Digital payments have had a slower adoption rate in the UK than the rest of the world, but with Brexit and the compounded uncertainty in today’s brick and mortar business, eCommerce is ripe for growth. According to a study by J.P. Morgan, the pace of the mobile commerce sector is projected to expand by 20 percent over the next few years to become a €188.8 billion (approximately £167.9 billion) market by 2021.
It is not just retail that is going digital. With more customers opting to carry their digital wallets over their physical, restaurants will need to make the move to accepting cashless payments too. If you expect your business to thrive, you’ll have to meet your customers where they tend to do the most shopping, and that is looking to be online. Accepting online payments is no longer a choice, but a necessity. Read on to learn more about how online payments work and how you accept online payments to ensure your business doesn’t get left behind.
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What is an online payment system?
In short, an online payment system is an internet-based method of processing monetary transactions. Besides allowing merchants to accept payments, many of the best online payment systems also integrate online and in-store sales so you always know what you have in stock, what your most popular items are, and when you need to start resupplying your inventory.
How do online payments work?
If you’ve ever bought anything online, then you know that the process from the first time you eye that designer handbag to the moment you click “Buy Now” only takes a matter of minutes. But you may be surprised by just how many entities are involved when accepting and processing your online payments. A typical customer journey usually follows a path like this:
- Customer finds the product or service: The customer proceeds to checkout and pays with a credit card
- The transaction is encrypted: This is then authenticated by the payment gateway and processor
- The sale is authorised: The transaction is sent to the customer’s credit card issuer where the purchase is either approved or not. Both the seller and customer will get a notification of the result.
- Funds are sent: The credit card issuer sends the money to the business’s merchant bank which deposits the amount to the merchant’s account
- Merchant is paid: Typically, in 2-3 business days, the merchant will have the funds available in their account.
With Square, you won’t need to worry about all the ins and outs with payment gateways and encryption. Why? Because we capture your customers’ payment information at the point of sale (no manual reconciling), work directly with credit card payment gateways to securely route those payments, and even deposit the funds into your bank account the next working day.
Plus, you won’t need a special merchant account or relationship with a bank. When you use Square, we take on the responsibility of the merchant of record, which means no additional paperwork or fees on your end.
What are the advantages of accepting online payments?
With digital payments amounting to £3,421,065M worldwide, and projected to almost double that by 2024, you are missing out on a lot of possible sales by not accepting online payments. But there are a lot more advantages than just sales associated with accepting online payments. Some of these are:
Business growth: The internet is a virtual world without borders, which means that you can advertise wherever and whenever. A small business, just like large ones, can use online sales to reach people from all over the country or across the globe. Creating and marketing your online store allows you to start expanding your business immediately.
Reliable and secure payments: Many customers may view merchants as more reliable if they accept payments online, so accepting this payment method may encourage more customers to buy from you. At the same time, online invoice payment offers the consumer the fraud protection that secures their money if they don’t receive the product purchased. Square Invoices allows you to create custom invoices, send detailed estimates, save card information securely, schedule recurring invoices, and a lot more. What’s more, there are no monthly fees.
Quick and easy setup: Setting up an option to receive online payments is simple with Square. You can easily sell online and ship orders, offer curbside pickup or delivery and even sell through social channels like Instagram and Facebook.
How do I accept online payments?
Square offers a couple of ways for you to start accepting online payments. An eCommerce platform or virtual terminal is what most people think of when they want to offer online payment services. If your business offers a variety of services and products, then setting up an online store may be worth your time. You’ll be able to alert customers to new products and service offerings, while also informing them of special, sales, and more. Square offers a couple of ways for you to start accepting online payments.
If your small business is just starting out or you don’t have the time to set up an online store, Square still gives you a way to accept online payments easily. With Square Online Checkout, you can create an instant link for your product without the need to know HTML codes or a website. Plus, there’s no need to sign a contract or to pay monthly fees. You are only charged a small fee per transaction.
How long does it take for online payments to clear?
All Square merchants start with our standard transfer schedule which is comparable to many other financial institutions. With this schedule, funds are usually transferred within 36 hours or 1-2 business days of the payment. If a transaction occurs before 5 pm GMT Pacific time (1 PM Eastern), your funds will be transferred over to your bank account the next business day.
How secure are online payments?
If you use Square, then you and your customers’ online payments are very secure. From the time your customer uses a credit card or enters their information through our online payment systems, the data is encrypted until it reaches Square’s processing hub. Square uses our proprietary tokenisation scheme which ensures that only encrypted data is processed through your device or application. And security doesn’t only apply to online payment systems. All of Square’s hardware is engineered with end-to-end encryption. Learn more about how Square handles all your payments securely.
What are merchant service fees?
Square allows you to get your online store up and running for free. You only pay when you make a sale. You’ll pay the following per-transaction fees:
- 2.5% for payments manually keyed-in to the Point of Sale App, Square Invoices, and Virtual Terminal
- 1.9% for European cards and 2.9% for non-European cards** for our online payment products, including Square eCommerce API, Online Store, Checkout Links and purchases of Digital Gift Cards. Learn more about Square Payment Fees.
As more people move towards doing their shopping from the comfort of their home, not accepting online payments may not be an option. it’s important to know how online payments and pricing work before your first virtual customer clicks “buy now”. Square is here to help you whether you’re expanding your brick-and-mortar shop to accept online payments or starting a new business from the ground up. Either way, with Square you’ll be prepared with a plan that works best for you and your business.