Today’s consumers have a wealth of choices in terms of how they can pay for their goods and services. As a business owner, it’s up to you to decide which payment options best suit the needs and preferences of your target market. There was a time when cash was the preferred way to make payment. But in this age of eCommerce, credit and debit cards, bank transfers and e-payments, business owners should take some time to familiarise themselves with the payment options available.
Examples of payment methods
Whether your business has a physical presence or deals exclusively in eCommerce, there is a range of payment methods available. Choosing the right ones for your operation can help to make things more convenient for your customers, while also helping you to improve cash flow. The advent of open banking gives businesses a wealth of options to choose from when it comes to accepting payments digitally, while new POS technologies give you more options than ever when it comes to accepting face-to-face payments without a merchant account.
Aside from good old-fashioned cash on delivery, popular options include:
- credit or debit card payments
- direct debits
- standing orders
- bank to bank payments
- mobile wallets (Apple Pay, Google Pay)
- cryptocurrency payments
- store cards, prepaid cards and store credit systems
How do I know if a payment method is right for me?
Choosing the right payment methods for your customers can be a huge boon to your operations. The right payment options can improve revenue by enabling customers to make purchases that may not otherwise have been available to them. Furthermore, some payment options will enable you to get paid faster, allowing you to improve your operating cash flow.
When deciding whether to offer a payment option to your customers, it’s important to ask the following questions:
- What fees and charges are associated with this payment method?
- Are fees flat or are they variable?
- Can I accept international payments using this method if my business grows?
- How quickly will the funds make their way into my business bank account?
- Can I easily integrate this method into my operational/IT infrastructure?
Frequently asked questions about payment methods
Do payment methods affect cash flow?
Your choice of payment methods can directly impact your cash flow. They can not only affect how fast you get paid; they can also determine how much of your margin is consumed by fees and charges paid on each transaction. Choosing a Payment Service Provider (PSP) with fixed charges can make it easier to manage and forecast your cash flow.
What is a CNP transaction?
CNP stands for ‘card not present’. It refers to any transaction where neither the card nor the cardholder is on-site when you take payment.
They can be used for online payments, payment over the phone or recurring payments for subscription services. Remote card transactions incur higher fees as there is a higher degree of risk associated with them.
What payment methods should I accept?
That depends entirely on your business, and what’s the best fit for your customers. Take the time to carry out some market research. Get to know which payment methods they prefer, and research how viable they are for your operations and cash flow. When you know this, you can add value to your brand while also improving your revenue, margins and operating cash flow.
This article is for informational purposes only and does not constitute legal, employment, tax or professional advice. For specific advice applicable to your business, please contact a professional.