How To Pick The Right Payment Methods For Your Small Business

Whether you’re running an interior design business – or any other small business – you need to select a strong lineup of payment methods to handle incoming transactions. A “payment method” refers to how customers will purchase your goods/services. Common examples include: 

• Card payments

• Direct bank transfers

• Digital wallets

• Mobile payments

• Cash

It may seem like all of these options are great ways to receive money, yet some are considerably better than others. Today’s blog will run through the most common business payment methods available, pointing out the pros and cons to help you pick the right ones for your small business.

Card payments

Card payments are separated into two categories: 

• Debit card payments

• Credit card payments

Debit cards are the most common form of online payment; customers simply type in their card details and send money across to your business. It’s really easy to implement this type of payment on a website – or you can use a physical card reader if you do business in person. 

However, you will incur debit card processing fees for every transaction. This can be around 0.73% of the total transaction (based on recent figures), so that’s something to take into account, particularly if you take a high volume of payments. 

The same goes for credit card payments, only you have the additional benefit of accepting a payment method that allows customers to delay how much money leaves their bank account. They can use a credit card to pay you right now, but they’ll still have at least a month to pay it off on their credit card balance. This makes it an attractive option that can draw in more customers. 

All in all, card payments of any kind are beneficial because everyone has at least one debit/credit card they use all the time. It’s pretty much the most essential payment method you can offer – rejecting card payments will usually mean you lose loads of potential customers. 

Direct bank transfers

Some business owners mix direct bank transfers with card payments. It might look like a similar transaction takes place; after all, debit card payments are basically bank transfers. However, the difference lies in how your customers pay when you offer a direct bank transfer. 

Typically, you will provide them with your bank details, and they’ll have to initiate a transfer via their bank. You can send them an invoice for this or fire over an email with your bank details. 

They will then use online banking (or telephone banking, if they’re old school) and send money directly from their account to yours. What’s the benefit of this? You avoid any payment processing fees, so it’s a completely free payment method for your business. You won’t have to worry about hidden costs eating away at your budget, and maximize earnings from each transaction. 

The downside? It’s not always practical to request direct bank transfers, especially in these two circumstances: 

• You operate an online store with a high level of transactions

• You run a brick-and-mortar retail business

With that in mind, direct bank transfers only make sense if your business involves providing a specific service to your customers. An interior design business is the perfect example of this; customers pay you to design their living spaces, and then you send an invoice containing the final bill with your bank details attached. 

When you can use it, this payment method is unbeatable. It’s just a shame that it lacks the practicality to be a viable option for everyone. 

Digital wallets

Digital wallets bring more convenience to consumers and let them pay for things without needing to constantly type in their card or bank details. Various wallets like this exist, though the most popular and well-known is PayPal. Setting up PayPal payments on your website or sending invoices with a “pay via PayPal” link can make life easier for your customers. It can also drive more sales on a website because people love the convenience of checking out by simply providing their PayPal email and password. 

Other digital wallets exist, and Venmo is one that often gets talked about. Consumers use it to pay other people all the time, but can you use Venmo for business? In short, yes, but it normally comes with extra costs and fees associated with every payment. 

And therein lies the biggest downside of digital wallets: like card payments, they come with some processing fees to worry about. You have to weigh up whether the benefit of possibly attracting more customers by allowing digital wallet payments outweighs the cons of paying fees. For the most part, it does, but you can always experiment. 

Mobile payments

Some people classify mobile payment systems as digital wallets, but they deserve a section on their own. Here, we’re looking at the likes of Apple Pay and Google Pay; systems that exist on mobile devices and let people pay for things. 

Like digital wallets, the user loads their bank details into the mobile payment system to make the transaction process quicker and easier. One of the big differences here is that you can make mobile payments in a couple of ways: 

• Online via mobile payment buttons

• In person through contactless payments

Consequently, this is a payment option you cannot ignore. It’s the go-to payment for a lot of consumers online due to the convenience, and it’s basically the number one way people pay for things at in-person points of sale. If you don’t accept mobile payments, then you may alienate a massive portion of your customer base. 

Cash

We’ll end with a quick word on cash payments: they’re not worth it. Obviously, you can’t accept cash online, so that rules it out for any digital business. Accepting cash payments in person is also not the smartest idea. It means you don’t get money injected into your operating cash flow until you deposit the cash with your bank. 

Moreover, holding onto cash puts a target on your back and can make your business susceptible to theft and other criminal activities. You might be inclined to accept cash if you take in-person payments, but the reality is that everyone will have another way to pay anyway. It’s extremely rare for a customer to only have cash on them these days; they’ll usually have a card or mobile payment method, too. 

After gathering all of the evidence and reviewing the pros & cons of your main business payment methods, two options jump out as the “must-haves” from this list: card payments and mobile payments. Direct bank transfers are also essential if you send invoices to clients, while digital wallets can be beneficial depending on your customer base’s payment preferences. It’s okay to play around with different payment options and test the waters before settling on your choices. Having a good range of payments can help you attract more customers and boost revenue, so it’s not something to take lightly!