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calendar    Dec 20, 2023

The Ultimate Guide to Payment Processing for Small Businesses: Systems and Methods You Should Know About

In today's rapidly evolving digital landscape, small businesses must navigate a maze of financial processes to stay competitive. This guide is tailored specifically for small business owners delving into the important world of payment processing, including payment systems, payment methods, and gateway payment processing.

Understanding these concepts is key to streamlining your transactions, enhancing customer experiences, and bolstering your business's financial health.

Let’s dive in as we explore these essential components in the following sections, setting the stage for a more robust and simplified financial management approach for your small business.

What are payment systems?

Payment systems are the backbone of financial transactions, serving as the digital infrastructure that lets money move. They involve several technologies and procedures to ensure transactions are processed smoothly and securely. This infrastructure is essential in our modern economy, supporting everything from traditional banking transactions to new digital point-of-sale payment solutions.

What are payment methods? 

Payment methods are the various ways in which customers can complete transactions and pay your business. They range from conventional options like cash and checks to modern solutions like credit and debit cards. Each method offers unique advantages and caters to different customer preferences. For small businesses, understanding and offering a variety of these methods can be vital in attracting a broader customer base, maximizing customer convenience, and ensuring fast and secure transactions.

How do payment systems and methods work?

Payment systems and methods work together to facilitate transactions. A payment system acts as the infrastructure, ensuring the proper and timely validation and transfer of funds. The payment method is the medium through which this transfer occurs, such as a debit card or bank transfer.

For example, let’s assume a customer chooses a credit card as their payment method. When they swipe their card, the payment system verifies the transaction details, checks for sufficient funds, and then processes the transfer from the customer's account to the merchant's account. This seamless interaction between payment method and payment system ensures that transactions are convenient for customers and reliable and secure for businesses.

What is gateway payment processing?

Gateway payment processing is a crucial layer of digital finance for businesses, acting as a bridge between a merchant's website and the payment processing network. It's a secure method for handling online payments, enabling businesses to accept a variety of digital payment methods easily. This technology is essential for ecommerce and any business selling goods or services online.

Payment gateways offer businesses a way to get paid online and a layer of security. They ensure that sensitive data, such as credit card numbers and shipping details, are encrypted and transmitted securely, protecting your customer’s sensitive information.

How does gateway payment processing work?

The process begins when a customer enters their payment details on a merchant's website. The payment gateway encrypts this information and sends it to the payment processor used by the merchant's bank. The processor then forwards this information to the card association (like Visa or Mastercard), which verifies the transaction with the issuing bank. Once approved, the transaction is authorized, and the funds are transferred from the customer's account to the merchant's account.

The payment gateway plays a crucial role throughout this process, ensuring that the transaction is fast, secure, and maintains the integrity of the customers' financial data. This speed and protection make gateway payment processing an indispensable tool for modern small businesses accepting online payments.

What to consider when choosing these payment options for your small business?

When selecting payment options for your small business, it's crucial to consider the various factors impacting your operations and customer experience. For example:

Transaction Fees: Make sure you understand the fee structure for each payment option. Some may charge a flat rate per transaction, while others might have a percentage-based fee. Opt for a solution that balances cost-effectiveness with quality of service that fits your business needs.

Pricing Structure: Assess whether the pricing structure aligns with your business volume and cash flow. Some systems offer tiered pricing based on transaction volume, which can benefit growing businesses.

Ease of Use: The user interface and overall ease of use are vital when choosing payment options. A system that's intuitive and simple to navigate can save time and reduce errors for your team and customers.

Customer Service: Reliable customer support is essential. Look for providers that offer responsive and helpful service, preferably with multiple support channels like phone, email, and live chat. If your business sees higher sales volumes on the weekends, ensure you choose an option with custom support access during these times.

Security Features: Ensure the payment system has robust security measures to protect sensitive data. Features like encryption, compliance with local and national data regulations, and fraud detection tools are essential for safeguarding your business and customers.

These considerations contribute significantly to the smooth operation of your business's payment processing. Proactively balancing cost, convenience, support, and security will help you choose the most suitable payment options for your small business.

Best payment systems for small businesses

Selecting the right payment system is crucial for small businesses. Let's explore some of the leading options and discuss their features: 

Resolve

Resolve stands out as a leading payment system for net terms B2B transactions, designed to streamline payment processes, improve cash flow, and provide flexible payment terms – when you offer 30-60 net terms to your buyers. Resolve’s B2B payment platform also aids in the credit management process and has a multitude of payment options accepted, making it perfect for B2B transactions.

Aspects to consider:

Transaction Fees: Resolve offers competitive, transparent transaction fees with no hidden costs, which can lead to significant cost savings for businesses.

Pricing Structure: Resolve's pricing is designed for small businesses, starting at $499 monthly, billed annually, and offering flexible payment options.

UX: The platform is user-friendly and intuitive, catering to users with different technical backgrounds and offering a straightforward interface that simplifies the management of B2B payments and credit lines.

Customer Service: Resolve is known for its excellent customer service. The support team is responsive and knowledgeable, ready to assist businesses with queries or issues.

Security Features: Resolve employs advanced security measures, including 2048-bit encryption as well as compliance with industry standards, to ensure the safety of transactions and sensitive financial data. The company will never share your information without your consent.

Adyen

Adyen offers a seamless payment solution that's versatile for both online and in-store transactions. 

Aspects to consider:

Transaction Fees: Transparent, starting at a competitive €0.11 processing fee plus any associated payment method fees. Their rates are cost-effective for many small businesses.

Pricing Structure: Adaptable, with no setup fees. Ayden only charges the base processing fee plus any payment method fee enforced by the provider.

UX: User-friendly, suitable for users with varying levels of tech-savviness.

Customer Service: Generally receives positive feedback for responsive and helpful customer support.

Security Features: Adyen has robust security protocols, including encryption and compliance with PCI DSS standards.

Chase Payment Solutions

Chase offers a range of payment processing services, including card, mobile, and online payments, tailored for small businesses.

Aspects to consider:

Transaction Fees: Reasonable, at 2.90% online and $0.25 per card transaction.

Pricing Structure: Flexible pricing structures are available, accommodating different business volumes.

UX: The system is intuitive, making it accessible for beginners.

Customer Service: Chase is known for its reliable, 24/7 customer support.

Security Features: Offers strong security measures, including fraud protection and encryption.

Shopify POS

Shopify POS integrates with Shopify's ecommerce platform, offering a cohesive solution for online and physical store sales.

Aspects to consider:

Transaction Fees: Transaction fees are reasonable, especially when using Shopify Payments, starting at 2.4% plus $0.30 for online card purchases.

Pricing Structure: Offers scalable solutions for businesses at different stages, offering flexible accounts and profiles.

UX: Highly user-friendly, especially for those already using the Shopify platform.

Customer Service: Offers comprehensive support.

Security Features: Strong security protocols in place, including PCI compliance.

Each of these payment systems offers unique advantages and some limitations. Understanding how they work will help small business owners make informed decisions that best suit their operational needs and customer preferences.

Best payment gateway for a small business

For small businesses, selecting the right payment gateway is as essential as choosing the best payment system. While these gateways facilitate transactions, integrating them with automated payment processing solutions like Resolve enhances their functionality. Though not a payment gateway, Resolve complements these systems by automating payment processing, reminders, and collections, providing additional benefits and making day-to-day business that much easier.

Let’s take a look at some of the most popular payment gateways in the market today:

Stax Payments

Stax Payments adopts a unique subscription-based pricing model, setting it apart in the payment gateway space.

Aspects to consider:

Transaction Fees: Offers a low-cost, subscription model starting at $99 per month, beneficial for consistent transaction volumes.

Pricing Structure: Straightforward flat-rate pricing aids small businesses.

UX: User-friendly, ideal for those without extensive tech experience.

Customer Service: Noted for reliable support.

Security Features: Includes PCI compliance and fraud prevention tools.

If the cash flow predictability of subscription models makes sense to you, consider exploring how Resolve can help you better understand payment terms and maximize the predictability of your business cash flow.

Braintree

Owned by PayPal, Braintree is a payment gateway that excels in mobile and web payment systems.

Aspects to consider:

Transaction Fees: Competitive rates starting at 2.59% plus $0.49 per transaction.

Pricing Structure: Tailored for businesses of all sizes, including small startups.

UX: Provides a smooth user experience with easy integration capabilities.

Customer Service: Known for its reliable customer support.

Security Features: Robust security with fraud protection and data encryption.

Authorize.net

Authorize.net is a popular payment gateway known for its flexibility and integration capabilities.

Aspects to consider:

Transaction Fees: Fees are moderate, starting at $0.10 per transaction with a $0.10 daily fee.

Pricing Structure: Suitable for small to medium-sized businesses, offering payment gateway-only and full-suite options.

UX: It's user-friendly, though some integration knowledge might be needed for full functionality.

Customer Service: Offers solid customer service with various support channels.

Security Features: Includes advanced fraud detection and strong encryption.

Payline Data

Payline Data provides flexible solutions for both online and in-person transactions.

Aspects to consider:

Transaction Fees: Competitive pricing starting at 0.4% in-person and 0.75% online credit card payments.

Pricing Structure: Customizable plans for various needs.

UX: Intuitive interface.

Customer Service: Generally positive feedback.

Security Features: Comprehensive security with encryption and fraud protection.

Competitive pricing is important, but make sure to choose an option that will scale with your projected business growth. Consider using Payline in tandem with Resolve to further reduce the financial risk to your business. 

Shopify Payments

Integrated with Shopify, this gateway offers a streamlined experience for ecommerce businesses.

Aspects to consider:

Transaction Fees: Competitive rates of 2.9% plus $0.30 for online transactions, starting as low as $39 per month.

Pricing Structure: No additional transaction fees for Shopify users.

UX: Intuitive, particularly for Shopify users.

Customer Service: Robust support within the Shopify ecosystem.

Security Features: Strong security, including PCI compliance.

As more business moves online, consider the future of your business's commercial touchpoints and how Resolve can help introduce more financial flexibility for your customers.

Square

Popular among small businesses for its simple pricing and user-friendliness.

Aspects to consider:

Transaction Fees: Flat rate of 2.6% plus $0.10 per online transaction.

Pricing Structure: Clear, straightforward pricing.

UX: Extremely user-friendly.

Customer Service: Generally good reviews.

Security Features: Includes fraud prevention and encryption.

Square lets your customers pay in various ways – make sure you’re up to date with any changes to their fee structures that may impact your business pricing.

Stripe

Known for its powerful API and customization options.

Aspects to consider:

Transaction Fees: Starts at 2.9% plus $0.30 for debit card payments.

Pricing Structure: Flexible and scalable for businesses with technical acumen.

UX: Customizable but requires technical knowledge.

Customer Service: Strong support and resources.

Security Features: Advanced security with machine learning for fraud detection.

Affordable payment gateways mean more money for growth–if you feel unsure about your cash burn, Resolve can help.

Clover

Offers an all-in-one solution with various hardware and software options.

Aspects to consider:

Transaction Fees: Competitive rates of 2.3% plus $0.10 per transaction.

Pricing Structure: Flexible plans for different business sizes.

UX: User-friendly with versatile hardware.

Customer Service: Reliable support.

Security Features: Robust security, including end-to-end encryption.

Customer support you can rely on is crucial for business success–explore your selected payment gateway’s customer reviews to get a better picture of user experiences.

Online Payment Methods for a Small Business

In today’s digital world, businesses need multiple online payment methods to meet customer preferences and streamline operations. Let’s explore some modern digital payment options and how they can impact small business functions:

Direct Debit

Direct debit allows businesses to automatically collect payment from a customer’s bank account, which is particularly beneficial for recurring payments.

Pros: Reliable for recurring revenue, reduces late payments.

Cons: Less flexible for customers, as it requires prior authorization.

Transaction Fees: Generally low but can vary.

Security Features: Usually includes strong customer authentication and fraud detection mechanisms.

Card Payments

Card payments, including credit and debit cards, are the most popular payment method in online transactions.

Pros: Widely accepted, convenient for customers.

Cons: Often economically prohibitive for smaller businesses.

Transaction Fees: Vary by card networks and may include a percentage of the transaction plus a fixed fee.

Security Features: Typically involves encryption and compliance with PCI DSS standards.

Digital Wallets

Digital wallets like Apple Pay and Google Wallet allow customers to store their payment information on a device and pay electronically.

Pros: Enhances transaction speed and offers security by not sharing card details.

Cons: Adoption varies by demographic and region.

Transaction Fees: Similar to card payments, subject to the policies of the digital wallet provider.

Security Features: Often includes tokenization and biometric verification like fingerprinting.

Email Invoices

Email invoices are digital invoices sent to customers, allowing them to pay through a link.

Pros: Convenient for B2B transactions, facilitates record-keeping.

Cons: Relies on the customer taking action to make the payment.

Transaction Fees: This may include a service fee per invoice or transaction.

Security Features: This usually involves secure links and data encryption.

These digital payment methods each offer unique pros and cons for small businesses. By understanding their differences, small businesses can select the options that best align with their business reality and customer needs. Integrating these methods with systems like Resolve further enhances their efficiency, particularly for B2B transactions.

Ready to find the right payment processor for your small business?

Choosing the perfect payment processor is vital for your business's efficiency and customer satisfaction. 

A dedicated B2B payment platform like Resolve can significantly complement your chosen payment processor by streamlining transactions and enhancing financial operations. Make an informed choice today to improve your transaction processes and set your business up for success and growth.

 

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