Small business payment options: Which is best?

Panna Kemenes

Life as a small business can be tough. With so many small business payment options on the market, it can be difficult to know which ones are best.

Take a look at the best small business payment options, and the pros and cons to consider along the way.

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📝 Payment options overview:
  • Payment gateways
  • Direct Debit
  • Card payments
  • Electronic invoices
  • Mobile payment options
  • Cash payments
  • Check
  • Wise Business

Small business payment options

Here’s an overview of the best payment options for small businesses.

🛒 Add a payment gateway to your online store

To compete in the world of today, having an online presence is key. Adding a payment gateway to your website allows you to generate business 24/7.

A payment gateway is the checkout portal that accepts various payment methods. With so many payment gateway providers out there choosing the best payment gateway for your business is key.

Stripe, PayPal and Square are examples of such providers.

You can save money by linking your Stripe account to Wise Business to receive money. A traditional business account can charge hefty fees for receiving foreign transactions. Wise Business gives you 10 local account details which you can receive payments to for free.

➡ Pull payments with Direct Debit

For businesses with a subscription service, offering direct debit eases your customer's lives.

Direct debits are recurring payments which can be set up for subscription services. Once they’re set up, you won’t have to chase payments and your customers won’t have to remember to always pay.

💳 Accept card payments

Card payments give your customers a smooth online and in-store checkout process. It also gives them the ability to make larger purchases compared to cash, as well as use credit. Likewise, providing card as a payment option creates trust among potential customers.

🔍 Did you know?
In 2021, card payments accounted for a whopping 57% of total transactions.¹

The downside to card payments is the associated costs. Transaction fees, PCI compliance, and chargebacks can all add up.

This can put pressure on your bottom line. Credit card fraud can also pose a security issue for you and your customers. In 2020 alone, the US had a total of $11 billion USD in losses from credit card fraud.²

To accept card payments, you’ll need to open a merchant account. Additionally, in-store card payments require a card reader. Providers such as PayPal and Square offer this hardware.

🧾 Set up electronic invoices

For independent contractors, electronic invoices may be the right way to go.

The manual processing of an invoice costs around $7 USD. But, an electronic invoice costs only $0.30 USD.³

You can send e-invoices via email to your customers. An automated system can create and send invoices. It can also receive payments and issue receipts.

A great advantage of e-invoicing is that you can also add a payment link, for customers to pay you seamlessly.

It’s worth considering if your customers may find e-invoicing more convenient as a payment option.

💡 Try the free invoice generator from Wise Business

📲 Discover mobile payment options for small business

Mobile payment options are growing at an incredible rate. By 2025, there will be an estimated 4.8 billion users worldwide.⁴

So it’s safe to say that mobile payment options are here to stay.

Mobile payment options are digital wallets and money transfer apps. In short, any app that allows you to pay with your mobile. Digital wallets such as Google Pay and Apple Pay(see Apple Pay alternatives) are just a few of the major options out there.

Mobile payment options store customer information. Additionally, near-field-communication (NFC) technology makes for one-touch payments. This makes for effortless payments and can increase your sales volume along the way.

That said, mobile payment options come at a cost. There is such awide range of apps to choose from, which all come with integration costs for your business. Also, you need to invest in Point of Sale (POS) systems that accept NFC payments.

💵 Receive cash payments for fast payment

In 2020, only 19% of total transactions in the US were cash payments.⁵ That’s a 7% decrease since 2019, which will continue as digital payments gain popularity.

Still, cash payments are a popular choice for certain types of businesses.

Cash payments avoid the costs associated with accepting card payments. You also don’t have to wait for the payment to clear, meaning you get immediate access to your payment.

A downside to cash payments is security. There is a higher risk of theft as the money is not immediately transferred to the bank.

Additionally, cash payments can be harder to keep track of. This can make money mismanagement more likely. On top of this, you may lose out on potential customers who prefer to pay with card or digital wallet.

✍️ Give the option to pay by check

Checks allow the transfer of funds from your customers bank account to your account. Checks are now available in both paper and electronic form - eChecks.

The benefit of accepting a check is that there are no upfront costs involved. Additionally, checks are often a preferred method to pay suppliers with.

That said, checks aren’t risk free. Paper checks carry the same risk as cash payments - they can be stolen. You also need to verify a check before cashing it in. Fake checks can cost your business in legal fees and unpaid products.

Likewise, checks aren’t always convenient. There is time involved from the accepting to the cashing in of the check. The processing time of the check can also vary depending on various factors.

Use Wise Business to accept international payments with ease

    When it comes to international payments, small businesses can save money by choosing the right payment option.
    Wise Business is a safe, easy and low-cost alternative to banks. The Wise Business account is a stress-free way to receive international payments. You can also send, spend, and convert currencies at the real mid-market rate.
    You can connect your Wise Business account to payment gateway providers, such as Stripe. This allows you to receive international payments to 10 local account details for free.
    If a customer pays you in a foreign currency, you can receive the funds using local account details. No need for the customer to worry about conversion fees and bad exchange rates.

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Wise Business

What’s the best payment option for a small business?

The answer depends a lot on your individual business model. For a small arts and crafts store, cash payments may be easy to manage. For a fashion store dealing with in-person sales, card payments may be the most convenient option.

You need to first consider the type of business you're running - if it’s in-store or online, or both. Then you need to research your customer base. Are they millennials using digital wallets? If so, then investing in NFC POS terminals may be worth it, for example.⁶

You should then consider the type of product you’re offering - is it physical or service based? And the payment type - is it one-off or repeating, a small or large amount?

For example, if payments are recurring, direct debit is a clear advantage to your business. Likewise, if payments are usually in large amounts, then only offering cash may not be the best idea.

In the end, it’s smart to offer a wide range of payment options. Up to 16% of buyers will abandon their purchase if they’re preferred payment option is unavailable.⁷

If you run an international business, then you'll also benefit from using an account with local account details, such as Wise Business. This makes it easier to get paid from abroad.

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🔍 More articles you may find useful:
  • Top ways to accept payments online

  • Sources:

    1. 2022 Findings from the Diary of Consumer Payment Choice – Cash
    2. 50+ Identity Theft & Credit Card Fraud Statistics (2022)
    3. EY - Worldwide electronic invoicing survey 2018
    4. Mobile Payments App Revenue and Usage Statistics (2022)
    5. 21+ Cash vs Credit Card Spending Statistics to Know in 2021
    6. U.S. consumer awareness and usage of Apple Pay 2016, by age group
    7. The Big Ticket: What’s Stopping Shoppers?

    All sources checked September 22, 2022.

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