Finding the Best Online Payment System for Your Business

When growing a business, it’s essential to consider every available opportunity to increase automation. Doing so frees up valuable time and, as a result, can increase profitability. One key area to increase profitability is accounts receivable. Collecting money from customers is a key function in any business, and the more automated this process is, the better. When collecting payments online, options are becoming increasingly available. Here are a few examples of what these methods might look like.

Your Website

You might initially assume that your website is the perfect place to collect payments from customers, but there’s one reason this might not always be the case: security. A typical website is not as secure as it needs to be to collect credit card information from customers. Almost always, you’ll need an additional application to obtain that security. Many web-building platforms allow you to connect to these apps seamlessly, but you can also implement a workaround if necessary. For example, you can direct customers to your website for payment and provide a link to a secure site (a shopping cart with a payment gateway) via a hyperlinked button. In both cases, you’re utilizing the necessary security protocols to protect you and your customers.

A Payment App

A payment system needs to handle three functions:

  1. A shopping cart feature, in which an item is priced and can be added to a basket
  2. A checkout page, where billing information and credit card information can be collected
  3. A behind-the-scenes settlement function, where the money is taken from the customer, held in a merchant account, and then sent to your business

You need shopping cart software to handle the function in the first step. Standard retail solutions include Shopify, WooCommerce, and Magento, to name a few. But these won’t, by themselves, get you paid; they simply process the transaction in a secure environment.

The second step requires a payment gateway application. The most common stand-alone gateway is, and you would typically connect this to your shopping cart.

Your merchant account handles the third step, and sometimes, a separate processor is involved, too. From your merchant account, which is connected to your gateway, you typically get a reconciliation of the daily settlements that hit your bank account. You would also handle customer complaints and disputes with them.

Luckily, credit card companies like Stripe and Square have combined the second and third steps into their platforms in recent years. These platforms act as the gateway, the processor, and the merchant account for a streamlined process. Some vendors go a step further and combine all three functions into one vendor. PayPal is the quintessential example. Additionally, by using WooCommerce and WooCommerce Payments together, you can accomplish the goal of achieving an all-in-one solution.

Getting Paid in Service Businesses

A shopping cart is standard for online retail businesses, but what about service-based businesses? Service businesses that charge in advance can use a shopping cart just like retail.

If a service business bills its customers after the fact, the payment setup is connected to invoice distribution instead of a shopping cart. In this case, you would need to determine which solutions work with your specific billing system and if you’ll need an add-on application to extend your billing system’s capabilities. For example, QuickBooks users can sign up for QuickBooks payments which links your invoice to the customer payment to the bank deposit.

When the invoice is sent to the customer, it will include a payment link the customer can use to pay. These service business payment solutions are fairly industry-specific; for example, you might have noticed that medical offices often use different solutions than beauty care businesses.

Different Choices

When selecting a payment system for your business, you might think that credit card fees are the most important factor to consider. While that’s important, there are some additional considerations to keep in mind:

  1. Strive to understand exactly what each apps’ capabilities are.
  2. Applying for a merchant account is just like applying for a loan. In the past decade, this process has become highly streamlined.
  3. Make sure the system allows you to pull the reports you need, like settlement details, refunds (full and partial) and void processing, failed payments and retries, and dispute resolution.
  4. Establish processes to handle all of the items mentioned above.
  5. Make sure the app you’re choosing can handle the type of billing you need it to, including cart items, recurring payments, after-the-fact invoicing, sales tax, and shipping parameters.
  6. Find out how long it takes for payments to move from collection to bank deposit; this can range from 1-6 days, depending on the provider.
  7. Watch for a high failure rate on customer transactions. If this is the case, it could be that the gateway and merchant account are rejecting perfectly good business because the merchant account’s acceptance rules are stringent. This can happen with merchant accounts tied directly to banks, and the best thing to do is avoid them and look for a different option.
  8. Expect any new provider to hold the first few days of transactions for longer than usual. This is a temporary safety measure and should clear up quickly without action required on your part.

Adding an online payment system is a smart business decision and can save accounting time once you choose the best payment system for your specific needs.