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How do small businesses take payments?

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedSep 20212 min read

It’s in the best interests of any business owner to make customer payments as quick and painless as possible. From digital wallets to credit cards and cold hard cash, there are numerous small business payment options to choose from. Keep reading to learn more about your choices and find the best payment method for small businesses.

Types of small business payment options

While there are dozens of payment processes and platforms, generally they fall into five main categories.

1. Cash

Small businesses with a brick-and-mortar presence traditionally accept cash payments from their customers. You’ll need a point-of-sale (POS) system equipped with a screen and cash register to manage these payments. Benefits of accepting cash include an immediate boost to your cash flow, as there’s no need to wait for transaction clearance. Apart from investing in a POS system, you also won’t need to pay any transaction fees with cash payments.

2. Checks

Paper checks are an outdated payment method for most industries, but some businesses might find them useful. For example, property management and utility companies still accept checks from customers. You’ll need a POS system that accepts this method of payment in person, along with a business bank account to receive the funds. While paper checks are uncommon, their electronic counterpart – eChecks – are becoming increasingly common to transfer funds between bank accounts.

3. Credit cards

Perhaps one of the most popular payment options for small businesses are credit cards, because these can be accepted both online and in person. Card payments allow small businesses to serve a broader demographic than cash or checks, with transactions clearing quickly into your business bank account. However, they do come with transaction fees, and you’ll need to ensure that your website is secure to prevent fraud.

4. Online payments

Online gateways are perhaps the most popular option for small business payment processing. A high percentage of start-ups only operate online with an ecommerce store. The best payment gateway for small businesses will accept multiple payment types from one platform, including direct debit, eChecks, and credit cards. Digital wallets like Apple Pay and Google Pay work well for physical store locations, allowing customers to pay with a single contactless tap.

5. Mobile payments

The final option ties into online payment gateways. Mobile payments are taken from tablets or smartphones, including the digital wallet apps mentioned above as well as other payments made using near-field communication technology. Money transfer apps like PayPal and Venmo also fall under this category, along with mobile card readers to swipe credit cards. These are some of the best options for small business payment processing, as they’re flexible and budget friendly.

The best payment gateway for small businesses

Now that we’ve explored some of the small business payment options, how can you choose the best gateway for your business? To begin with, you’ll need to think about your business structure and location. A brick-and-mortar retailer is more likely to accept cash and checks, while a mobile pop-up vendor might stick to contactless card payments and mobile apps. For online retailers, the best small business payment options should accept credit cards and direct debit at a minimum.

Here are a few features to look for as you’re comparing payment options for your business:

Payment flexibility: How many payment methods does the gateway support? Can customers pay with bank transfer, credit, and debit cards?
Price structure: How is pricing determined? Do you need to pay a fee for each transaction?
Integration: Is the payment software or app easy to integrate with your business? Is it user-friendly both for your employees and customers?
Payment security: Is fraud protection included with the gateway? Will your customers’ card details be kept secure with features like encryption and fraud protection?

There’s no single best payment method for small businesses; most companies will mix and match a few. Think about your typical customer and where your average transactions take place to find the best processing solution for your needs.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.