Choosing the Right Payment Method for Your Business

The method of payment is important to anyone starting one’s own business. This technical choice is vital in securing reliable and unproblematic cash flow. As a company that has both a storefront and Internet site, we can accept several payment methods both online and in the store. Each has benefits and its downside.

The first, most obvious opportunity is payment in cash. This is relatively simple for both customers and sellers. However, in today’s world of widespread banking services, cash payments are no longer viable when large sums come in question.

Clients may simply fail to carry a sufficient cash amount in their pockets. Sales assistants will have a hard time counting the money, and may risk taking counterfeit money, too.

A credit card payment may be more convenient as everything occurs automatically and cards are protected by financial institutions issuing and servicing them in terms of security. The only downside for a small business is the fee that credit card companies charge on such payments.

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In the initial stages of business, the profit margin may not warrant the expense.

Online, there is also a rich variety of options. Clients can use the same credit card, which makes the payment quick and easy. However, there are security concerns on the part of many clients, and if you want to set up an account with a renowned Internet payment service like CheckOut there will be a fee for a transaction.

PayPal is another online option. This system can move money via the Internet, drawing on a bank account or credit card.

However, “to use PayPal you must sign up for an account, which most customers will not already maintain”, and “this additional step will cost you sales” (MonsterSmallBusiness, 2005). This means that PayPal should be used as an addition, not a replacement of credit card online payments. An e-check is another handy option. Its downside is the large amount of information that clients have to put in on the site, which creates room for confusion and may cost sales as well.

References

1. eBay. (n.d.). Payment Methods. Retrieved August 2, 2006, from http://pages.ebay.co.uk/help/buy/payment.html
2. MonsterSmallBusiness. (2005). Payment Methods: Which e-commerce payment methods do you offer? Retrieved August 2, 2006, from http://www.monstersmallbusiness.com/print/prt_payment-methods.htm