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Customers want payment options that fit easily into their lives – whether they’re tapping a card, checking out online or spreading payments over time. From classic methods like cash and cards to modern favourites like mobile wallets and BNPL services, we’ll go over the different payment methods and their pros and cons, so you can pick the ones that work best for you.
Understanding different payment methods
As a business owner, you know how important it is to make paying as easy as possible for your customers. The more convenient and simple it is to pay, the more likely they are to follow through with their purchase.
Today, offering a range of payment methods is more important than ever. Whether in-person or online, traditional or digital, giving customers the freedom to choose what works for them keeps them happy and your business buzzing.
Depending on your setup, the main types of payment methods to consider include:
- In-person payment options (cash, credit and debit cards, mobile wallets)
- Remote payment options (virtual terminals, digital invoices, online checkouts)
- Interest-free and deferred payments (BNPL, lay-by agreements)
In-person payment options
For face-to-face transactions, there are plenty of ways to accept payments – from traditional options like cash to modern solutions like cards and mobile wallets. Some methods of payment are simple and familiar, while others add speed and convenience.
Cash
Cash has stood the test of time as a reliable payment method. It’s easy to accept, doesn’t come with processing fees and works in almost any situation. However, it has its downsides. For starters, it poses security risks, especially when handling large amounts of money. Also, counting cash is prone to human error, and cash transactions aren’t traceable in the same way electronic payments are, making it harder to track your sales accurately.
Credit and debit cards
As cash usage continues to decline in Australia, credit and debit cards are the norm for customers checking out at your business. Tapping or inserting cards at the point of sale makes transactions fast, reliable and hassle-free. The widespread popularity of card payments shows just how convenient they are – there’s no need for cash or counting change.
Benefits:
- Widely accepted and convenient for customers
- Quick, reliable transactions
- Increased purchasing power and flexibility for customers with credit cards
Challenges:
- Variable or hidden processing fees from card providers
- Risks of chargebacks if customers dispute a transaction
As one of the most popular payment methods Australians currently use (over three-quarters of payments are made with a card), taking credit and debit card payments is pretty much essential for any business.
Mobile wallets
Mobile wallets are gaining popularity for their convenience. Customers can link their debit or credit cards to their smartphones and make quick, contactless payments using their device. Using near-field communication (NFC) technology, these payments are not only fast but also secure, with extra security features like encryption and biometric authentication (such as Face ID or fingerprint scans).
Popular mobile wallet providers:
- Apple Pay: A go-to for iPhone and Apple Watch users, offering quick, secure payments
- Google Pay: A popular choice for Android users, allowing seamless, contactless payments
- Samsung Pay: Integrated with Samsung Galaxy devices for added convenience and security
Many shoppers today don’t even carry physical wallets anymore, relying entirely on their phones to pay. A recent Reserve Bank of Australia survey found that 1 in 3 in-person card payments are made with a mobile device. By accepting mobile wallet payments, you’re meeting the needs of these tech-savvy customers and ensuring you don’t miss out on potential sales.
Using Square EFTPOS machines for debit and credit payments
It’s simpler and easier than ever to accept credit and debit payments with Square, whether you’re running a shop or taking your business on the road.
If you’re often on the move, Square Reader is a compact, portable device that plugs easily into your phone or tablet, letting you accept payments from customers, wherever you are. Or, if you need a more robust solution, Square Terminal accepts payments, prints receipts and lets you manage your business – all in one device. Both options support contactless payments and are a budget-friendly choice for small to medium-sized businesses, with minimal setup needed. On top of that, there’s no hassle of lock-in contracts, hidden fees or variable processing rates for different card types.
Remote payment options
For businesses that don’t rely on face-to-face interactions, remote payment methods let you accept payments without needing a physical presence. These are especially handy if you sell products or services online or take phone orders.
Virtual terminal
With a virtual terminal, you can take payments remotely by turning your computer into a card-processing terminal. Ideal for phone orders or remote sales, it’s a flexible solution for businesses that don’t have an online store or where meeting customers isn’t always practical – like consultants, tutors or freelancers, for example. With just an internet connection and right from your web browser, you can key in card payments and securely process payments, no matter where you or your customers are.
Digital invoices and online payment methods
Online payment methods like digital invoicing are a go-to tool for remote businesses. With digital invoicing, you can send invoices to customers and receive payments online, which is particularly useful if you’re a service-based business or operate remotely.
Using an invoicing tool simplifies the process of collecting payments even further. Features like ready-made templates allow you to whip up invoices quickly and customers can pay instantly with just a click, while tracking helps you see what’s paid and what’s outstanding at a glance. Automation such as scheduling recurring invoices or sending automatic reminders is another big time-saver, meaning less time chasing payments and more time focusing on your business.
If your business runs on appointments or pre-arranged services, consider adopting an online payment method that lets customers prepay you for the service. Prepayments help cut down on no-shows – common in sectors like beauty, personal care and consulting – and ensure that customers are committed to their bookings. After all, if people prepay for a service, it’s more likely than not they’ll show up.
Online checkout
An online checkout lets customers complete their purchases through a payment page, making it a must-have for any online store. Since there’s no physical staff to greet and serve customers, providing a smooth and hassle-free checkout experience is crucial to closing sales.
Cart abandonment is a challenge for businesses, with 57% of Australian shoppers admitting they often leave their virtual carts behind. Investing in a user-friendly checkout process like Square Checkout helps turn more browsers into buyers. It integrates seamlessly with your own website, offers a range of payment options and keeps payment details safe. Its secure, convenient and easy-to-navigate experience gives customers the assurance they need to go ahead and lock in their orders.
Interest-free and deferred payment options
If your business offers high-ticket items or you want to make larger purchases more accessible, payment options that let customers pay over time are a great choice. They can help attract customers who might otherwise hesitate to commit to bigger buys.
Interest-free deals
Interest-free payment plans allow customers to spread the cost of their purchases over time without worrying about interest. This appeals to shoppers who prefer instalments, especially for higher-cost items, and can help encourage sales by making larger purchases feel more manageable. Clearly communicating any fees or conditions that apply helps keep things transparent.
Buy now, pay later (BNPL) services
Buy now, pay later services have become hugely popular payment methods, with research in August 2024 indicating that 2 in 5 Australians used a BNPL service in the past six months. Widely used by younger consumers, these allow customers to make purchases and spread payments over time, often without interest if paid within the agreed period.
Popular BNPL providers:
- Afterpay: A leading BNPL provider, particularly popular with younger shoppers
- Zip Pay: Provides flexible payment plans with no fees if paid on time
BNPL services give customers more flexibility and boost their purchasing power. Their merchant fees can be a fair trade-off for making it easier for your customers to say ‘yes’ to that extra item – or finally go for the bigger order.
Lay-by agreements
Lay-by agreements let customers pay in instalments before receiving their product, and are often used for high-ticket items like furniture or electronics. Since customers don’t receive the product until it’s fully paid off, there’s less risk of unpaid debts or credit issues. While less common nowadays due to the rapid rise of BNPL services, offering lay-bys can still be a good option if your business caters to older-generation customers who prefer traditional payment methods.
Choosing the right payment methods for your business
Picking the ideal payment options comes down to balancing what works for your customers and what fits your business. Here’s a quick checklist of things to consider:
- Consider your customers’ needs: It’s important to align payment options with your customer base and the types of payment methods they tend to prefer. Younger, tech-savvy customers may favour mobile wallets and BNPL services, while older generations might lean towards cash, cards or lay-bys.
- Reliability: Reliable and consistent payment methods keep your business running. Choose payment processors that provide a smooth transaction and offer customer support if you need help.
- Cost analysis: Different payment methods come with different costs, such as transaction fees, setup fees and ongoing maintenance charges. Some may also have hidden costs, like surcharges for certain payment types or extra fees for offline payments. Analyse the costs for each option to find the best fit for your budget and needs.
- Security: Security is a must when handling payments. Ensure the methods you choose comply with PCI standards and offer security-related features to protect both your customers’ sensitive information and your income.
Once you’ve chosen the payment method that works best for your business, learn how Square can help you reach more customers and make more sales, no matter how you do business.
