In 2021 almost every store has to have an online website. Otherwise, you will have a hard time acquiring new clients and promoting your business. Besides a regular informative website, many business owners decide to start an e-commerce site where customers can buy products and services. The competition is fierce, so every choice matters, as making the wrong one can be catastrophic.
That’s why we prepared a short guide on how to choose the best payment method for your service so both you and customers can profit from it. Here, you will find detailed information about the most popular paying methods, including cash, cards, recurring payments, and online paying services such as PayPal or Weave – and their advantages and disadvantages. Read on and make sure your business runs smoothly.
Understand the Basics
First thing first, you have to understand what a payment method is. In short, it is a protocol or system that allows facilitating and recording of transactions between two parties. The most basic and common methods include cash, checks, credit card, and debit card. When it comes to choosing the best payment method for your business, you need to analyze all the pros and cons.
Cash is a traditional method of making payments, which people still use in this day and age. It’s one of the most secure ways to pay because you don’t have to share any personal information with the vendor. This method is perfect if you are selling products in person, but it doesn’t work well online.
A check is very similar to cash as it doesn’t require sharing any personal information with the vendor. However, you can only pay with it at a physical store or bank, so it’s not convenient at all.
The main disadvantage is that the transaction can’t be verified instantly. When you send a check, it moves through the banking system before reaching the store, which can take up to 3 days. Some countries still use checks, but the trend is moving towards digital payments.
The main advantage of credit cards is that they offer instant transactions with no need to carry cash with you. Moreover, you don’t need to wait for a check to arrive after you make a purchase.
However, you should know that while the majority of stores accept credit cards, some vendors avoid them due to high fees (e.g. 2-5% of a transaction). Also, you can get into trouble if you are selling something illegal or suspicious activity is detected on your website’s paying platform.
A debit card operates in a similar way to a credit card, but it comes with several advantages. First of all, it deducts funds directly from the buyer’s bank account. Also, unlike credit card payments, those made with debit cards are reversible within a certain period of time (3-5 days).
The main disadvantage here is that you may have to deal with chargebacks or fraud users who cancel orders and then try to get their money back.
Recurring payments are becoming more popular these days since they make customers feel more comfortable when using your service or product. For example, if someone has purchased a subscription for an online service like Netflix or Spotify, they may be more comfortable knowing that their account will be replenished automatically without any worries about cancellation fees.
Recurring payments are also useful as they ensure that your customers will continue getting benefits from your service without any interruption. If they have to pay each month, they might decide to cancel their subscription at some point and switch to another provider.
Online Paying Methods
In recent years, more and more people have started using modern online payment methods such as PayPal, Google or Apple Pay, or even Bitcoin, among others. The main benefit of these payment methods is that they allow the buyer to make purchases on the internet without revealing any personal information.
However, they also have their downsides. Many online payment systems charge high fees (for example, with PayPal, they can be up to 4% of the transaction), and it can be pretty challenging to exchange the online currency into the regular one.
Moreover, many modern payments have just appeared on the market, meaning that not many people use them and that there are still many software bugs to be fixed. You have to be careful when adding them to your website.
Payment methods are crucial for your service or product, as they allow customers to purchase from you easily and for you to receive money quickly. Choosing the best one for your business is the key to success. However, there are too many options on the market today.
This article was meant to help you make the right choice and decide which payment methods suit your needs best. Take into account all of their advantages and disadvantages when making a decision – and make another step on the road to success.