Small business owners can boost sales by offering different payment methods to their customers. However, when it comes to selecting different payment methods, small businesses should consider transaction sizes, their accounting system, and who’s responsible for handling the payments.
Let’s look at four payment methods that small businesses must support.
1) Check payments
Checks are paper documents that authorize the issuing bank to transfer money from your customer’s bank account to your business bank account. A check documents the payment date and amount and the payer’s bank account number and signature that authorizes the payment to the recipient.
The use of paper checks peaked in the 20th century. However, they’re not as popular due to the global adoption of electronic payment systems. However, checks are still common for small business owners that own rental properties or small utility companies.
As a business, you just need to have a business account to accept check payments.
What’s more, many senior citizens are not comfortable with digital payment methods. As a small business, it’s important for you to support the aging demographic and accept checks from them.
What’s more, void checks are also helpful as they have information to verify your account and details of which bank holds your account. Some uses of void checks are to set up auto-pay or direct deposits with employers, automate your loan payments, and set up automatic electronic bill payments.
You can get a voided check by visiting your local bank or requesting one online using check printing software
2) Card payments
77% of US consumers prefer to make their payments with a card, according to the 2017 TSYS US consumer payment study. Plastic has become the primary way of payment by US consumers, whether they use a credit or a debit card.
Payment with the help of cards is convenient and can lead to a smoother checkout process. As a result, most US customers have come to expect that businesses will accept at least one kind of card payment.
Card payments will benefit you if you’re a small business owner as well, as they’ll increase your customer base and will legitimize your company as well.
What’s more, card payments get deposited into your bank account promptly, which may help in better cash flow management for your business. However, one caveat of this payment method is that small businesses may incur an additional cost in terms of transaction fees.
When it comes to transaction fees for debit cards, the Durbin Amendment sets the transaction fee for debit carts at 0.05% of the purchase amount, plus an additional 22 cents. On the other hand, transaction fees for credit card payments do not have any such cap and can significantly impact your bottom line if you do not pass the expense to your customers.
3) Payments by Cash
When it comes to cash payments, consumers pay with bills and coins. Typically, small business owners manage cash payments Method with the help of a point-of-sale system. Until recently, cash was the primary form of payment for most businesses. However, other payment methods have risen in popularity.
The main benefit of cash payments is that businesses will receive the money immediately instead of waiting for transactions to clear.
Payments by cash also reduce overhead costs since there are no extra fees for receiving cash from customers. If you’re a small business with slim profit margins, you should consider whether credit card fees will be expensive for you. However, cash-only businesses run a high risk of mismanagement of money or even theft. You may also lose customers who prefer to pay only using cards or other payment methods.
4) Online payments
Online payments are transferred electronically. They use payment gateways to authorize and facilitate several payments, including credit cards, direct debit payments, and eChecks.
Online payments are the primary payment methods for a business that operates online. However, even brick-and-mortar businesses can offer online payments with the help of digital wallets or mobile apps that store debit and credit card information.
Online payments offer a faster and cheaper way for small businesses to get payment, and they offer consumers a lot of convenience at the time of check-out.
What’s more, credit card or cash sales may require you to calculate the total cost of a product, including applicable taxes. However, usually online payment methods do this calculation automatically, saving time and reducing the chances of human error.
While you may have to pay fees to accept online payment, such fees are usually more affordable than the fees that are charged in the case of credit card payments.
The payment methods you offer as a small business depends upon your customers and the business model you follow. Remember that providing different payment options to your customers will add to their comfort level and improve your cash flow.