Last editedSep 20227 min read
There are two main online payment options available to US businesses - bank payment and card payment. Bank payment is cheaper and more reliable, while cards offer quicker payments but are significantly more expensive and less reliable.
Online Payment Options
It's extremely important to offer appropriate online payment options that suit your customers' preferences, create a slick checkout process, and prevent late-stage abandonments. It can be difficult to decipher the many online payment services available and what each offer.
Below we summarise the most popular online payment methods available today, to help you decide which is the best way to collect online payments for your business. It's useful to note that these each use one of two main systems for collecting payments:
We've put together a summary of each online payment option below.
1) ACH Debit
ACH Debit - also known as Direct Debit or bank debit - is an instruction from your customer to their bank which authorizes your business to directly withdraw funds from their account when payment is due.
This kind of payment is known as a ‘pull’ payment - once authorized, the business ‘pulls’ the payment from the customer account automatically without the customer needing to take further action. The main benefit of pull payments is that it eliminates late payments almost entirely, improving cash flow, and its automated nature reduces the amount of financial admin required.
While this can sound like a payment method that favours your business over your customer, there are actually a number of advantages for both parties (see benefits for payers, and benefits for businesses), and rules in place to protect consumers.
ACH Debit is best suited to businesses that want to be paid on time while keeping transaction fees and the amount of manual admin low. However, it isn’t suitable for businesses that require their online payments to be instant (such as for e-commerce).
ACH debit tends to be cheaper than card payments, as well as requiring less accounting and payments admin in comparison.
The reason that bank payment methods such as ACH Debit offer cheaper transaction fees than cards is that they are direct account-to-account transfers, whereas cards require the involvement of several intermediaries to complete payments, each of whom charges a fee.
How to take Direct Debit payments online
Option 1: Direct access to Direct Debit
You can directly access the ACH network (the bank-to-bank network Direct Debit payments run on in the US) through certain banks, however the entry requirements to direct access can be expensive, time-consuming, and complex to meet.
This option is typically only advantageous for large enterprise businesses.
Learn more in our guide to direct access to ACH.
Option 2: Third-party payments processor (TPPP)
For many businesses, direct access to the ACH network isn't feasible. Organizations referred to as third-party payments processors (TPPPs) help fill this gap.
TPPPs act at scale, serving many businesses as an intermediary to the bank which is part of the ACH network. Because of this, they can offer cheaper, faster, and simpler entry requirements to Direct Debit for your business.
TPPPs can also be banks, or they can be credit card payment processors, accounting software providers, and more. It's possible your business already has a relationship with one.
Learn more in our guide to indirect access to ACH.
Option 3: GoCardless
GoCardless is a Direct Debit specialist that can provide your business cheap, fast, and simple access to Direct Debit.
With GoCardless you can manage your Direct Debit payments from a simple online dashboard (or you can integrate with the GoCardless REST API).
Your customers will be able to set up Direct Debit payments to you online, without having to fill out tedious paper authorization forms.
Learn more about ACH debit payments with GoCardless.
2) Credit (or debit) card
Credit and debit cards are - for several industries in the US - considered the de facto default way to accept payments online. A look at global business payment preferences suggests that this "preference" for cards isn't a payer preference at all, but rather a historical habit that has stuck around.
Until recently, card payments were likely your best option if you need to collect payments from your customers instantly. However, with the rise of open banking, you can take payments in a moment through services like Instant Bank Pay.
How to take card payments online
Option 1: DIY
A merchant account is a bank account that allows you to accept payments from credit or debit cards. It is an online bank account that temporarily holds your money until it is moved to your normal business account. Many banks offer these, and you don't need to get one from the same bank that you have your normal business account with.
A payment gateway connects your website to one or more of the processor networks, similarly to a credit card machine in a shop or restaurant. It lets your customer submit their credit card details and then tells you whether the charge is approved by the cardholder’s bank, as well as submits your charges for settlement.
Learn more about the top payment gateways in the US.
Option 2: Outsource to a Payment Service Provider (PSP)
If you don’t want to do it all yourself, you can choose to use a payment service provider (PSP) to help you accept online payments.
PSPs act as a middleman between you and the banks – they ensure that all the money ends up in the right place by taking it from the cardholder’s account and delivering it to your account.
Full-service PSPs typically provide the services of both a merchant account and a payment gateway, letting you accept online payments without you needing to acquire these facilities on your own.
Using a PSP typically reduces the burden of compliance as you will never actually touch sensitive financial information. Online providers like Stripe also offer a full stack of services such as subscription billing, fraud management, payouts, transfers, and more, making the payment process even easier.
Which you choose will depend on what you need:
If you want a great API
If you want a really well-known name
If you want a great mobile experience
If you provide your customers with a subscription service, a subscription management service (or subscription wrapper) lets you easily handle recurring payments. You’ll typically still need to use either a merchant account and payment gateway or a PSP.
Top online payment methods
To keep things simple, below is a summary of some of the most popular online payment methods available today.
A key focus for Adyen is to be available everywhere. Adyen prides itself on its global coverage and compatibility with any device, offering web, app, and in-store options. Other key features include integrated data insights and dashboards to help you review performance.
From invoices to subscriptions and ad-hoc amounts, receive payments automatically from your customers either by getting set up directly using our dashboard or through seamless integration with one of our 200+ partners.
If that wasn't easy enough, research from IDC showed that GoCardless lowers the overall cost of taking payments by 56% Suitable for payments of all sizes, GoCardless makes taking both recurring and one-off payments painless, with 97.5% of payments collected successfully on the first try.
With ACH Debit and GoCardless, you can;
keep transaction fees low
enjoy high payment success rates
reduce manual payment admin
eliminate late payments
protect customers from fraud
3. Google Pay
Google Pay enables users to pay on your website using card details they have stored in the product, a major player among digital wallets. Users can recognise the payment option by the distinctive "G Pay" logo. It's highly inclusive, as hundreds of millions of users worldwide are using Google Pay on their devices already.
3. Apple Pay
The obvious counterpart to Google Pay, Apple Pay is its iOS equivalent. With equally enormous numbers of existing users, Apple Pay offers convenience when taking payments in your website. Be sure to check out Apple's Acceptable Use Guidelines, as you'll need to adhere to specific branding and user interface requirements.
One of the most recognisable online payment methods in the world, PayPal's reputation is a major advantage of using this provider. It's a trusted and secure service but comes at a price, at 2.9% + $0.30 per transaction at the time of writing. Other providers can likely give you the same service at a much lower cost - GoCardless charges just 1% + $0.25 per transaction, capped at a maximum of $2.50, on our simple, contract-free pricing plan.
Needing no introduction, Stripe is one of the most well-known payment gateways on the market. Designed with online transactions in mind, it's a huge service that provides a reliable and slick experience. Other benefits include multi-currency support, allowing you to show prices in the native currency for your customer in over 135 countries.
7. Amazon Pay
As a newer addition to the online payments landscape, Amazon Pay could nonetheless be a suitable choice for your website. It's an international gateway that opens up convenient checkout for anyone who has an existing account on the site - in other words, almost everyone.
8. Card providers
Services from well-known card companies make it easy for those who favour card payments to checkout on your website. Visa Checkout, American Express, and Masterpass by Mastercard are all examples of card payment gateways for implementation online. All three offer the great customer support, integration help, and user recognition you would expect.
9. Buy-Now-Pay-Later providers
Names like Klarna and Afterpay are making a big splash as BNPL is rapidly becoming a popular choice. Americans, particularly those who are more debt-wary, are gravitating towards the interest-free instalments, which reduce the need for large sums on credit card bills. You may want to consider offering this option as an increasingly available alternative payment method.
Consider offering a mixture of payment options
For many online businesses, offering a mixture of payment options is the best way to go. This allows the customer to choose their favoured method, reducing friction to the minimum.
We can help
GoCardless provides an automated ACH Debit service that allows merchants to control payment collection, eliminates late payments and is more affordable than card payments.
Furthermore, automation reduces the level of manual admin. With a user-friendly merchant dashboard and over 200 accounting software integrations, merchants can set up payments in just a few clicks.
With no contract or upfront commitment required, it is quick and easy to start getting paid on time with GoCardless today!
Case Study: How Diaper Stork saves time and money with ACH and GoCardless
Using GoCardless has enabled Diaper Stork to reduce payment costs, with the company now paying 2% less per transaction than cards for every customer that chooses ACH debit.
On top of the monetary savings, automating financial admin and eliminating late payments has saved the business 2 - 3 hours a month in accounting time, allowing them to focus on improving the customer experience.
Learn more about how GoCardless can save you time and money on payment collection.