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Doing business online is almost a given for any company, even if the primary product or service is purchased directly. By accepting online payments for goods and services, you can reach more users and keep the customer experience smooth. Learn in detail four quick, easy, and effective ways for your business to accept online payments.
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4 ways to accept online payments
There are many ways to accept online payments, and the right one depends on the type of business you run.
1. Online payment service provider
If you run a service-based business or sell products online, the most common way to receive payments from your customers or clients is likely to be through an online payment service provider.
PayPal and Stripe are the most popular payment service providers, but if you run your e-commerce business through one of these platforms, you can also use the processors built into Shopify or WooCommerce.
Most modern website builders such as Squarespace, Kajabi, and WordPress can easily integrate with payment service providers. Simply create an account with PayPal or Stripe and enter that information into your website builder to start making payments on your website.
Online payment service providers allow you to accept payments by credit card or directly from a provider's customer's account, such as PayPal, to your account.
Setting up an account with most payment service providers is free, and you pay a fee of around 3% per transaction, depending on the platform. Many popular point-of-sale (POS) systems also offer e-commerce modules with online payment processing.
2.ACH transfer
Automated Clearing House (ACH) is a network that electronically moves funds between U.S. bank accounts. This is how you receive your money if paid by direct deposit.
Accepting payments via ACH transfers typically requires no special functionality. Simply provide your customers or clients with their direct deposit information, such as:
- bank routing number
- your bank account number
Some companies require a voided check or an authorization form from your bank with these numbers on it. However, many people initiate his ACH with just their bank information.
Whether or not to receive payments via ACH is generally up to the payer. That's because you'll need access to the accounts and tools you need, including ACH payment service providers like Gusto, Bill.com, and Stax. Compared to credit card transactions, where the recipient pays the fee, the payer also pays the fee with an ACH transfer.
However, you can also use your own account to receive ACH payments through Stripe. For each transaction, he pays a 0.08% fee (up to $5) and requires customers to connect their bank account using his Plaid network.
Related: Best ACH payment processing service
3. Mobile payment
Mobile wallets like Apple Pay, Google Pay, and Samsung Pay make online payments much more convenient for your customers. Your credit card information will be filled in automatically, so you don't have to fumble through all the numbers from your physical card.
To implement mobile payments on a website you're building from scratch, you'll need to follow developer guidelines to incorporate each into your site.
Most popular e-commerce platforms support mobile payments and you can easily accept this payment method by simply enabling the option. No coding required.
4. Invoicing and billing
Make it easy for your clients to pay for your services by using an invoicing platform that allows one-click payments directly from email.
Invoicing platforms such as QuickBooks, Zoho, Xero, Wave, and Harvest offer integration with major payment service providers such as PayPal and Stripe. You can invoice your clients via email and the platform will create a message with a payment button reminding them to pay immediately.
You can choose which payment methods you want to accept. Simply enable your preferred method or enable multiple methods to give your clients options.
Benefits of accepting online payments
Even if you run a business that promotes and sells services online, you may be able to get by without accepting online payments. You can also do it the old-fashioned way and send in an invoice and wait for the check to arrive in the mail.
you could. But given all the opportunities and convenience it adds to your business, you'll probably want to accept online payments.
No matter what you sell, your business can benefit from online payments for the following reasons:
- Expand your audience. Accepting multiple payment methods makes your business more convenient for more people. The more seamless the payment process, the more positive the customer experience and the more likely they are to do business with you again.
- Make it easy to set up memberships and subscriptions. Payment service providers like Stripe and PayPal facilitate automatic recurring payments. This eliminates the hassle of invoicing your customers and collecting payments every billing period. Additionally, retention rates are also improved because customers don't have to check their bill every month to decide whether to renew their subscription.
- Get paid faster: It can take several days or even weeks for a customer to receive an invoice and a check to be mailed. Online payments can be made instantly or within a few days at most.
Challenges with accepting online payments
The convenience and benefits of online payments come with some trade-offs, but the benefits tend to outweigh the drawbacks. When setting up online payments for your business, keep these potential pitfalls in mind.
- Fee: Unlike checks in the mail, online payments require an intermediary, and you must pay that intermediary. You'll end up sacrificing a portion of your revenue to payment processing fees.
- Data management: The potential for identity theft and credit card fraud is much higher when customers purchase online than when they purchase in person (or with a payment method other than a credit card). If you use a self-hosted payment gateway, you are responsible for protecting your customers' financial information on your servers. You can reduce that liability by using a hosted payment gateway or payment service provider.
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$0 setup fee, no cancellation fee
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Customized Interchange+ pricing – low rates from 0.2% to 1.95%
offer
Save up to 40% on credit card processing
Pricing
Transparent subscription-based pricing with 0% interchange fee markup
Frequently asked questions (FAQ)
How are online payments processed?
Online payments are processed through payment gateways that communicate between financial institutions and approve transactions. It connects issuing banks and merchant accounts, leverages credit card networks to ensure available funds, and prevents fraud.
How do I accept free online payments?
Generally, you can accept payments online via ACH transfers for free, as long as the payer facilitates the transaction. Most banks can accept his ACH transfers without any fees. Although you can't avoid fees on credit card payments, you can negate them by adding a surcharge to customers who pay by credit card.
How do I set up my own online store?
Accepting payments is just one aspect of running a successful online business. You also need to worry about things like an attractive web design, hosting your site, and growing your audience through effective online marketing. To better understand what it takes to step into the world of e-commerce, check out our guide to setting up your own online store.
What is the safest way to accept payments?
In addition to cash, certified checks are the safest way to receive payments for your business. However, if you want to receive payments online, you'll need more flexibility. Choose a well-known payment service provider to process credit card and ACH payments to ensure your (and your customers') financial information is safe. Look for providers that employ security measures such as encryption and multi-factor authentication to prevent theft and fraud.
What types of POS systems are there?
We have full-service terminals, mobile POS systems, cloud-based POS systems, and web-based POS systems. Full service terminals are the most expensive type of his POS system. Typically used in large retail stores and restaurants with multiple locations. Mobile POS systems are less expensive than full-service terminals and are often used in small retail stores and the food service industry, such as food trucks.
What is the best way to avoid chargebacks?
The best way to avoid chargebacks is to provide excellent customer service to those who purchase your products or services. If there is a problem, make sure you have a refund policy in place and issue a refund if necessary. Other ways to avoid chargebacks are to include your phone number (preferably a toll-free number) on your receipts and billing information, and make sure your business name is the same as your company or website name.
What is the difference between a payment gateway and a payment processor?
The two are very similar in that they help process transactions between merchants, customers, and banks. Payment processors cannot verify that the customer is who they say they are, but payment gateways can.
