Which Payment Methods Should You Accept?
By: First Union Lending
Tags: Payments, Small Business, Money

Deciding which payment methods to accept from customers is no longer just as easy as deciding between cash and check. Once upon a time, these were the primary methods of payment; of course, this isn’t the case anymore. New payment methods seem to be popping up every day, and as a business owner, figuring out which are acceptable to you and which, furthermore, your company can accommodate is crucial to your overall business model. In this article, we look a little closer at some of the payment methods that seem to be gaining in popularity.

Is Cash Still King?

As noted, cash was and to some extent continues to be a very common form of payment for many customers. That said, there are both pros and cons to accepting cash as a payment method. Certainly, it is among the easier forms of payment to take. No special equipment or processing involved. Just open the register and insert. You also do not have to wait for payments to transfer to your business banking account — which is a very good thing. However, for businesses who do engage in a lot of cash transactions, they are leaving themselves open to questions of theft, both internally and from thieves who like to target cash-heavy companies.

The Prevalence of Debit Cards

Debit cards are gaining ground as the top payment method in America today. Rather than withdrawing cash from their accounts, people simply use a debit card as a stand-in. This is safer and far more streamlined than walking around with a wallet full of bills. The great thing about using a debit card as a primary payment method is you do experience the convenience that you’d get with a credit card, but you cannot spend more than you have, thus preventing yourself from going into debt. Almost all businesses nowadays are accepting debit cards because they are so prevalently used. That said, to process debit cards, you will have to integrate a Point of Sale (POS) system. There could be fees attached to processing the cards as well depending on the system implemented.

Credit Cards

Another hugely popular payment method is credit cards. Again, for the business owner, this will require putting money into a POS system and credit card companies do tend to charge fees associated with the transactions. To this end, many business owners will adopt a credit card sale minimum to help offset the fees that will be incurred when a customer pays with a credit card.

ACH Payments

Particularly useful for companies that offer some form of a subscription service, an ACH payment is a regularly occurring payment directly debited from the customer’s account. This is generally thought to be a highly secure and also easy way of paying, as the consumer is not having to remember to remit payment every month.

Mobile Payment Methods

The proliferation of mobile payment methods in just the past few years has many businesses revisiting the types of payment they will accept. Mobile payments can be done from virtually any device, and some will require a POS system. The most common forms of mobile payment methods include:

PayPal. Perhaps among the most popular ways of paying, PayPal makes it quite easy for sellers to collect money directly through their website for instance. The PayPal app has also proven highly convenient for many. That said, there are fees attached to each transaction.

Perhaps among the most popular ways of paying, PayPal makes it quite easy for sellers to collect money directly through their website for instance. The PayPal app has also proven highly convenient for many. That said, there are fees attached to each transaction. Apple Pay. Keep in mind too, there is also Samsung Pay and Google Pay. So people with a device from one of these 3 can easily pay in a contactless way. The business accepting these payment methods will require a POS system as well as a merchant account with the corresponding mobile pay service.

Pros and Cons of Mobile Payments

Certainly, ease of use is toward the top of the list when considering the benefits of mobile payment methods. Especially as younger generations come to have more and more buying power, being able to accept mobile payments will make a business more attractive to consumers. Another good thing about this type of payment is that the transaction fees are somewhat lower than you will find with more traditional credit/debit card companies and services.

On the downside though, keep in mind you still have to integrate a POS system, so there is that cost. And while fees may be lower than with some other payment methods, there are usually still are fees attached to transactions. Whether or not you choose to accept this form of payment will be about whether or not your business is ready to integrate what is required.

Gift Cards

Gift cards now come in all shapes and sizes; from those which resemble credit cards to electronic gift cards, you have your choice. The good thing about accepting gift cards is that so many people now often use a gift card as their go-to present for many occasions. They are super easy and convenient. So as a business owner, you seriously want to consider offering/accepting gift cards as a form of payment; if you currently do not, you could be losing out on some business.

Not to mention, when people come into a store to spend a gift card, or even when shopping online, they usually spend more than what the gift card allots. This of course is good news for the business in question.

On the flip side, keep in mind that there are expenses associated with gift cards as a payment method. You do need a POS system. There is also the expense of ordering the cards if you are using physical gift cards. So again, this is another instance in which you have to weigh the benefits of accepting gift cards versus the potential cost.