Many business owners who contemplate the use of online payment services wonder if the effort will pay off, simply because they believe that electronic payments are meant for larger enterprises. That’s not always the case, though. With online sales rising sharply because of the pandemic and other events, small businesses can enjoy the same benefits as their larger counterparts.
If you haven’t yet implemented an electronic payment option for your company, you aren’t alone—almost two-thirds of small businesses in the United States don’t even have websites! Why should you accept online payments, and what kind of challenges might you encounter? We’ll answer those questions here so your business can choose the best merchant services provider for your needs.
What Are Online Payments and Why Should Your Business Accept Them?
Electronic payments are those made with a debit card, credit card, or ACH. For the purposes of this guide, though, when we discuss electronic payments, we’re referring to those made online. There are numerous reasons for small businesses to accept these payments, and the top benefits of digital payments for e-commerce are listed below.
It Generates Additional Revenue
Where fees are passed to consumers, transaction charges can be completely eliminated, increasing your bottom line. It’s important to note that if your margin is 10%, every $1,000 dollars saved is equal to $10,000 in additional revenue!
In retail, several studies show that consumers spend more when using electronic payment methods than when they pay with cash. By accepting online payments, you’ll get your customers to open their (digital) wallets.
It’s a Time Saver
Paying via mobile wallet or card is almost always faster than paying with cash. As customers simply click to pay, they no longer need to dig through their wallets looking for a physical card—and you don’t have to count out change. That’s a real time saver for customers and sellers alike!
Per-Transaction Costs Are Lower
Paper-based payments are an inconvenience for businesses and customers. There are numerous drawbacks, the biggest of which is the cost of collecting and processing checks. The method is a slow one as well; even an electronic check can take two weeks or more to clear.
By comparison, the acceptance of electronic payments is simple. Digital payment options are faster, easier to collect, safer, and less expensive. By incorporating these methods, a company’s accounts payable department can save on each invoice.
It’s Much More Efficient
By streamlining the payment process, you’ll keep checkout times short. And, when it takes less time for customers to pay, you’ll need fewer team members to manage your online store at times of peak demand. With electronic payments, e-commerce retailers can redeploy staff into other customer support roles to improve service and productivity.
It Removes Cash from the Equation
When e-commerce retailers accept electronic payments, they soon discover that their need to handle money, as well as the associated security concerns and costs, will decrease. With less handling and processing of cash, transactions are finalized sooner, which positively affects turnover.
With less money in and around a business, the risks of fraud and human error decrease. Furthermore, shopkeepers don’t have to worry about taking bags of cash to the bank to make deposits.
Administration is Easier
When e-commerce retailers go cashless, they have an easier time with auditing, accounting, and administration. There’s little to no cash to bank or track; rather, all transactions are digitally recorded on the company’s chosen platform.
Electronic payment systems increase the transparency of the financial supply chain, enabling more proactivity and well-informed decision making. Digital payments also increase the efficiency of various business processes, making it easier for managers to access to financial data. Furthermore, customer service agents will have greater insight into payment statuses, which leads to improved customer profitability.
Payments Are a Virtual Certainty
When sellers process electronic transactions and they are approved by a terminal, they know with complete certainty that those payments will appear in their accounts very soon. Unlike cash, which requires transportation and depositing, there are no extra steps required.
It Reduces the Company’s Carbon Footprint
With today’s payment apps, there’s no longer a need for paper receipts. Instead of issuing conventional receipts, online retailers send the digital equivalent—which helps them save money on printers, ink, and paper while boosting their eco-friendly credentials.
Overhead is Lower
If an online retailer already accepts PIN and chip payments, there’s no need worry about extra fees for the acceptance of digital payments. There are packages out there for companies of all budgets, transaction volumes, and sizes.
It Offers a Competitive Edge
In light of recent events, governments in the US and abroad are encouraging citizens to use contactless payments. To that end, buyers will likely become accustomed to digital forms of payment. If your company offers it while others do not, differentiation becomes much easier.
Removing Potential Purchase Obstacles for Customers
As we’ve discussed, electronic transactions are faster and more secure than traditional payments. This creates a frictionless sales experience for customers. No long lines or cash concerns. Rather, a chosen electronic payment method helps them buy what they need when they need it.
Increasing Security and Confidence
With digital payments, customers no longer need to carry copious amounts of cash. This allows them to be confident in the knowledge that the impact of loss or theft is quickly offset by blocking their mobile wallet or card.
As we touched on earlier, the pandemic has brought online payments into focus as a way to minimize contact between individuals. With contact-free digital payments, consumers won’t have to exchange cash or touch a PIN pad—which makes it a health-conscious and hygienic option.
The Ability to Accept a Range of Currencies
With digital payment systems, sellers can accept payments in global currencies allowing them to converted to their currency of choice. In some instances, companies can choose to accept payment in Ethereum, Bitcoin, and other cryptocurrencies.
In today’s competitive e-commerce environment, the need to exceed consumer expectations is the key to continued relevancy. A company’s ability to accept additional payment methods may make the difference between a completed sale and a lost one.
Digital payment systems allow companies to accept a range of methods, such as credit, debit, Samsung Pay, Google Wallet, and Apple Pay. Universal acceptance keeps customers satisfied, encouraging them to return, and demonstrates the company’s willingness to stay atop payment trends.
Improved Recordkeeping and Data Analysis
Many payment systems offer database and customer relationship management tools along with reporting and data analytics. E-commerce business owners can view transaction details and reports from anywhere there’s an internet connection. Online marketing campaigns targeted to potential and existing customers can generate a return on investment through social media posts and emails that include links to the e-commerce site.
It Improves Customer Engagement
By simplifying the checkout process, you can spend less time on transactions and more time improving the customer experience. When customers are engaged and satisfied, they are much more likely to return.
Easy Customization Makes for Effortless In-House Management
E-commerce companies that want to keep transaction sequences in-house with custom website design and maintenance services should consider the cost of the labor involved. The expense of integrating electronic payments into a site depends on the nature of the installation. With an integrated solution, the cost will likely be much less.
While today’s payment systems can’t reduce interchange rates, as they’re set by card networks, they can reduce markups on processing fees. Modern systems don’t compete based on batch processing rates; they instead focus on passing best pricing along to their customers and offering the lowest possible per-transaction rate.
What About the Risks?
Online businesses thrive on customer information, which means it’s important to keep data secure. Traditional payment methods are often riskier than electronic systems, simply because more people are involved.
When an employee (or a team) handles customers’ card information, the risk of fraud is greatly increased. It’s not because workers are inherently untrustworthy; rather, it’s because the possibility of mistakes increases as the number of steps in a transaction does.
Most of today’s electronic payment and point-of-sale systems protect card users from fraud by removing intermediaries between accounts and the entities with which they’re transacting. With online payments, the card never leaves the customer’s physical wallet in most cases. That’s why these systems are safer than any that have come before.
A separate issue with digital payment methods involves card payments and transaction fees. Accepting credit card payments can cost your business as much as 30% in profit margin. Xpress-pay’s Site Fee program eliminates this cost and put 100% of those hard earned dollars back into the bottom line. As a trusted digital payment partner in industries ranging from insurance to municipalities, Xpress-pay is here to guarantee your business is sucessful. Contact them today to learn how Xpress-pay can fulfill your business’s needs.
Why Your Company Should Consider Digital Payments
Every year, North American companies make trillions of dollars in business-to-business payments but spend over $500 billion in accounts payable. A reason for these high costs is that many payments are still made by paper check. While most finance experts see the need to move to digital payment systems, many business owners aren’t sure how to begin.
Getting started with a digital payment service doesn’t have to be complicated. By learning about the intricacies of electronic payments, you can move a company toward the acceptance of online card payments and offer a service your existing—and future—customers will likely appreciate.