An Online Business Owner’s Guide to Different Payment Methods
There are more digital payment methods available to consumers than ever. If you’re an online business owner, it benefits you to offer multiple payment methods to your customers. It gives them more flexibility and options with how they pay, creating less friction in the checkout process. Less friction means more conversions and more revenue and for you. While it can sometimes be complex to implement these payment methods into your current payment infrastructure, the positive impact is worth the effort. In this ultimate guide, we’ll be exploring the different online payment methods available for businesses and providing helpful tips to help you choose the right ones. Read on to learn more or click below to demo the Dots payout API.
A Quick Overview
Online payment methods allow online merchants to accept payments from nearly anywhere with an Internet connection. Digital payment processors and financial institutions make it possible for these businesses to quickly and securely receive payments from customers. As mentioned, there are many ways for these customers to pay. This is where businesses need to carefully consider which payment options are right for them. While it would be ideal to allow customers to pay however they choose, this isn’t always realistic or feasible for all online businesses. There are fees, taxes and regulations to consider. With that in mind, the benefits can’t be denied. Let’s take a look at some of the biggest benefits of offering multiple online payment methods.
What are the Benefits?
Online businesses can reap a number of benefits when they implement multiple payment methods. First, it provides a better and more seamless customer experience. Customers can choose the payment options that work best for them and have a more convenient checkout process. This leads to increased customer satisfaction as well as an increased chance of a successful conversion. When customers are limited to one payment method, they may choose to just abandon the cart and not go through with the transaction. Offering multiple payment options also expands your customer base. Many payment processors can facilitate international transactions and support multiple local currencies. This allows you to take your online business global if you decide it makes sense to scale to that level. In short, the benefits usually far outweigh the costs of implementing multiple payment processors. With that in mind, let’s take a look at some of the payment methods you may want to consider adding to your online business payment infrastructure:
Debit and Credit Cards
Debit and credit cards are one of the most common payment methods online businesses can offer. Most customers have one, entering the information is straightforward and they’re a secure way to transact. Payments go through quickly and customers can easily grab their credit card anytime they need to pay for something. Customers also tend to enjoy using their credit card, since it can provide them with points and perks. Customers may be frustrated if they can’t use their preferred credit card when purchasing through an online business. Debit cards are typically issued to a customer by their bank, allowing them to pay for funds directly through their bank account. These funds will be cleared by the bank once the authorization process verifies the customer has sufficient funds to cover the transaction. Credit cards can be issued by banks or other financial institutions, requiring customers to pay their bill at the end of each monthly cycle. Both debit card and credit card payments can be authorized in seconds, making them an extremely efficient way for merchants to get paid. These charges will often come with processing fees for the merchant, so keep this in mind when deciding which credit cards you’ll accept.
ACH
The Automated Clearing House (ACH) is an electronic payment network that facilitates transactions to and from financial institutions. ACH transactions are an efficient, secure and low-cost payment option for online businesses to offer. ACH payments allow funds to be transferred directly from the payer’s bank account to the payee bank account. This makes ACH a great choice for online businesses that offer subscription services or a recurring payment model. The ACH process can improve cash flow by cutting out third-party payment platforms and providing direct access to bank accounts. For online businesses, the ACH payment fees are a particularly attractive benefit. Generally, ACH transactions cost less than credit card transactions. While not all of your customers will opt to go the ACH route, offering it is a good idea to potentially save you on fees with some of your customers. Keep in mind that businesses also need to make sure they’re complying with the relevant financial regulations when accepting ACH payments. Since customers have to enter sensitive banking information for ACH transactions, you should ensure you have anti-fraud measures in place and sufficient digital security measures.
Online Forms
Online forms can make checking out much more convenient for customers. Online businesses can allow customers to create their own account on your website and use an online form anytime they checkout. Online forms are great because they encourage repeat customers and it makes it much easier for the customer to go through with purchase. The customer’s payment details will be securely stored, allowing them to log in and use it for future purchases. Overall, online forms just make the checkout process more convenient and intuitive for your customers. Online forms can also be tailored to fit your website branding, making it a white-label solution that also improves the customer experience. Online forms will need additional security measures in place, since you’re storing customer data and allowing them to create an account with sensitive information. Make sure you have encryption and other security measures in place to protect the data of your customers.
Payment Links
Payment links are another payment option that can be convenient for online businesses. Payment links allow you to generate unique URLs that customers can click on to initiate the checkout process. You can send payment links to customers via email, SMS or other messaging platforms. Once the customer clicks the link, they’ll be prompted to enter their payment details and complete the transaction. Payment links are convenient, secure and efficient. They also don’t require businesses to set up a specific payment rail on your website. Payment links make it so customers don’t have to enter their financial information directly on your website. It also makes it easy for international customers to make payments. Additionally, payment links are trackable, allowing you to track payment statuses and giving you insight into user behavior. Payment links are a great option for online businesses that are invoice-based. With a payment link, you can simply send the amount to be paid for the invoice and the customer will complete the transaction. Also, you can often send reminders for customers to complete a payment.
Recurring Billing
Recurring billing allows customers to set up payments that automatically go out on a regular schedule. This can improve your businesses cash flow and make paying more convenient for customers, saving them from having to manually enter payment details for each billing cycle. Recurring billing is a must for online businesses that utilize a subscription model. Recurring billing can be flexible, allowing customers to make automatic payments on a weekly, monthly or yearly basis. You can also provide customers with multiple payment processing options to route their recurring payments through. By setting up recurring billing and allowing customers to automate the process, businesses can increase their chances of getting paid on time and getting paid the right amount. Reducing late payments is helpful for your cash flow, as well as the convenience of the customer. You can also save some money on processing fees since payments don’t have to be manually processed each time. Recurring billing can also be used as a ‘buy now pay later’ model, allowing customers to break up larger payments over time. These payment models can incentivize customers to pay for products or services with a higher cost, since they don’t have to pay for everything all at once. They can then set up a recurring payment to pay off the balance of the product or service they’ve purchased. There are several third-party buy now pay later applications that can be integrated directly into your checkout processes. Overall, recurring payments can streamline cash flow for online businesses while also improving the customer experience..
Digital Wallets
Digital wallets are becoming an increasingly popular method of online payment. They offer customers a secure and convenient way to pay. Digital wallets allow users to store their payment information in one place and make payments to numerous online businesses without having to re-enter payment information every time. Customer data like names and shipping addresses can also be saved in digital wallets, allowing them to take care of every part of the checkout process with just one log in. Digital wallets are typically tied to a user’s bank account or card. Digital wallets also utilize encryption technology to keep customer data safe when transacting with your online business. Some examples of digital wallet providers include Apple Pay, Google Pay, PayPal and Venmo. Digital wallets offer several advantages for businesses. They’re easy for customers to use, as customers can complete their transactions in just a few clicks. Digital wallets can also come with low transaction fees, costing you less than traditional payment methods like credit cards. Digital wallets are also efficient and secure, providing a fast transaction that is protected with an extra layer of encryption security.
Bank Transfers
Bank transfers and electronic cash transfers are a reliable and secure way to accept online payments. Bank transfers are a popular e-commerce payment method in the UK, while cash transfers are great for countries that may not have a developed banking infrastructure. Bank transfers allow businesses to accept payments directly from a customer’s bank account. They can be accepted in the customer’s local currency or the currency of your choice. If a customer doesn’t have a credit or debit card, they may prefer to pay with a bank transfer. Bank transfers are also great for accepting larger sums of money since most credit cards and debit cards have transaction limits. Bank transfers are also one of the options with the lowest processing fees since they don’t have to be routed through an intermediary. One downside of bank transfers is that they aren’t always the fastest option. Depending on the banking provider, a transfer can go through in minutes or it can take a few days to arrive. Customers may also have to pay a wire transfer fee to use a bank transfer option. There are also third-party options that offer bank transfer services if you want to make the process of implementing them more convenient. Keep in mind that this may increase transaction fees. As for cash transfers, these require brick-and-mortar locations. This makes it a good option for online businesses that do have retail locations. A code is sent during checkout and a customer can pay cash, which allows the cash payment to be processed electronically.
How to Choose the Right One
When it comes to choosing the right online payment method for your business, there are going to be a few factors you’ll need to consider. It’s important to keep in mind that not all of these payment methods will be the right choice for your business. With that in mind, here are some tips for choosing the right one: Your target demographic - You need to be thinking about your customer base and the types of payment options they may prefer. Think about the products and services you offer. If you’re a subscription model, you’ll want to offer recurring payments and other methods to make payments easier. International businesses will want to consider the payment methods used by the countries they do business in. These are all questions you should consider when choosing the right payment options. Convenience - One of the best things about offering multiple payment options is how much it improves the customer experience. Customers will appreciate the convenience and flexibility of choosing their preferred payment options. While you don’t have to offer every payment method on the list, you should still try to offer some of the most popular methods to make your customers happy. Fees and charges - Each payment method has its own set of pros and cons. There are typically fees associated with every type of payment method, so you’ll want to know what these fees and costs are. Be sure to research your options so you can choose the best payment processor for your business. While choosing the right payment methods can be time-consuming, it’s worth the effort in the long run. You want to offer multiple payment options to make your customers happy, but it shouldn’t drastically impact your business negatively in the process.
Why is it Important to Have Different Methods?
Online businesses of all sizes can now offer multiple payment options. Payment APIs and payment processing software has made it easier than ever to offer your customers the payment options they use most. It’s important to provide these methods to make online payments more convenient, flexible and efficient. Additionally, offering multiple payment methods can be a boon for your business. With international payment options, you can greatly expand the reach of your business. With quick and efficient payment processing options, you can increase conversions and revenue. With payment processing solutions with built-in security solutions, you can reduce your risk for fraud and chargebacks. Ultimately, it’s important for online businesses to offer multiple payment methods because it’s just the way the world works today. Multiple online payment methods benefit both the business and the customer. The business gets more customers and more revenue and the customers get a better, more secure, more efficient experience. If you’re an online business, it’s time to look at your payment infrastructure in closer detail to see if it’s meeting the needs of your customers.
Simplify Your Payouts With the Dots API
If you’re an online marketplace, you should also consider offering multiple payout options to your sellers. Just like their customers, sellers prefer to have their choice of payout options. While offering multiple payout rails to sellers may seem difficult, it doesn’t have to be. The Dots API allows you to offer new payout options to sellers with just a single line of code. You can also send payout links to sellers if you’d prefer, all with the Dots API. Dots even takes care to automate your tax and compliance for payouts, making the process even more streamlined. Ready to learn how Dots can benefit your marketplace and your sellers? Schedule your demo today to learn more.