The ability to accept payments online is important for small businesses today. Having an online payment option can increase sales and improve cash flow. You don’t need to have your own merchant account these days to do so, either. There are a number of third-party payment processors that allow small businesses to take payments from customers online and seamlessly incorporate this payment method into their business. Below are some of the most popular payment services used by small businesses. We’ve included information to help you compare the services and choose the best one for your company.
PayPal is a widely used service for accepting payments online.The company offers personal accounts as well as business accounts, and allows small businesses to accept payments from other PayPal users, credit cards, Venmo, and bank transfers.
Whether you are a traditional brick-and-mortar business or an online business, PayPal makes it easy to accept payments from all types of customers, but there are limitations. For starters, it's not available in all countries internationally, so cross-border payments can be a problem.
PayPal charges 2.9% of the payment for an online transaction or 2.7% for a brick-and-mortar transaction plus 30 cents per transaction. Outside the U.S., those fees are 4.4% and 4.2%, respectively.
Nevertheless, it's free to transfer from PayPal to your bank. You can also add up to 200 of your employees to have limited access to your account.
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Square launched in 2009 and allows brick-and-mortar retail stores to integrate Square payments with their point-of-sale terminals and cash registers. Other brick-and-mortar businesses such as bars and restaurants, health and fitness clubs, home repair services, and professional services can also use it. Merchants can accept credit cards, debit cards, contactless and chip cards, magstripe, and more. You can even offer gift cards through Square.
The beauty of Square is that merchants and microbusinesses can accept payments either on the web or through mobile apps and hardware that connect to your established payments systems. The service also includes robust analytics that allows you to learn more about how your customers pay for your products and services. Square has a variety of fees for different merchant needs and almost all of them are lower than PayPal's.
Stripe, which launched in 2010, provides payment solutions for online businesses. Among other features, it allows online businesses to use the company's API to beef up their own operations. One such innovation is the ability to issue expense cards for employees and other physical and virtual cards.
Stripe is also active in countries where PayPal is absent. Payment methods include bank transfers, popular wallets like Alipay and WeChat, other local payment sources in various parts of the world, local currencies, Apple Pay and Google Pay, and, of course, credit cards.
Like Square, Stripe offers an awesome dashboard with analytics, and it also features a robust development platform for small businesses that want to build a successful online business model. Payment fees start are 2.9% plus 30 cents per transaction. However, larger businesses can work with Stripe to create a customized package that meets their needs. PayPal is easier to use, but Stripe is more flexible for online business and e-commerce.
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Venmo is the new kid on the block. The service launched in 2009, but for the longest time, it was nothing more than a way for friends to send money back and forth to each other without huge processing fees. Now owned by PayPal, Venmo has issued its own credit card and allows merchants to accept payment through PayPal Checkout or by integrating with Braintree, another PayPal-owned startup, for mobile payments.
Amazon Pay offers third-party merchants a way to accept payments from customers who are also heavy Amazon users. Anywhere customers can buy from Amazon, Amazon Pay is there to provide payment processing for businesses that need a way to process online payments. Their Global Partner Program allows merchants to integrate Amazon Pay into their business model.
FreshBooks is a web-based small business accounting and invoicing solution. It’s easier to learn than QuickBooks and doesn’t include many of the robust features that small businesses typically don’t use anyway. It’s simple and easy to use.
In the last year, FreshBooks quit supporting PayPal payments. Instead, they now support ACH direct payments. Because they are an accounting and invoicing system for small businesses, particularly service businesses, freelancers, and web-based businesses, their fee structure is not transaction-based. Rather, it is subscription-based.
While Stripe and PayPal are both available in Europe, and Square has begun its European tour starting with the United Kingdom, there are other payment processors that focus solely on European markets. Two worth mentioning are SecurionPay and Skrill.
SecurionPay claims to accept every payment processing method. Literally. What sets it apart from PayPal is its targeted focus on software-as-a-service companies, digital content, and pay-per-use scenarios. Its unique features make it an excellent option for micropayments and subscription-based business models.
Skrill is based in the United Kingdom. It's a popular application because Skrill has millions of users with an online wallet that allows them to make payments at merchants and online sites they use. Therefore, businesses have access to a wide user base right off the bat. There are some technical limitations to Skrill, but payment options are not one of them.
The science of processing payments online is ever-evolving. Two up-and-coming services are quickly changing the way merchants online and offline are accepting payments and allowing customers to pay for goods. Affirm and Klarna allow customers to pay for product purchases over time with fast and easy lines of credit approval at the point of sale.
Because U.S.-based Affirm and Sweden-based Klarna are technically loan service providers rather than payment processors, they only get a mention, but their unique arrangement with merchants that allow this payment method means merchants have another revenue stream that is effectively fee-less, making credit cards a less attractive option.
In Canada, National Processing and Helcim are respected alternatives. In Australia, Kash and AfterPay fill the void.
? 2020 Attard Communications, Inc. All Rights Reserved. May not be reproduced, reprinted or redistributed without written permission from Attard Communications, Inc.
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