5 Most Important Payment Methods for a Small Business to Offer

Some people say cash is king when it comes to accepting payments at small businesses, while others swear by debit and credit cards. The coronavirus pandemic has also changed the way that people think about contactless payments. Ultimately, though, most small businesses can benefit from offering a diverse array of payment options to their customers, including the five below.

1. Online Payments

Online payments involve using a digital wallet to make financial transactions electronically. The business owner signs up for an online payment processing service that can authorise online payments such as eChecks and direct debit payments, and the customer can make a payment on the spot from his or her mobile device. Most experts believe that online payments will be the way of the future for businesses of all sizes given that they decrease payment processing costs and increase levels of convenience for both customers and employees.

2. Cash Payments

Until recently, cash payments were more common than any other option. Though the COVID pandemic has changed how some consumers feel about carrying and handling cash, there are still plenty of people that prefer to use this traditional, convenient, and untraceable method for making payments. Business owners can also benefit from continuing to take cash payments because they do not come with any associated fees, however, cash-only businesses are no longer viable in many areas due to changing consumer preferences.

3. Card Payments

Even before the pandemic, the vast majority of consumers stated that they preferred to pay with cards over carrying cash. Some people use debit cards, which allow them to transfer money directly from their checking accounts, while others use credit cards. Accepting both of these forms of payment can help small business owners diversify their customer bases and improve their cash flow.

It’s relevant to note here that credit card transaction fees can be higher than one might think. Currently, the Durbin Amendment caps the fees associated with debit card transactions to 0.05% plus $0.22. However, the Durbin Amendment does not apply to credit card transactions, which means that many payment processors charge much higher fees that must then be either passed on to customers or assumed by the business.

4. Mobile Payments

Mobile payments encompass a range of options, including transactions made through near-field communication technology, digital wallet apps, money transfer apps, and mobile card readers. Small business owners that cater to younger customers may find that it’s worth investing in the infrastructure to support mobile payments.

5. Check Payments

There’s a common misconception that checks are completely outdated when really, this admittedly traditional payment solution still has a valuable role to play in today’s small business transactions. Though paper checks are no longer as popular as they used to be, eChecks have largely taken their place. Small business owners that run service-based companies often take both eChecks and paper checks, as well, despite the fact that bounced checks can lead to a lot of hassles.

Offer a Range of Options

The best solution isn’t to choose just one payment method and force all customers to adhere to those standards. Instead, small business owners should diversify their customer bases by offering multiple payment solutions to accommodate different consumer preferences. Just make sure at least one of them allows for contactless payment to accommodate any current or future local, state, or national health requirements.

Here is a great infographic from Clover Network showing the benefits of contactless payments.