Choosing the right payment methods is crucial for businesses for several reasons:
- Convenience: Customers want convenience when it comes to paying for goods and services. Providing multiple payment options ensures that customers can pay in the way that is most convenient for them.
- Customer Satisfaction: Offering a variety of payment options can also increase customer satisfaction. Customers are more likely to return to a business that offers the payment method they prefer, leading to repeat business and positive reviews.
- Increased Sales: When customers have more payment options, they are more likely to complete a purchase. Businesses that only accept a limited number of payment options may be losing out on potential sales.
- Security: Some payment methods offer more security than others. For example, credit card payments are often more secure than cash payments. Providing secure payment options can increase customer trust and reduce the risk of fraud.
- Global Reach: Offering payment options that cater to customers in different countries and regions can help businesses expand their customer base and increase revenue.
Overall, selecting the right payment method can impact a business’s revenue, reputation, and customer loyalty. Therefore, it is crucial for businesses to carefully consider and offer a variety of payment options that meet their customers’ needs.
Ultimately, the best online payment method for a business will depend on factors like the type of business, the customer base, and the specific needs of the business. In turn, the best online payment method for customers will depend on personal preferences, security, and convenience.
It’s important to evaluate different options and choose the one that best suits both the business’s and the customer’s needs.
Variety of online payment methods for businesses today
- Debit card
Debit cards are the simplest and most approximate analogue of cash for online payments. These are simple transactions when funds are withdrawn from an individual’s account immediately. Debit cards are fairly secure. Among the disadvantages, we can single out a commission that can be charged and there are often payment limits.
- Credit card
This is a payment that the client makes with borrowed money rather than a bank account. Credit cards work by providing the user with a line of credit up to a certain limit.
There are many advantages to using credit cards, such as the creation of a credit history, rewards and points for spending, and the ability to make larger purchases. However, there are a number of drawbacks as well: a transaction can last 24-48 hours; merchants might be charged a transaction fee; possibility of fraudulent transactions; a high-interest rate (15% to 25% APY) on outstanding balances.
- Virtual account numbers
Many banks offer this counterpart to debit and credit cards with increased security. When using virtual account numbers for online purchases, customers do not have to provide their actual card details to merchants. The lack of digital transmission of actual card data, minimizes the risk of cybercrime. However, there are difficulties from the merchant’s point of view, because not all banks provide this feature, the management of returns and chargebacks is complicated, and so on.
- Bank transfers (wire transfers)
Manual bank transfer is mainly used for B2B transactions and large payments, for example, bulk orders. There are various systems for such transfers all over the world: iDEAL, SUPRA, IBAN, NET, TP TS and so on.
These transactions are considered to be among the most secure with a low risk of fraud, however, there is no card network to track the transaction and it cannot be revoked in case of an error. Also, due to the transaction of only sufficiently large amounts, the fees and costs are correspondingly high.
- Online transfer (eCheck)
Online transfers are a kind of combination of bank transfers and the principles of operation of ordinary paper checks. This type of transfers is carried out by connecting the sending bank and the receiving bank, which jointly send and receive payments over the network. Such networks can be, for example, ACH or SWIFT. For payment, money is withdrawn from the payer’s current account and credited directly to the payee’s current account.
Online transfer payments often apply only to domestic transfers or single market payments. In addition, these payments can take one to three business days.
- Direct debit
Automatic and scheduled payments used to pay household bills and in various subscription payment models. This is a simplified payment method based on the fact that companies debit the customer’s bank, subject to prior notification of the amounts and dates of collection. And so, such payments guarantee timely payments with a certain set period. It is a highly secure way to receive recurring payments, but with a transaction speed of 3 business days or more.
- Digital wallet / E-wallet / Pass-through wallet
It is an electronic device, online service or software for storing money in your phone and making electronic transactions online and in person, sometimes using biometric data. Examples of mobile wallets are PayPal, Apple Pay, Google Play, Alipay and so on.
Digital wallets have a high level of security, transactions are fast enough and are much cheaper than many other types of transactions. Therefore, digital wallets have become the preferred payment method for many startups and small businesses, especially for service-oriented industries. The downside for businesses is the time and cost to integrate with them.
- Payment links
This is a convenient, versatile, and extremely easy method of making a payment for both parties. You use special platforms to create a unique custom link very quickly (or even automatically) and send it to the customer. When the customer receives the link (can be in the form of a button), fills in the card details, and confirms the payment. Payment links are the basis for email invoices.
- QR codes
This is a fast and very secure method due to the possibility of data encryption. In general, it is similar to payment links, i.e. the merchant creates a unique code and sends it to the customer, and the latter in turn scans the code, fills in his data and makes the payment. See, short and sweet.
- Digital currencies
Digital currencies are a full analogue of conventional currencies in their properties, except for the lack of physical embodiment. Digital currencies include cryptocurrency, virtual currency and central bank digital currency. So, a cryptocurrency wallet is a digital wallet where private keys are stored for cryptocurrencies like bitcoin. The idea is simple: anyone with digital currency can send coins or tokens to any address on a blockchain. Digital currencies speed up payment processing and simplify the use of the preferred currency in a particular situation.
- “Buy now, pay later” apps
These are product purchase apps that integrate with various merchant stores. The applications are based on providing customers with an installment lending process. This system allows customers to pay for purchases without extra cost or with a minimum fee. Customers might have the option to pay in a few installments. Most companies that use such services prefer to choose those that offer full payment upfront and make then protected from fraud and the risk of customer non-payment by.
- Gift cards
Gift cards, physical or virtual, are also a method of online payment, as they can be otherwise referred as “pay now, buy later”. A person buying a voucher as a gift to another person makes a transaction in any form, which is a guaranteed and secure payment for the company.
Wrap Up
Most consumers take a flexible approach to payments, wanting to have at their disposal multiple payment options to choose from.
The most winning option for businesses is to combine methods to make the most of the ultra-fast and secure methods available to customers. Offering multiple online payment methods makes it easy and convenient for customers to make purchases, which consequently increases business conversion rates.
But providing many variations of making a payment leads to a number of difficulties, which must also be taken into account
- Connection of each method separately. Often your product must meet certain requirements and the connection process itself can be quite complicated and require specialist intervention, which primarily entails costs to the business.
- Maintenance of each payment method. Of course, all payment methods are not free and transactions are subject to a certain fee.
- Additional services, such as automatic notification or scheduled invoice generation, may be chargeable.
- Accounting for all payments. Reporting and analytics can be a real headache if you’re in an international market and receive payments in many different ways and in different currencies and frequencies.
This is where businesses come to the rescue of billing platforms, which are designed to free you from payment problems.
We can help
Rainex is a comprehensive billing and subscription management platform that allows you to simplify and speed up routine business processes.
The platform allows you to accept all types of online payments and even register offline payments, automatically generate invoices and send them to your customers within the set schedule as well automatically, generate personalized dashboards with multiple metrics, and much more.
If you have a subscription-based startup or business, Rainex is exactly what you need to streamline your subscription and payment management workflows.
To learn more, sign up for a product demonstration. We will be happy to tell you about us and answer any questions.
