The way people pay for purchases has changed dramatically in the last two decades. Gone are the days of writing paper checks or hearing the ding of outdated cash-register drawers. Most businesses have embraced more modern methods of transactions to enhance both customer and merchant convenience. But the ever-changing landscape of tech can make choosing a small business payment processing method seem daunting for small businesses. We’ve outlined some considerations as well as some trends to keep your eye on.
Factors to consider
Small businesses have a lot of choices when it comes to payment processing, and each option has pros and cons. Here are some factors to consider when reviewing your small business payment processing options.
- Consider your demographic. If you cater to a crowd that’s not tech-savvy, your choice will be different than for a merchant with a mostly millennial client base. Choose a system with the right ease-of-use for your customers.
- Factor in whether you need additional functionality like point-of-sale software or the ability to handle invoicing.
- Read the terms and conditions of any contract diligently before signing and take note of penalties for early termination.
- Understand the fees associated with each transaction type, as well, and how those will affect your bottom line.
- Fully vet the security functions and fraud detection of a potential processor. Your customers will want peace of mind in knowing their personal information is safe when they do business with you.
- Understand cashflow timelines. Payment processors operate on varying schedules for verifying transactions and making the funds accessible to your business.
Pay attention to new methods of payment and adapt to the needs of your customers as tech changes. Follow news regarding these trends.
More than three quarters (77 percent) of Americans now own smartphones, according to Pew Research. From communicating with others and taking photos to reading the news and paying for goods and services, Americans are doing a lot with their mobile devices (and wearables like smartwatches). Mobile wallet options like ApplePay, Android Pay, Samsung Pay and more allow consumers to skip out on carrying a physical wallet bursting with multiple plastic credit, debit and rewards cards. Although consumer and merchant use of mobile wallets has been slow, a recent report from Business Insider predicts that mobile wallet transaction volume will grow to more than $500 billion by the end of this decade. The report also suggests that businesses should leverage the use of loyalty programs that integrate with mobile wallet options to increase customer retention.
With the popularity of smart speakers or voice assistants like Amazon Echo, Google Home and Apple HomePod, more people will be using voice payments in the future, predicts E-Commerce Times. Although consumers are mostly using voice payments for Amazon-based or other list-oriented or re-order purchases, rapid changes in tech over the next few months and years will likely open doors for smaller retailers to take advantage.
As a business owner, keeping up with technology can make or break your success in the market. Offering additional options for making purchases gives customers greater convenience and may help attract more business. Expanding payment options can also come with added risk. In a time when even our largest retailers are falling victim to data breaches, it’s more important than ever for business owners to protect their data, and their business, from thieves. Talk to your local Farm Bureau agent about adding data breach insurance to your business coverage.