those retailers that operate worldwide.

Square makes paying very easy for your customers, both in person and online. You can receive payments via contactless, mobile or chip and PIN. They also offer payments in instalments using Clearpay, and you can even design a website to integrate all their payment solutions.

3.3 Using a website builder to accept online payments

If you’re thinking of creating a website or already have one, there are payment processing features with a checkout function already integrated into the website builder. Examples include those such as WordPress, Shopify, Wix or Squarespace who have payment gateways built in, or allow you to add them to your shop. For example, WooCommerce is easy to download and is free to use, plus it accepts payments in more than 100 different currencies. However, you’ll still pay fees for accepting card payments. In contrast, Shopify will just charge for a processing fee for each transaction, the cost of which will depend on your plan.

3.4 Mobile payment apps and digital wallets

In a post-Covid world, customers paying through their smart phones or mobile devices has dramatically increased. Therefore, accepting online payments for your small business on your website can hugely help with sales and is extremely convenient for your customers.

GooglePay grants customers to pay, either online or in person, using their credit and debit cards which are linked to their Google accounts. Although it doesn’t charge fees, the usual credit/debit transaction fees apply. It can be easily integrated onto your website, checkouts are secure and have easy access for customers.

ApplePay works in the same way as Google Pay but in this instance, customers make payments using any Apple/i device. A mobile payment and digital wallet, Apple users can make payments online, by app or in person securely with a simple click on Apple Pay. The usual merchant fees for cards apply but no fees are charged.

Other payment methods include Venmo, SamsungPay and PayPal who also have mobile apps.

3.5 Set up recurring billing

If your business offers monthly or subscription services, such as a gym, gardening or childcare service, then it’s best to receive payments using recurring billing. The good news is that most of the main payment processing payment software will offer business this feature. You can usually customise recurring billing along with accounting software and there’s no need to manage your customer information manually. Customers just need to choose a payment plan from the options you set up.

3.6 Email invoicing

If you’re running a service-based business, then setting up an invoice management system to request payments is the most efficient solution. For example, companies such as Xero or Quickbooks. This can be done emailing client, or a more reliable option would be to use click-to-pay invoices. The latter gives a client to instantly enter their payment information once an invoice has been issued. They’ll receive a receipt in seconds, and you don’t have to worry about paper invoicing as all data is saved in once place.

3.7 Payment links

Payment links include QR codes or shared URLs that securely accept online payments using a secure website. Generally, it’s not necessary to download an app or open up an account. As a business owner, you don’t even have to have a website because payment links can be shared by phone, invoices, social media, emails, texts or messenger apps. However, it will depend on your merchant provider how you send a Pay Button, and fees will vary for transactions.

6. What to think about when accepting online payments

  • Security: the payment gateway you choose to use should have inbuilt features such as SSL and includes encryption to ensure money and data is kept safe. This applies to mobile payment security too.
  • Fees: before you commit to a payment gateway or mobile app, weigh up all transaction fees or monthly subscriptions. You’ll need to make sure their in line with your business budget and how that equates to sales.
  • Customer experience: you’ll also need to take into consideration how clear each step of a transaction is for customers. If you choose a method, from selection to payment, that causes confusion, then it’s very likely you’ll lose sales. In contrast, customers want convenient ways to make payments and without any hitches.
  • Technical ease: similarly, whatever payment system you decide upon, should be easy for you to set up and install. It shouldn’t need much technical expertise to design or navigate. You should also consider whether they accept international payments.
  • Customer support: before you sign up for a payment solution, read customer reviews to find out what other customers are saying. Does it have a positive comments when it comes to customer support? What methods can you contact their support, for example, by phone, live chat?

How you decide to accept online payments for your small business will really depend on their importance and the specific needs of your online shop or services. Consider your budget, compare the features of each one and how easy they’re to use for both parties. The benefits you’ll reap for taking online payments will result in happy customers and more sales.

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About Anita Forrest

Anita Forrest is a Chartered Accountant, spreadsheet geek and money nerd helping financial DIY-ers organise their money so they can hit their goals quicker.