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How small businesses handle payments used to be a big decision: cash, check, credit card with merchant account, and you’re done. But while the digital age has made customers much more flexible when it comes to payments, it has made the process significantly more difficult for merchants, especially smaller shops and online sellers.
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Most merchants already know about traditional credit card processing services and now also offer a long list of online payment and e-commerce solutions. However, in recent years, the list has grown further as the number of mobile payment methods that can use their own processing devices, smart cards and contactless terminals has grown rapidly.
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While all of these options are great for consumers, this evolution of payments also means that small businesses will have to go through a lengthy process of collecting claims and cost-effectiveness for each new payment method. These requirements can be difficult as they depend on both your payment method and your specific business situation.In the past, setting up a payment solution was a much easier process. You had to get a landline phone, rent a credit card machine, factor processing fees and other charges into the cost of your business. Mobile payment providers are working to make the application process easier for small businesses, but the array of options can be daunting.
Additionally, most point-of-sale services (POS) are also digital, so even choosing a store checkout can be difficult. Especially if your brick-and-mortar store is supported by an online POS, the two payment systems need to communicate with each other, as many merchants do today. You can share inventory and customer information as well.
These are the only options currently available. Payment processing solutions will grow to $120 billion by 2025, according to research firm Markets and Markets (opens in new window). This includes debit cards, credit cards, e-wallets, ACH payments (opens new window), and other methods, some of which have yet to be announced. The report cites several economic factors driving this shift, but ultimately changing consumer needs appear to be the main driver.
“Today’s consumers value convenience,” said Frank Pagano, director of sales for his card processing provider VizyPay (opens in new window) for small business credit. . He argues that offering multiple payment options is important for any small business, especially those that deal with mobile payment systems, especially big brands like Apple Pay. This conclusion appears to be supported by current market data compiled by market research firm Statista (opens in a new window).
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“Smartphones are becoming more and more popular, eliminating the need to carry cash and credit cards,” he continues Pagano. This kind of convenience is very attractive to customers, and convenience is central to most new payment methods. This means that few small businesses can afford not to plan for these new trends.
His C. Eric Smith, his CEO and co-founder of AppBrilliance (opens in new window), a payments technology company based in Austin, Texas, said: The pace of innovation in this area has accelerated dramatically. This means more complexity as well as more opportunities.
“Alternative payment lines can offer significant cost savings in a retail economy that has rapidly transitioned to cashless operations,” explains Smith. He notes that there are payment processing costs for both retail cash card transactions and card-not-present transactions. Payments through mobile apps and e-commerce systems(opens in a new window) are growing exponentially. This has led small businesses to embrace payment innovations that can reduce these costs.
Card-not-present transactions typically have higher processing costs than card-present transactions. Additionally, a merchant is liable for fraud if it fails to accept a customer’s EMV (chip-enabled) credit or debit card for face-to-face transactions. Ted Rossman, credit card analyst at financial services provider Bankrate.com (opens in new window), said:
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“Another big trend is ‘buy now, pay later’ by companies like Affirm, Afterpay, and Klarna. There are some ‘pay later’ options,” continues Rossman. This is because data shows that customers spend more when using these types of services.
One of the key recent impacts on payments trends is, of course, COVID-19. “The pandemic has made contactless payments essential,” he says VizyPay Pagano. This is actually mandated in many places not only because businesses need to serve the customers they care about, but also because of state or local safety regulations for measures such as contact tracing. If you’re doing business in either, you’ll need to meet these requirements to keep your doors open for at least the next year. This has significantly increased the demand for contactless payment systems, and once customers experience this convenience, they are unlikely to go away long after the threat of COVID-19 has passed.
Banks try to meet the needs of small business owners by trying to become payment solution providers, but perhaps they need to figure out what works best for their business. Here, SMEs have two big challenges, he said. First, you need to decide which combination of payment solutions works best for your current business. Second, no matter what you choose, you don’t want to be locked into one set of services and unable to quickly adapt to new payment options.
If you want to find the best fit for the moment, there are costs to consider. This was her biggest challenge, says her Emily Chung, owner and operator of auto repair shop AutoNiche(opens in new window) in Ontario, Canada. “These are costs invisible to the end user,” he says. “We cannot refuse premium cards or add additional fees to accept credit cards.” You will face the costs that will be imposed.
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These costs may also be invisible to the customer but important to the business. Chung said his company spends less than $3 a month on processing all debit card transactions, but he spends hundreds of dollars a month on credit card payments. are spending
“Companies should consider total cost of ownership when evaluating payment solutions. For example, ‘free’ payment terminals may come with higher processing costs and expensive long-term contracts,” said Bankrate.com. says Rossman of
“Leasing a device can be more expensive than buying it outright,” he continues. “You should compare the cost of processing Apple-to-Apple transactions with applicable hardware costs, other fees or subscriptions. Then assess whether you are making a long-term or short-term commitment. ”
You can also be strongly guided by the way you do business. For example, a store that operates only online does not need a processing terminal, while a store that operates both online and in physical locations needs services that support both environments. Customer interaction is also a good indicator. Especially in brick-and-mortar stores, payment systems that support mobile devices connected to tablets and smartphones are becoming popular. Because sales staff can interact more freely with customers.
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“Many businesses may be tempted to look for a particular payment solution right away. explains Pranav Sood, vice president of small businesses at GoCardless (opens in new window), which helps you pay with. How your business works. In other words, think about where your customers are and how they want to interact with your business. Then decide how you will bill and collect payments. You can start looking for solutions. Below, we have listed eight common business payment solutions that can help.
Authorize.net(opens in new window), Visa Solutions is a payment gateway provider. In other words, our focus is on enabling merchants and businesses to securely accept credit card and electronic check payments through their e-commerce websites. While not a household name, Authorize.net has been a payment backend processor for a long time and has a customer list to prove it.
However, this maturity is also reflected in the delivery of payment services that, until recently, were primarily focused on established payment technologies: credit.
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