Best payment solutions for small businesses

The best payment solutions for small businesses should be designed to securely and efficiently process online payments, primarily ACH transactions and card payments. They should seamlessly integrate with existing business platforms, offer robust security against fraud, and ensure rapid payment processing for enhanced cash flow. These solutions must also include user-friendly dashboards and provide detailed financial analytics. Notably, they must be scalable to adapt to businesses' unique growth and evolution.

When setting up a small business, there is so much to consider. From your marketing strategy to how to handle your finances, it can seem challenging to make the right decisions across the board. One of the most important things to consider is payment solutions for small businesses and which one is right for you.

Things used to be pretty simple – you just had to accept cash, check, or credit card from your customers and take these payments into a merchant account. But technological advancement means you should consider several new options available to customers.

If you’re struggling to decide on the best payment solutions for small businesses, keep reading to learn more about mobile payments, e-commerce solutions, and other methods available.

What is payment processing for small businesses?

It might sound simple, but it’s helpful first to define precisely what payment processing means. It’s probably the most essential part of any business since it involves accepting customer payments in exchange for products or services.

Various elements are involved in payment processing, including the customer, the customer’s bank or credit card provider, the merchant, the payment gateway, the payment processor, and your merchant account.

Efficient and secure online payment solutions for small businesses are vital. Since you’re trying to build a loyal customer base, you want to ensure their experience with you is as seamless and easy as possible.

What’s more, as a small business, you should try to cut costs down wherever you can, and one way this can be done is by reducing transaction costs.

What to consider when choosing payment processing for small businesses

With so many options, choosing the best online payment solutions for small businesses can take time. To make the right decision, there are a number of different factors that you should bear in mind:

Transaction fees

If you accept payments from your customers, there are likely to be transaction fees. Credit card payment processing companies can be particularly costly, especially for online transactions. If you take a lot of online payments, it’s worth looking for a processor that offers low rates.

Ease of use

For customers, a payment method that they are comfortable with makes them more likely to purchase your product, allowing you to increase conversions. Good card payment solutions for small businesses will save time and energy.

Good customer service is crucial for payment solutions

If you do a lot of business online or operate out of hours, look for a 24/7 support line.

Data security and privacy

Your payment processor should follow stringent security protocols to protect customer data. Look for processors offering additional security layers, such as tokenization and encryption, to prevent fraud.

Variety of transaction types

The payment processor should support various transaction types - credit/debit cards, bank transfers, etc. This ensures you can cater to the payment preferences of all your customers.

Payment timings

Understand the settlement period - the time it takes to transfer funds from the processor to your bank account. Some processors may offer same-day settlements, while others might take a few business days.

Transparent pricing structure

The processor's pricing structure should be clear and straightforward. Watch out for hidden fees, monthly minimums, and penalties for not meeting certain transaction volumes.

Contractual obligations

Some providers may require long-term contracts with hefty termination fees. Opt for those offering month-to-month service with no early termination fees.

Total cost of ownership

Consider all costs associated with the payment provider - setup fees, monthly fees, transaction fees, and any other potential charges. This will help you understand the actual cost of using the service.

Customer preference

The chosen payment solution should cater to your customer's preferred payment methods, enhancing their experience and potentially increasing your sales.

Involuntary churn and failed payment rates

Payment providers should have measures to reduce the risk of involuntary churn (when customers unintentionally lose access to service due to payment failures) and manage failed payment rates. Features like automated retries of failed payments, card update services, and effective communication channels can help.

How can a small business process payments?

Choosing the best payment solution for small businesses involves considering many different types of payment and depends largely on the business's unique requirements. 

Cash and checks

Traditional payment methods, such as cash and checks, are still widely accepted by businesses of all sizes. Although becoming less common in the digital age, cash payments provide immediate liquidity and require no processing fees. On the other hand, checks offer a traceable payment method, though they may involve longer processing times and an increased risk of fraud or payment failure due to insufficient funds.

Debit and credit card payments

Debit and credit card payments remain incredibly popular, offering convenience for businesses and customers. This form of payment is virtually indispensable for many retail, hospitality and e-com businesses, even though the associated processing fees may be relatively high.

Manual bank transfers also serve as a secure payment method, but they typically require more customer effort and may cause delays due to processing times.

ACH payments

ACH payments are automated bank transfers that represent an excellent choice for businesses that want to eliminate late payments and reduce manual admin. These automated transactions allow the funds to be ‘pulled’ directly from the customer's bank account, putting the business in charge of its payment process, facilitating a more predictable cash flow and reducing the chances of missed payments.

Services like GoCardless provide an uncomplicated and effective payment solution for small businesses. With a straightforward setup and easy management, GoCardless collects funds automatically on the due dates set by you, allowing you to focus your attention on your business.

Digital wallets

Emerging payment technologies have further broadened the horizon for small businesses. Digital wallets like Apple Pay and Google Pay are becoming increasingly common. They offer consumers a seamless and fast checkout process, thereby improving the overall customer experience.

Cryptocurrency

In recent years, cryptocurrencies have also entered the payment scene. While adoption is still not widespread, businesses open to accepting cryptocurrencies like Bitcoin can reach a growing market of digital currency users, enhancing their brand's modern image and potentially circumventing traditional banking fees.

As each payment method comes with its own set of advantages and drawbacks, the best solution is often a blend of multiple options that cater to the diverse preferences of customers while maintaining operational efficiency and cost-effectiveness for the business.

How can GoCardless help your small business payment processing needs?

GoCardless makes business owners' lives easier by automating payment collection via the ACH network. Whilst card payments are still very popular, using bank payments has many advantages for businesses. These include reductions in late payments and manual admin, plus more flexibility in setting up payments and more convenience for your customers.

Automated payments: GoCardless allows businesses to set up automatic payment collection, reducing the administrative burden associated with manual billing and improving cash flow consistency.

Reduced level of payment failures: With ACH debit, your business controls the payment process, reducing the chances of late payments due to customer oversight. 

ACH debit is a ‘pull’ payment - this means that once your customer authorises your business to take payments directly from their account, without them needing to take any further action. The authorization lasts until a specified date or cancellation, allowing you to take recurring payments, even changing the amount, frequency and due date, without requiring further authorization.

Lower transaction fees: Compared to other payment methods like credit cards, GoCardless offers lower transaction fees, making it a cost-effective choice for businesses, especially for recurring payments.

Global payments: GoCardless supports international ACH debit in various currencies, making it easier for businesses to collect payments from customers worldwide.

Flexible payment options: GoCardless allows businesses to offer flexible payment plans to their customers, including one-off, recurring, and variable payment plans. You can even collect on invoices using ACH debit via GoCardless.

Integration with business software: GoCardless integrates with popular business software and platforms, including accounting software like Xero, QuickBooks and Sage, along with various subscription management platforms, making it easier to manage payments within existing workflows.

Secure: ACH is a bank payment and, as such, is less susceptible to fraud than card payments. Customers enjoy strong protections in the ACH scheme under Regulation E providing peace of mind for businesses and their customers.

ACH Payment Case Study

Diaper Stork, a Seattle-based diaper service and baby boutique, has found success in implementing GoCardless as a payment system. Owner Carrie Pollak realized that lower overhead costs could significantly benefit Diaper Stork and looked to reduce the cost of payments, initially a 3% fee per credit card transaction. 

GoCardless is a Xero partner, and this integration for accepting ACH debit payments offered a solution. Diaper Stork now pays 2% less per transaction compared to cards for every customer that chooses ACH debit. 

Carrie notes,

Key Insights

Cost Reduction with GoCardless: GoCardless has helped the company save 2% per transaction compared to credit cards for every customer opting for ACH debit and over 50% now choose to pay via GoCardless and ACH.

Integration and User Experience: The GoCardless integration with Xero has resulted in significant time savings for the business. Furthermore, this automated system minimizes human errors, making future payments automated and the process more efficient and convenient.

Carrie points out,

We can help

GoCardless is a global leader in bank payment solutions for small businesses designed to streamline your collections process, significantly reducing the financial administration tasks for your team. 

It is quick and easy to get started, and with no contracts and no long-term commitment required, there’s no risk to trying GoCardless. 

You can set up payments in the merchant dashboard in just a few clicks, and GoCardless automatically creates and sends all the necessary forms, doing all the heavy lifting for you. You can also connect to GoCardless via over 350 partner apps, such as Xero and Quickbooks.

Discover how GoCardless and ACH can assist you in managing both one-off and recurring payments.