Over the past decade, the online payment modes have brought innovative change to the business industry. ‘Online payment’ refers to the money exchanged electronically by using the internet and digital devices without involving cash. The purpose of the service is to make the process of payments easier for customers and companies/enterprises globally from any corner of the world with lesser time. Businesses that were dealing with their customers around the globe and used to wait for payments for a long time, it benefited them the most because it reduces time, hassles and provides improved customer service. Customers can make payments with their credit/debit cards by using their gadgets such as laptops, tablets or smartphones. There are various options available today for online payment services such as Paypal, Stripe, Payza, 2checkout, world pay, Google wallet and many others. But the question is “Are these options made for every kind of business?”
As every business has its own structure and works on a different business model so it depends on the need of activities and services offered by any business to decide upon the type of online option to choose. Below are some of the common options discussed with their pros and cons in order for you to choose the option that works best for your business.
Paypal is the most famous online payment option which carries its history with its name. It allows users to transfer money instantly to anyone by using an email address. The usual transaction completion time is 1 day (however transfers instantly most of the time). With its vast customer base of over 170 million users, it enables the users to shop/purchase online from anywhere around the world. On the drawback side, it should be kept in mind that Paypal has somewhat complicated service fee structure that tends to vary from time to time and over the volume of transactions. Paypal also does not provide data portability, which means once a customer puts their payment data on Paypal and if the merchant account holder wishes to move to another payment option, Paypal won’t give you their credit card data. Paypal also charges its transaction fee over refunded transactions which is often disturbing to small businesses.
Stripe is another popular way of online payment in comparison with Paypal and has spread its roots in 23 countries in the world within a short time. It also allows businesses to integrate its online payment module to their website and receive online payments. Stripe offers better transaction rates (over low to medium volumes) than most of the other online payment businesses and is, therefore, better suited for small businesses. It pays more attention towards security that means when a person puts their credit card data in the form it does not send the actual info to the server but transfers the data in a highly encrypted format. The flip side is it takes relatively more time to pay out. (Approx. 7 days time)
2checkout is also among the alternatives of online payments that allow companies to receive online payments from their customers and at very low setup cost. It also has the capability of localized payment options and quality services by providing shopping cart solutions. On the drawback side, it has limited geographical coverage.
This is the gateway which is supported by Royal Bank of Scotland with very scrutinized and well-defined processes.it deals in multi currencies with customized services. When it comes to the disadvantage it is important to know that it takes time of at least 4 weeks to process with high setup cost.
Benefits of online payment system to Small Business
- The primary benefit that online system gives to the small business is that it helps customers to pay instantly.
- It adds value to the business to provide easy payment mode.
- Secure systems develop trust in customer.
- Recurring payments can be made without going through the complex process of checks and pay orders.
- Prevent customers from the time taking the effort of physically being there in front of the seller and making cash payment.
- As small business can’t afford high set up cost, they can choose among the alternatives that save their cost and provide a quality solution.
In conclusion among the options available, it is important to understand what type of payment system should be selected that is better suited for small business; this requires thorough understanding and wise judgment after analyzing all the options and their pros & cons.