Scaling Your Business

How to Accept Online Payments to Scale Faster and Smarter

In today’s digital-first world, people are used to doing everything online; they share their lives online, shop online, and pay bills online. So, if you want your business to stay competitive, you need to give them the opportunity to pay their invoices online as well.

When you are able to collect payments online, your payment process is smoother, faster, and more convenient—both for you and your customer.

Pros and Cons of Accepting Online Payments

Before jumping into how to accept online payments, let’s look at what might be stopping you. You’re probably familiar with all the reasons you’d want to accept payments online. Namely, they’re convenient for your clients and for you.

Automating the process of sending invoices and collecting online payments takes a lot of work off your plate and makes it easier for you to scale your business. Plus, you get paid faster. Digital payments clear quickly and eliminate any waiting around for checks.

Cons of Accepting Payments Online

So, why wouldn’t you want to accept payments online? Here are a few potential downsides:

Technical issues. Like any piece of technology, payment processing software experiences bugs from time to time. Depending on the technical issue, it could prevent you from being able to accept payments temporarily. Bugs are often resolved quickly, but it could cause a few headaches in the meantime.

Potential for fraud. Because you’re not physically seeing the payment method, there is a chance that customers could use fraudulent information to pay their invoice (for example, a stolen credit card). There are also data breaches where customer information—like credit card numbers—have been accessed.

Fees. Some online payment services charge fees for processing payments. Depending on which payment processor you go with, it may be more expensive to process payments online than, say, cashing a paper check.

As online payments become more ubiquitous and technology becomes more sophisticated, these issues are becoming less of a concern. And, more and more, clients expect the ability to pay online.

What Do You Need in Order to Accept Online Payments?

Once you’ve decided to accept payments online, you’ll need to set up a payment service provider. You’ll need to decide on types of payments you’ll accept and how to collect them. Finally, you’ll need to communicate all this with your customers.

Step 1: Set Up a Payment Service Provider

To accept payments online easily, your payment service provider should provide all of the following:

The payment gateway is the communication link between your client or customer, credit card company or bank, and your merchant account. It provides the customer-facing technology to accept the payments and ensures that all data is encrypted and secure and transactions are authentic. Read more about how payment gateways work.

The payment processor integrates with your website and/or invoice system to process online payments. It manages credit card and debit card transactions and moves the funds from the customer’s account to your account. Some of the most popular payment processors include Square and PayPal.

Your merchant account holds the funds from your credit card or debit card payments. In most cases, you need it to get paid online. You can secure a merchant account directly through your bank, but when you sign up for payment platforms like Stripe, merchant accounts are part of the package.

Step 2: Decide the Types of Payments You’ll Accept

In order to evaluate the right merchant account and payment processor for your business, you have to know which types of payments you want to accept. That includes credit cards, digital wallets, PayPal.

Step 3: Decide How You Will Accept Payments

Depending on your business model, you may want to offer your clients more than way to pay. Common payment methods include:
Invoice payments. Your clients can pay via a link embedded on the digital invoice you send them.
Recurring payments. You automatically charge clients for recurring bills or subscriptions, without the need to send an invoice that requires immediate attention.
Mobile payments. Your clients pay directly from a phone or tablet. Mobile payments are great if a customer wants to pay in person—but in a contactless way.
Online shopping carts and order forms. This is the equivalent of brick-and-mortar transactions online.

Step 4: Let Your Customers Know

Once you’ve got your online payment system up and running, you’ll need to inform customers of their new options. Some ideas to get the word out include:

• Sending an email blast to all clients
• Adding a message/instructions on future invoices
• Adding a “payment options” section to your website or FAQ
• Creating a dedicated customer service email (such as payments@yourcompany.com) can also be useful to answer any questions from your clients.

3 Major Types of Online Payments

There are a number of different ways for you to get paid online—and some are more convenient than others, both for you and your clients. Here are a few of the different ways to process payments online:

Electronic Funds Transfer or Bank Transfer

Electronic Funds Transfer—also known as bank transfers—is a process that allows people (and businesses) to send and receive money online. More specifically, ETFs allow customers to send money electronically to a specific recipient—in this case, your business.

ETFs have different names depending on where you are in the world. In the United States, there are Automated Clearing House (ACH) payments, where customers authorize businesses to pull funds directly from their accounts. In Canada, the equivalent is Pre-Authorized Debits (PAD). While in the European Union, it’s called Single Euro Payments Area (SEPA). Wire transfers and direct deposits also qualify as EFTs.

Whatever the name, EFTs all work the same—and they’re a convenient, easy way for customers to authorize online payments and for you to get paid. There are, however, a couple of caveats:

1. Clients will have to share key information with the bank or payment provider, including their bank account number—which may make them nervous.
2. Some EFTs also come with fees for you or your customer.

Debit Card and Credit Card Payments

Credit card is the most popular way to pay online in the U.S., followed closely by debit card payments. A few reasons it makes sense to accept credit card payments:

• It’s a familiar way to pay
• It’s easy to set up
• It’s convenient for you and your clients: You can accept payments as soon as they’re made and paying takes just a few clicks for your clients

There are a variety of services that allow you to easily accept credit and debit payments online, including:

PayPal. Arguably the popular payment out there, PayPal allows you to easily process credit and debit transactions from your customers—and because so many people already use PayPal, chances are, your customers will feel totally comfortable navigating the platform.

Stripe. Another popular choice for businesses, Stripe offers both online and in-person credit and debit card payment processing—and many users praise the platform for seamlessly integrating with their other software solutions.

Square. If you need to process credit card payments not only online, but on the go, Square—which offers hardware that transforms your smartphone into hardware that can easily and quickly process credit and debit transactions.

Shopify. If you run an e-commerce operation and process sales through your website. Shopify offers a host of payment processing features that make it easy to accept credit cards from your customers.

When you use these options, as a merchant, you’ll generally have to pay fees on transactions, but the added convenience—for you and your customers—should outweigh the costs.

Mobile Payments and Digital Wallets

Mobile payment apps can be linked to all major credits and debit cards (and sometimes bank accounts) to allow you to pay without a credit card. Mobile payments might include:

• Digital wallets like Apple Pay or Google Pay that can be used on point-of-sale devices or online.
• Peer-to-Peer (P2P) apps like Venmo and PayPal, that allow you to send and receive money informally. (No merchant account is needed for these payments.)
• SMS payments allow you to be paid via text, using a text-to-pay service.

3 Things to Consider When Choosing Online Payment Options For Your Business

Clearly, there are a lot of different ways to accept online payments from your customers. So how, exactly, do you choose which is the right fit for you?
There are a number of factors you’ll need to consider when choosing an online payment gateway, including:

1. What types of payments do you need to accept? Before you can choose which online payment option is the right fit for your business, it’s important to consider what type of payments you’re going to need to process. Do you want to offer mobile payment options to your customers? Do you need an online shopping cart? Do you want to be able to send invoices via email? Take stock of what you need from your online payment processing service—and choose accordingly.
2. What are your customers’ payment preferences? You may have your own ideas about how you want your customers to pay you—but ultimately, it’s important to consider how your customers want to pay you. Ask your customers what online payment options they’d like to see from your business—and then choose a payment gateway that offers those options.
3. How much do you want to spend on payment processing? Some payment gateways have higher fees than others. So before you choose a gateway, it’s important to consider the fees and how they will impact your budget.

At FreshBooks, we make it easy, fast, and convenient to accept payments online. With FreshBooks, you can:

• Accept online credit card payments in 45+ countries—including the United States, Canada, United Kingdom, Europe, Australia, New Zealand, South Africa, India, and Singapore
• Accept PayPal payments in ~25 currencies
• Accept bank transfers (available in the US, Canada, UK, and European Union)
• Accept mobile online payments via Android and iOS (including via Apple Pay)
• Set up Advanced Payments (virtual terminal), which help you get paid faster
• Generate Checkout Links, so your clients can pay online directly through a unique link—no invoice necessary

FreshBooks also seamlessly integrates with a variety of payment service providers, including Shopify, Square, WooCommerce, Stripe, and PayPal—making the process simple and streamlined, no matter what platform you use to process payments.

Want to learn more about how FreshBooks can simplify the process of accepting online payments? Sign up for a free trial.

Position Yourself for Growth With Online Payments

Accepting payments online is a win for you and for your clients—and is a must if you want to stay competitive in today’s business landscape.

Now that you understand how to accept payments online, there’s just one thing left to do: Get out there and set yourself up to start accepting payments online so you can scale your business faster and more efficiently.