When it comes to payment types, there are more options now than ever before. But what payment method is best for YOUR small businesses? What payment types should you accept? 
There are many factors to consider, but which payment is best depends on several factors. First, it’s important to understand the type of payments out there and the pros and cons for each.
1. Cash payments
For some businesses, cash is still king. Accepting cash payments means you’ll receive payment immediately instead of waiting for a transaction to clear. These payments also cut down on overhead costs since there are no fees, unlike using credit cards. Cash may be the best payment method if you have a slim profit margin since those fees can be costly.
However, cash-only businesses carry a higher risk of theft. It can also be an inconvenience for customers. In addition, factors like COVID and increased mobilization mean that cash-only businesses are harder to come by.
2. Checks
Most people don’t pay with checks anymore, but this form of payment isn’t entirely outdated. Checks are still widely standard among small businesses that own rental properties and provide other home-based services, like lawn care or cleaning.
To accept checks, you’ll need a business account. However, checks have a higher risk of fraud, so you’ll want to have a protection plan in place. First, create a policy for accepting checks to help you avoid bad or fraudulent checks. Standard practices include only taking checks from well-known or in-state banks or requiring checks only for the exact amount owed. You can also use a third-party service to help verify each check.
Unfortunately, if a check bounces, you could wind up in small claims court or using a collection agency to recover your losses. Both can be expensive and don’t guarantee payment.
3. Card Payments
Credit and debit card payments are the most popular method of payment. According to a recent study (Fundera’s Cash vs. Credit Spending Statistics 2021), almost 80% of consumers said they preferred paying with a card. Customers usually expect businesses to accept at least one form of card payment.
Paying with cards is easy and convenient and can facilitate a smoother checkout process. It can also allow people to finance large transactions.
Like cash, card payments deposit funds into your account quickly. Accepting card payments may also help broaden your customer base.
On the downside, card transactions carry fees. Transaction, flat and incidental fees can impact your bottom line unless you pass the expense to the customer. Each card company sets its own rate. You may also have to deal with merchant services, PCI compliance charges and monthly minimums.
Customers can also dispute their credit card charges if they’re unhappy with your product or service. You may also face chargebacks, which can sometimes happen without warning. In addition, other banks may hold merchants responsible for credit card fraud. All of these can add up to large and unexpected expenses for small businesses.
4. Mobile payments
Online, or mobile payments, are likely to be *THE* payment type of the future. In recent years, these types of payments have been on the rise and, by 2024, are expected to surpass $20 billion.
Mobile wallets allow customers to pay for services or goods without having to swipe their card physically. Instead, their card information is stored on their phone. Then, to complete a transaction, the customer waves their mobile devices across a contactless reader, which captures the payment information.
This process is done through technology similar to Bluetooth to transfer data nearby. It’s the same tech that powers common mobile wallets like Apple Pay and Google Pay. Customers can use this technology in-store or online, and it’s quickly becoming a popular— and preferred — way to pay due to its simplicity.
Mobile payments offer additional security than other forms of payment. While credit card payments come with risks, mobile wallets can eliminate many of these. Purchases made using mobile wallets need to be verified by the customer before each use, so they’re generally more secure and carry less of a risk for identity theft.
Setting up mobile payments for small businesses is also relatively fast and affordable. However, you need first to choose a credit card processor that supports mobile payments.
The best payment methods for your small business will depend on many factors. But ultimately, the best payment solution should be affordable and easily integrated into your software. If you’re feeling overwhelmed by payment processing or payment options, we are here to help. Visit our website today to learn more about our services. https://www.ipopsales.com/