Cash Management · June 24, 2020

Three Payment Options for Businesses to Consider

There are more payment options for businesses to consider today than ever before. In-store tablets have arrived at the point of sale, e-commerce continues to thrive, and mobile wallets are growing in popularity. 

The key to sorting through the options is to find the methods that are both convenient for your customers and work well for your business. More than likely, you'll need a combination, especially if you're conducting transactions both in-person and online.


Modern POS systems

Today's point-of-sale, or POS, systems do more than process credit and debit card transactions. Many of them act like business hubs, where you can manage inventory, marketing, payroll and human resources. They can also provide analytics that can help you grow your business. If you have a physical location, a POS system is a good choice.

Advantages: The advantage of using a POS system is that it's an all-in-one solution, generally sold as a package based on your business needs. It offers a wide assortment of tools, and businesses can be up and running quickly, because the hardware and software is packaged together. Also, many POS systems are intuitive and easy to use.

Disadvantages: If you've never had a POS system before, you'll have to upload your inventory and customer information, and that can take time. Also, some POS systems are pre-programmed. If your business requires very specific features and capabilities, you may need to invest in greater customization.

Costs: The cost of a POS system can vary depending on the complexity and the number of stations you'll need. With modern POS systems, a single register setup typically costs $1,000 to $1,500. In addition to the equipment, most POS system providers charge monthly subscription fees for the software use, as well as credit card processing fees based on a percentage of the transaction.

Online payments

If you run an e-commerce business, you'll need an online payment provider. The traditional method has been to use a merchant account and a payment gateway. Today, you can also choose a simplified online payment processor, which integrates with your store's checkout process and doesn't require a merchant account or payment gateway.

Advantages: Using a merchant account and payment gateway provides you with more personalized customer service, as well as greater control over security rules. Simplified online payment processors are easy to set up. Because they don't require a merchant account or payment gateway, they can also be less expensive.

Disadvantages: Some merchant account and payment gateway providers require you to sign a contract. Others may require that you meet monthly transaction minimums. Traditional merchant accounts typically take longer to set up than simplified online payment processors.

Costs: Merchants that accept online payments will incur a monthly flat fee and a transaction fee, often a flat rate plus a percentage of the transaction. The typical cost for credit card processing for online stores is between 2.30% and 2.50% of the transaction.

Mobile point of sale

A growing number of business owners are choosing mobile point of sale, or mPOS, systems. Instead of being hard-wired into a checkout station, this payment processing type connects to a smartphone or tablet and can be moved around your store or even taken off-site. 

Advantages: mPOS devices replace large checkout stations, freeing up floor space. They also help speed up checkout. With mPOS, your sales staff can actually complete transactions on the selling floor rather than the checkout line.

Disadvantages: Since mPOS operates in the cloud, your business needs a strong internet connection. Be sure to choose a vendor that allows you to save transactions offline and process them later in case of an outage.

Costs: mPOS devices are relatively affordable. Like POS system providers, mPOS usage will incur monthly subscription fees for the software use, as well as credit card processing fees, usually based on a percentage of the transaction.

What's right for you?

The best payment options for businesses are specific to each organization's goals. Finding scalable solutions that can grow with your company will help you keep up with the changing consumer demands. The checkout process is the final impression you leave on your customers, so take the time to find a solution that will help you build repeat business and a happy clientele.

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This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.