Digital payment methods are now an essential part of business. Whether you operate an e-commerce platform, brick-and-mortar shop, or even offer services, customers and clients often expect to be able to pay digitally. That includes methods like debit and credit, contactless payment services, and even the use of cryptocurrency.
While some methods are more forward looking than others, it's important to have at least some digital payment solutions already implemented. If you are unable to process digital payments now, you are already falling behind.
Debit and credit
Debit and credit are payment methods that consumers take for granted. Many Americans expect the ability to use debit or credit when shopping, electing to leave their cash at home and only carry plastic.
"If we are talking about traditional credit and debit cards, the consequence is simply lost sales. This is a fact," said Phillip Parker, founder of CardPaymentOptions.com. "People prefer to pay with cards and fewer and fewer people are carrying sufficient cash for all of their purchases."
Debit and credit cards tend to come along with modest processing fees, generally around 1 to 3 percent. There is also the risk of experiencing chargebacks, which occur in the event of fraud or a dissatisfied customer. That means businesses can sometimes be on the hook for a transaction they believed was completed.
A business can process credit or debit payments either using a point of sale hardware system or on a digital platform that connects to a smartphone or tablet. [Want to learn more about the point of sale and payment systems? Check out our reviews and best picks.]
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Contactless payment and e-wallets
Contactless payment solutions are a few years old now. Such applications as Apple Pay and Android Pay have been on the market for quite some time, and while more and more merchants have implemented the near-field communication (NFC) technology required to interface with these payment methods, consumer adoption has remained sluggish. That's not to say these solutions aren't used, however, and if you fail to offer the option for contactless payment, you could be missing out on sales.
There is also the option of e-wallets, such as PayPal or Venmo. These solutions allow users to link debit or credit cards to a third-party platform and then send or receive payments. E-wallets are quickly becoming a popular option for payments as well, closing in on credit cards as the top payment option.
"Wallets are suitable for low payments and can be integrated with online websites and payment gateways," said Sandeep Todi, co-founder of Remitr. "The fees for processing are much lower than debit and credit cards, but they can be used only by buyers within the same country."
E-wallets tend to be useful for independent contractors or freelancers who regularly need to send invoices and receive payments from a number of sources. They are also great options for merchants to maintain in the event a customer wants to pay through that source. Their direct connection to a user's banking information makes it easy to quickly and easily deposit the funds into a main account, making them a great pivot point for both sending and receiving payments.
The most forward looking of the bunch, it is not yet an imperative for most businesses to accept cryptocurrency. Today, most people who hold crypto do so as a speculative investment, rather than a true payment method. However, if you work with international clients or in the tech space, it's likely you've received at least one crypto payment before.
Setting up a wallet for cryptocurrency is quick and simple, as is sending and receiving assets such as Bitcoin or Ethereum. The beauty of cryptocurrency is that it can be sent across borders globally with a simple wallet address, which is a length string of letters and numbers unique to your wallet. Once the transaction is confirmed, users can immediately exchange cryptocurrency for any other asset listed on their chosen exchange.
"Cryptocurrency is not yet a mainstream form of payment, but it will be soon," said Serge Beck, CEO of fintech company Optherium Labs. "Reduced fees, increased transaction speeds, security and transparency will all drive adoption in this space, especially as coin values stabilize and new platforms emerge."
The downside to cryptocurrency is that it is not particularly usable at the moment. Because prices of Bitcoin and alt-coins are so volatile, it is not practical to hold onto cryptocurrency as a payment method. Moreover, many businesses have not set up wallets and have no real incentive to do so unless large swaths of customers are clamoring for it. As a result, cyptocurrency is not widely used to purchase products and services.
Securing digital payments
Whatever method of digital payments you choose to accept, it's important to ensure you are transacting over secure networks and you are protecting your customers sensitive financial information. Regularly update all software to patch any security vulnerabilities, as well as use unique, complex passwords that you regularly change.
It's also wise to monitor any third-party payment processors you are working with to ensure they are keeping their security policies up to date. To learn more about cybersecurity best practices, see our small business cybersecurity guide.
Digital payments are evermore a critical component of business. Your customers will increasingly expect you to offer at least one digital payment option, and if you fail to keep up with the times you might find your sales going to your competitors who do. The window for early adoption has already closed for some major digital payment channels, but it's never too late to implement them. And remember, payment methods are constantly evolving, so you'll want to keep an eye on developing payment technologies that could benefit your business.