If you're not offering your customers multiple ways to make payments online, you're leaving money on the table.
While there's no way to escape some transaction fees and currency fees, there are ways to reduce payment processing costs and receive payments online for free.
So, you're probably wondering, "How can I save that money?"
You'll have to set up an effective online payment portal with a range of payment options. This makes it as easy as possible for your customers – and your wallet.
Below, let's review why you should use payment processing software and how to receive payments online for free.
Why Should You Use Payment Processing Software?
As a small or local business, you might be tempted to handle payments yourself via checks and direct bank transfers.
However, in this digital age, there are numerous reasons why that's not a good idea.
Here's a look at some of the advantages payment processing software will bring to your business.
- Convenience – Convenience is one of the main factors that influence conversion rate. The more steps a customer has to take to make a payment, the more likely they are to abandon their purchase and go elsewhere.
- Speed – Payment processors can transfer most payments between shoppers and sellers instantly. On the other hand, transfers to and from bank accounts can sometimes take 24 hours or more.
- Trust – Many payment processors are brands that are globally recognized. If a customer already uses payment software, they're more likely to trust your payment system.
- Security – Payment processing companies add an extra layer of protection to online transactions. You can set limits, flags for activity on your account, and sometimes even a time frame to recall payments.
- Record-keeping – With payment processors, you'll have access to your account online and can manage your contacts, recurring payments, and other account activity via desktop or mobile.
Now that we know why you should use a payment processing software, let's look at the fees you can't avoid, the ways you can receive online payments, and the most efficient ways businesses of all sizes handle invoicing and online payments.
1. Create a secure online payment gateway.
There are a couple of ways you can approach creating a secure online payment gateway. You can hire an outside developer or use your website development team to create a bespoke gateway. Or, you can use third-party software.
Setting up a secure gateway is essential. You're also putting automated processes in place, which will save time on manual processing, especially as you scale your business and handle more transactions.
The more payment methods you make available within your payment portal, the wider the audience, and the easier it'll be for your customers to send you money.
2. Facilitate credit and debit card payments.
Although it may change as mobile payments become more prevalent, using debit and credit cards is still the most popular way people pay for products and services online.
You can easily facilitate accepting card payments through established payment providers such as PayPal or Stripe. These will accept the most-used credit cards worldwide -- Visa, MasterCard, and American Express.
3. Set up recurring billing.
If you offer subscription plans or ongoing monthly services, the most efficient and reliable way to invoice and receive payments is via recurring billing.
Most of the major payment processing software also includes recurring billing features. For example, Growth Marketing Pro built an SEO tool that charges subscribers on a monthly basis and they used Stripe to set this up.
Sites like Paysimple also offer a suite of tools to set up custom, automated recurring billing if you already have a payment processing system in place.
Using automation is essential. It removes most human error and the stress of keeping track of invoicing and payments.
Your customers can commit to recurring payments with just a few clicks, and you won't have to worry about manually managing your customer base.
4. Accept mobile payments.
In 2019, we saw a steep rise in the use of mobile payment apps, and it may continue through 2020.
People are more likely to have their phones on hand than their debit cards, and mobile payment apps are more convenient than ever. Mobile may become the way consumers pay for goods online in the future.
Apple Pay has quickly become one of the most popular mobile payment systems in the United States. With an estimated 30+ million users in the U.S. and more than 380 million worldwide, you'd miss out if you didn't accept Apple Pay.
Google Pay, Venmo, and PayPal also have mobile apps with a decent market share.
5. Accept cryptocurrency payments.
If you're okay with handling cryptocurrencies, it's a way you can extend your reach to a broader online audience.
Sites like Bitpay provide all the tools you need to accept crypto payments online, send invoices, request payments, and receive money on-the-go through apps.
Because they're a decentralized exchange, cryptocurrencies offer some unique benefits for businesses. You can accept payments from anywhere in the world without incurring currency exchange fees or bank handling fees. There's also a reduced risk of fraud.
6. Use email invoicing.
Email invoicing is a proactive way to request payments. You can share a payment form through email or add a link redirecting the recipient to a payment portal.
However, there are a couple of issues with this method: Email isn't the most reliable form of communication, and customers can have trust issues making payment via email.
Expect a failure rate, but it's a vital part of payment processing for a lot of businesses.
7. Accept electronic checks (eChecks).
The third most popular method of paying for things online is using eChecks. To accept this payment, you'll need a form where the user can input their information, which you can see using payment processing software.
It's basically a way to pay by check online. It's a quicker and more reliable way than sending a paper check through the post, so offering this to your customers will make the process run smoother.
Top Online Payment Processing Providers
Once you've developed a strategy for accepting payments online, you'll need to decide which payment processing provider to use. There are hundreds of payment processing companies providing software to help businesses handle their online transactions.
Most offer a similar range of services and comparable pricing. Here are few of the largest and most well-known payment processing companies:
1. PayPal
Price: 2.9% plus 30 cents per transaction.
PayPal was one of the first companies to enter the online payment processing space back in 1998. They're one of the most trusted and widely recognized payment processing companies.
They also have comprehensive coverage, making PayPal a good choice for international companies. They currently operate in more than 200 countries and handle 26 currencies.
It's free to join, and they provide all the tools you'll need to integrate PayPal payments into your website and set up a secure payment gateway for visitors.
2. Stripe
Price: 2.9% plus 30 cents per transaction.
Stripe entered the market in 2009. They offer a wide range of options for online businesses wanting to create custom checkouts and have useful tools for managing subscriptions and recurring payments.
Their fees are competitive, and they support all the major credit cards, mobile paying apps, wallets, and more.
3. Square
Price: 2.9% plus 30 cents per transaction.
Square entered the payment processing space by introducing a dongle that sellers could insert into a mobile phone to accept credit card transactions.
They've since expanded their software to cover all the major payment processing options and have included some useful tools for online businesses as well as high-street stores.
You can even create a basic website for free and integrate all of their point-of-sale solutions at the same time. Or, they have paid options for a custom website.
4. Due Payments
Price: 2.8% per transaction.
Due Payments is an invoicing tool aimed at freelancers, individuals, and small businesses. They operate on a flat-rate payment processing model, making it easy to calculate invoicing and payment processing costs at scale.
Their app, which they call their "Digital Wallet," makes it easy for small business owners to send and receive payments quickly and conveniently.
No matter which payment processing software you choose, the most important part is making it easy for the customer to pay. And the more ways they can pay, the more likely your customers will follow through on a purchase.