This is part three of our small business owner expert roundup series
In order to get your small business up and running, you have to consider how your customers will pay you. In today's world, accepting only cash is a pretty risky decision. It's clear that cash is becoming an outdated form of payment.
To keep up with your competitors and be successful, you should focus on accepting a variety of payment types including credit card payments, debit card payments, mobile payments, online payments, and maybe even app payments from Venmo or Apple Pay. Basically, the more payment types you can accept, the more customers you will be able to service.
We asked the experts if they had any tips or advice for small business owners who are looking into payment processing services.
This is what they said.
Think of your customers
“Customers expect you to offer as many different payment options as possible. Your job as a small business owner is to meet the customer where they are and how they want to interact with you. More often than not the place a customer wants to interact with your company is online and the way they want to pay is electronically. This means you have to offer as many ways to purchase from you as possible. The best way to effectively offer as many payment processing services as possible is to establish a strong relationship with your financial institution and communicate to them what your customers value.” — Walt Capell, President and Owner of Workers Compensation Shop.com.
“Make the paying process quick and easy while providing alternative methods of payment. Ensure that the payment processing service incorporates a mobile solution as well.” — V. Michael Santoro, Co-Founder of Vaetas, LLC
“This advice hangs on the use of a content management system (CMS). If using a CMS, you can easily allow your customers a multitude of payment processors. For example my site is a Shopify site and at checkout we have four checkout options (Amazon pay, Apple pay, Shopify/Stripe, and PayPal). Between all of these options every major credit card type and currency form is accepted.” — David Barbour, Co-Founder of Vivo Life Sciences
“First, make it as easy as possible for the customer to pay you (this could vary from business to business). Then, if there is more than one service that offers the same ease of use for the customer, pick the one with the lowest rates for you.” — Lindsey Myers, Founder of Concrete Blonde Consulting
Consider your options
“Lots of them are very similar. You're looking at a 2.9% fee + 30 cents for credit card transactions almost across the board. Build that into your pricing upfront. If you have recurring fees, make sure to get software that auto-invoices for you. That has saved us so much time and money.” — Brandon Anderson, Ceralytics
“Work with a company that understands all of your business operations and can advise on multiple related areas such as PCI compliance, cyber-security, and revenue-enhancing technologies.” — Carl Mazzanti, Co-Founder and Vice President of eMazzanti Technologies
“While the easy route is to sign up with the ‘plug and play’ apps, it's crucial to look at all processing platforms and how they translate into dollars for you. For higher cost transactions, for example, traditional point of sale services may serve you better. As with everything in business, time spent researching is never wasted time.” — Denise Stern, CEO of Let Mommy Sleep
“There are several options available, and free! Even if you have good credit and can get a standard merchant account, the extra added expense is not necessary up front. Wait until you are processing heavy loads of transactions. I once thought PayPal was not a professional looking option to my clients, but soon came to realize that they are widely accepted with little disparagement. It allows those clients that don't have traditional sources of credit and banking available to them (as well as those keeping their spending off the grid) to become customers at ease. Stripe and Square have their place as well in online and offline purchases. Stripe works well integrating with websites and other back-end applications, whereas Square seems to be maintaining offline businesses, from the crafter selling at markets and mall carts to larger retail locations. It retains its edge against PayPal, with robust integrations and portals and a variety of new services. I have PayPal, Square, and Stripe, specifically for the reasons above, and none of them is costing me more than the other. I like the fact that I can have all three and it doesn't negatively impact my accounting operations.” — Karen Eason, Owner of KE2SUCCESS
“Honestly, I’ve been through three and still don’t love the solution I have now. Stay open-minded to different ways to process things. Try not to get frustrated, and when you have issues, be honest with your clients! So many of my clients use their own payment processing and I don’t know too many people who say they LOVE their processor. I use Stripe now and it works.” — Emily Rowe, Chief Executive Sensei of Social Sensei
“Look for ways to reduce your payment cycle in order to improve your cash flow. We adopted a digital payment system early on, which reduced our payment cycle from weeks to days. Our average time between invoicing and getting paid is now between 3-4 days!” — Gil Gildner, Co-Founder of Discosloth
Think of your business type
“Depending on the type of business you have, you should make sure to have the right sort of payment gateway. For example, if you have an online store you need to make sure you can process cards on your website. When you batch out your daily sales, the funds should be received next day into your account, so you don’t lag on cash flow. Also, you should work with a processor who can give a clear breakdown of interchange pricing and set fees. Many times, someone will offer free equipment, but it comes with strings like a long-term contract. Be wary of this; make sure you’re entering into 1-year contracts and you own your equipment outright.” — Jared Weitz, CEO and Founder of United Capital Source Inc.
“Small business owners looking into payment processing services should always gravitate towards payment processing companies that specialize and focus on small businesses. Additionally, small business owners should look for payment processing that has a simple fee structure, allows you to own your payment processing equipment, and also allows you to accept as many types of payment as possible, including new payment options that emerge as technology changes.” — Jhonn Thomassen, Owner of Marine Park Coffee
Know what to avoid and ask for help if needed
“Do not tie yourself up to long-term contracts with monthly fees. Some expect a three-year contract and you have to pay even if you close the business. Look into Paypal and Squareup for the least expensive ways to do payment processing. They are dependable and no long-term contracts.” — Jess Perna, Owner of JessPerna.com
“It can be a difficult task to find a payment processing service. Ask other small business owners what service they use and why they like it, as well as the downfalls.” — Jen Teague, Owner of Jen Teague, LLC
Consider fees and money
“Look at all the fees and weigh them against the impacts on revenue and cash flow. I say it this way because it isn’t as simple as going for the least expensive service. You want to also receive the revenue as fast as possible (cash flow is so important). Further, you want a payment system that will generate new revenue by allowing people to pay and make purchases who may not if you were using a more constrained system or stayed with cash only.” — Gary Romano, President and CEO of Civitas Strategies, LLC
"Be prepared to wait for your money. A client can deliver, but depending on which processing system you use, it can take days to a week to actually be able to use that money. We have found that the more it costs, the faster we get access to the money, but the lower the monthly cost, the longer it takes to process. So with Quickbooks, we paid less, but it took longer to get access to the funds. Credit card payments are great, but you pay to be able to use them. Know your system and know the pitfalls and it will make your life easier.” — Kayla Flam, COO of Social Snacks
Think of innovation
“Pick one that is staying on top of their development cycle. I've seen too many that choose a processor that gets behind on the innovation curve, and they just stagnate because they can't afford to keep up.” — Stephen Alred, KnowCap IO