The whole purpose of technology is to make things simpler. OK, so postgraduate philosophy students might balk at that sweeping generalization, but as four-word definitions go, it is close to the point. However, small business owners are often left questioning whether it always succeeds in its objectives. Let’s take payment processing as a case in point.
50 years ago, for the average business owner, the process of getting paid was quite straightforward. For B2C business cash was king, while B2B transactions were most likely to involve writing checks to various suppliers the end of each week or month. Today, cash and checks are still around, but are far from the first choice. Only five percent of Americans use cash for all purchases and most people use it for “very few.” And this is from a country that is still quite firmly attached to cash compared with Western Europe and Australia.
More options than ever
21st-century people demand choice. Just look at the range of drinks available in a coffee shop, or cast your eye over the options list for even a modest new car. People also want a choice when it comes to their payment method. This holds as true for e-commerce purchases as it does for buying something in a traditional store, arguably even more so. Let’s look at the options from the perspective of a small business that sells B2C both face-to-face and online.
Credit and debit cards are the go-to choice
Most people make their purchases using a card of some sort. Visa and Mastercard are the go-to options, and if you don’t accept them as a minimum, your business will go nowhere. Even traditionally cash-oriented physical points of sale like cafés and bars are now expected to take mobile or card payments.
Ostensibly, there is little difference from the vendor’s perspective whether the buyer uses a credit or debit card. The payment gateway or EPOS system communicates with the bank or credit company, and usually, the transaction goes through in a matter of seconds.
Dig a little deeper and there are pros and cons. Credit cards generally charge higher rates to vendors. But they also provide more protection against delinquent purchasers. This is why some car rental companies insist on a credit card for security deposits.
It is worth noting that outside the USA, many vendors opt not to accept AmEx due to significantly higher processing fees than Visa or Mastercard.
More customers are choosing crypto
Even five years ago, the average small business would not have considered accepting crypto as there just wasn’t the demand. That is now changing and adoption is increasing at a CAGR of about 18 percent. In real money terms, that means what was a $1 billion market in 2021 will be a $5 billion market in 2031.
This growth is brought about by several factors including improved consumer knowledge and also the introduction of stablecoins like Tether, which drastically reduce the volatility risk. Accepting crypto payments is less of a headache than you might think as long as you don’t try to do it all yourself.
If you work in partnership with a payment gateway there is no hassle involved. Just be sure to use one that includes USDT payments and that does not levy massive charges if it is not used. UniPayment, is an example that checks both boxes and is popular among small businesses.
Digital wallet payments
The other payment method you need to consider is via a digital wallet. PayPal is the most obvious, but others are popping up such as Venmo ad Payoneer. PayPal is so ubiquitous online now that it really seems foolish not to, as the potential from additional sales will more than makeup for any hassle factor and the merchant fees, which run between two and 3.5 percent depending on the type of transaction.