We’ve all been hearing lately in the news, about the numerous cyber-hacking scandals and thefts that have been taking place in the retail sector, the most well-known being the Target accounts that were hacked just before Black Friday a few years ago.
However, Black Friday also shows us that more and more people are shopping via their mobile devices, increasing the opportunity for customers to make purchases without ever stepping into your store. Here’s a brief overview of why and how small businesses can accept electronic payments.
Despite the proliferation of e-commerce these days, small businesses are still conducting business primarily in paper. Let’s take a look at a few stats:
1. 64.6% of small business owners, still pay with paper checks.
2. Small business owners (SMBs) write $5-$6 billion in checks a year at a cost between $7.5 to $10 billion in banking fees.
3. 15-20% Small Businesses and Mid-Size Businesses pay 80-90% of all their invoices with paper checks.
4. The average small business suffers a loss of $127,500 a year in fraud and 65% of all payment fraud occurs via paper check.
The good news is that electronic payments are becoming more and more secure and affordable. Here are a few ways that you can make accepting payments for your small business more convenient and little easier.
RDC (Remote Deposit Capture)
This is a device that allows you to scan paper checks electronically to your bank.
You can also take a photo with a phone for direct deposit.
Wire transfers via Fedwire or CHiPs
This is done through your bank. It’s very fast, reliable, but fees can be expensive and the payee will have to have your private banking information in order to make the payment which means that your private banking information is in the hands of several vendors.
You can accept payments via smartphones and tablets like Square, GoPayment (Intuit), Stripe, PayPal Here and Braintree. These allow you to swipe credit cards on site with the software. Most of the applications allow you to input credit cards without them being present and they have fixed transaction fees.
Square is very popular, it’s used in more than 20,000 locations and processes more than $5 billion in transactions a year.
Online Bill Pay
Online mobile banking is on the rise for small businesses. It makes up 48% of all small business transactions, but the downside is that it takes several days to clear, which can hinder your working capital.
P2P payments (Chase Bank & PopMoney), Google Wallet and NFCs (near frequency centers) are becoming popular too. You register with any of these apps and then use their mobile phone to pay for products and services in a secure cloud platform. This is great for street vendors or anyone who sells door-to-door.
You don’t need to use all of these methods, but you may want to consider using a combination of these, depending on your business.
Question: How much of your business is conducted online?
Note: This post was last updated on May 5, 2017.
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