Top Online Payment Methods for Small Businesses

Online payments are all the rage these days. They offer the customers a great deal of convenience since there are various UPI-based apps today that allow the customers to perform transactions in a matter of seconds.

Why is online payment becoming important?

The constant advancements in technology have allowed for quicker processing of business transactions today. More and more businesses have started to infuse technology with their core business activities to keep up with the ever-growing demand.

• Elevated levels of customer experience

Small businesses such as general stores often have limited staff. Hence, catering to every customer quickly and efficiently is a bit of a task. The main problem was always the payment process since not having the right amount of change could lead to delays in settling the final bill amount. However, with online payments (especially UPI apps), the transfer of funds and confirmation instantaneously, making life easier.

• Reduction in costs

With the cash-based payment system, the business owners would either round off the bill by offering a discount or request the customer to pay it shortly. This would happen commonly when the owner cannot tender the exact change due to the lack of coins or specific currency notes. By offering a discount, the business would often lose out a bit of money per transaction. However, with the introduction of online payments, this unnecessary and avoidable cost is eliminated.

• Available trail of transactions

Tracking each transaction has become very easy through the online payment system since this data is stored in the cloud. This gives the business owners the actual break up of each transaction and provides a visible trail of transactions, making verification easy. Moreover, there is no need to appoint a cashier anymore since the payment can be made digitally in seconds.

• Offers competitive advantage

By adopting the digital payment system, small businesses have now opened their doors to overseas markets since payments can be processed instantaneously. This provides the opportunity for growth and expansion and enables the businesses to scale up gradually.

• Quicker processing of payments

The ability to control account receivables goes a long way towards ensuring the financial health of the business. Payments can be made remotely, thanks to the digital payment system, which means that the customers do not need to be physically present to perform the payment function. With the advancement of technology today, payments often get processed in a matter of seconds.

• Improved supplier relations

It was standard practice for businesses to receive a large shipment of goods and make the payment at the end of the credit period offered by the supplier. However, sometimes the delay in payment beyond the credit period is used to sour the relationship between the supplier and the business owner. Today, through the quick processing of online payments, this problem is eliminated.

• Improved cash flows

Offering customers a credit period on purchase was a common practice for businesses. However, due to unforeseen delays, this would often leave the businesses cash-strapped. Presently, since the transaction turnaround period is relatively shorter, many small businesses have seen a sharp uptick in cash flows.

Types of online payment methods for small businesses

• Card payments

Debit cards and credit cards are common methods of payment used today. Business owners often outsource the responsibility of the payment system to a third party for the sake of convenience. Through this, the merchant account will be set up by the third party, and they shall ensure adherence with the PCI DSS compliances.

All the customer needs to do is insert the card into the card reader machine and enter the PIN to facilitate the transactions. The transaction is completed in a matter of seconds, after which a receipt is printed for the customer and the business owner.

• Direct debits

Under this method, the business owner deals with the customer’s bank directly to ensure payments. All it requires is a step that includes a one-time verification. Once this is done, all payments will be directed automatically to the designated account. This method is most commonly used by businesses that offer subscription services.

• UPI and digital wallets

This is the most recent development in the world of digital payments. A merchant account will have to be created in any UPI (GooglePay and PhonePe being popular examples). A KYC verification process will be carried out through which the user will key in all the necessary details, including the user’s bank account. Once it is set up, payments made via the app are processed almost instantaneously.