Table of Contents
- 4 ways to accept online payments
- Benefits of accepting online payments
- Challenges with accepting online payments
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Doing business online is pretty much a given for any company, even if your primary product or service is purchased in person. Accepting online payment for your goods or services helps you reach a wider audience and keep the customer experience running smoothly. We break down four fast, easy, and effective ways for your business to accept online payments.
1
Square Payments
Monthly fees
No monthly fee
Key features
Clear per-transaction pricing, affordable hardware, instant payout, invoicing & more
1
Square Payments
On Square's Website
Featured Partner
4 ways to accept online payments
There are a variety of ways to accept online payments, and the methods that are right for you depend on the kind of business you run.
1. Online payment service provider
If you run a service-based business or sell products online, an online payment service provider might be the most common way you get paid by customers or clients.
PayPal and Stripe are the most popular payment service providers, though you might also use the processor built intoShopifyor WooCommerce if you run an e-commerce business through one of those platforms.
Most modern website builders, like Squarespace, Kajabi and WordPress, integrate easily with payment service providers. You just need to create an account with PayPal or Stripe, then enter that information in your website builder to enable payments on your website.
Online payment service providers let youaccept credit card paymentsor payments directly from your customer’s account with the provider (e.g., PayPal) to yours.
It’s free to set up an account with most payment service providers, and you’ll pay a fee per transaction of around 3%, depending on the platform. Manypopular point of sale (POS) systemsalso offer e-commerce modules with online payment processing.
1
Shopify POS
Price starts at
£19 per month
Free trial
14 days
Key features
In-person and mobile POS, order management, customer profiles
1
Shopify POS
On Shopify's Website
Featured partner
Starting Price
Free
Key Features
Inventory management, omnichannel selling, user-friendly, create customer loyalty programs
2
Square POS
On Square's Website
Featured Partner
2. Bacs transfer
A Bacs transfer (which stands for Banking Automated Clearing System) is the same as a bank transfer – and the two terms can be used interchangeably. It’s where money is transferred from bank to bank (business or personal accounts) in the same way as it would be via internet or telephone banking.
However, unlike these common payment methods, there is usually a cost of sending a Bacs payment. The amount depends on the amount and the bank, but it is usually restricted to just pence.
3. Mobile payments
Mobile wallets like Apple Pay, Google Pay and Samsung Pay make online payments super convenient for your customers. Their credit card information is entered automatically, so they don’t have to fumble with typing in all those numbers from a physical card.
To implement mobile payments on a website you’re building from scratch, you need to follow developer guidelines to build each into your site:
Most popular e-commerce platforms support mobile payments and make it easy to accept this payment method by simply activating the option – no coding required.
4. Invoicing and billing
You can make it easy for clients to pay for your services by using an invoicing platform that enables one-click payments right from their email.
Invoicing platforms including QuickBooks, Zoho, Xero, and Harvest offer integrations with major payment service providers, including PayPal and Stripe. You can bill clients via email, and the platforms build messages that include a payment button to encourage them to pay right away.
You can choose which payment methods to accept – just activate your preferred method, or activate several and give the client options.
Benefits of accepting online payments
Even if you run a business that promotes and sells services online, you could get by without accepting payments online. You could go old school: Send a bill and wait for a cheque in the mail.
You could. But you’ll probably want to accept online payments for all the opportunities and convenience they add to your business.
Regardless of what you sell, your business can benefit from online payments, because they:
- Expand your audience:Accepting multiple forms of payment makes doing business with you convenient for more people. The more seamless your payment process, the more positive the customer experience – and, therefore, the more likely customers will do business with you again
- Make memberships and subscriptions easy to set up:Payment service providers like Stripe and PayPal facilitate automatic recurring payments. That saves you the hassle of invoicing customers and collecting payments each billing period. Plus, it improves retention, because customers don’t have to see the bill and decide whether to renew their subscription each month
- Get you paid faster:Waiting for a customer to receive an invoice and send you a cheque in the mail could take days or weeks. Online payments can happen instantly or, at most, within two or three days.
1
Square Payments
Monthly fees
No monthly fee
Key features
Clear per-transaction pricing, affordable hardware, instant payout, invoicing & more
1
Square Payments
On Square's Website
Featured Partner
Challenges with accepting online payments
The convenience and benefits of online payments come with some trade-offs – though the pros tend to outweigh the cons. As you set up online payments for your business, keep these potential pitfalls in mind:
- Fees:Unlike a cheque in the mail, online payments require an intermediary – and that intermediary needs to be paid. You’ll sacrifice a chunk of your revenue to payment processing fees
- Data management:The potential for identity theft and credit card fraud are way higher when customers make purchases online versus in person (or with a payment method other than their credit card). If you use a self-hosted payment gateway, you’ll be responsible for protecting customers’ financial information on your servers. You can offload that responsibility by using a hosted payment gateway or a payment service provider.
Frequently Asked Questions (FAQs)
How are online payments processed?
Online payments are processed through a payment gateway, which communicates among financial institutions to authorise a transaction. It connects the issuing bank with the merchant’s account, and taps into the credit card network to ensure available funds and prevent fraud.
How do I accept free online payments?
You can usually accept payment online for free via BACS transfer, as long as the payer facilitates the transaction. Most banks let you accept a BACS transfer without fees. You can’t avoid fees for credit card payments, but you could negate them by adding a surcharge for customers who pay with credit cards.
How do I set up my own online store?
Accepting payments is just one aspect of running a successful online business. You also have to worry about things like having an attractive web design, hosting your site and growing your audience with effective online marketing. To get a better idea of what you need to step foot into the world of e-commerce, check out our guide tosetting up your own online store.
What is the safest way to accept payment?
Besides cash, a certified cheque is the safest way you can receive a payment to your business. However, if you want to get paid online, you’ll need more flexibility. Choose a well-known payment service provider to process credit card and BACS payments to ensure your (and your customers’) financial information stays secure. Look for providers that use security measures like encryption and multi-factor authentication to prevent theft and fraud.
What are the different types of POS systems?
There are full-service terminals, mobile POS systems, cloud-based POS systems and web-based POS systems. Full-service terminals are the most expensive type of POS system. They’re typically used by large retailers and restaurants with multiple locations. Mobile POS systems are less expensive than full-service terminals, and they’re often used by smaller retailers or foodservice operations like food trucks.
What are the best ways to avoid chargebacks?
One of the best ways to avoid chargebacks is to make sure that you offer excellent customer service to those who buy your products or services. If there is an issue, be sure that you have a refund policy in place and offer refunds when necessary. Other ways you can avoid chargebacks is ensuring that your receipts or billing information has your phone number on them, preferably a toll-free number, and that your business name and the name of your business or website are the same.
What is the difference between payment gateways and payment processors?
The two are very similar in that they help process transactions between merchants, customers and banks. Payment processors can’t verify the customer is who they say they are, whereas a payment gateway can.
