A Guide to Online Payment Methods

In the aftermath of the pandemic, online retail sales experienced a dramatic jump.

This shift presents a massive opportunity for retail businesses, whether you’re 100% online, purely brick and mortar, or both.  

Consumers who swore that they would never submit payment information online for fear of identity theft are now handing over their details online to get access to products and services.

And it’s not just e-commerce businesses that are enjoying the benefits of the rising tide. Brick and mortar retailers can also grow their bottom lines by accepting payments online or over the phone.

For example, a buyer can potentially order from your business online and have their items delivered via a local courier or available for contactless pickup. Even if concerns over spreading illnesses like Covid-19 disappear entirely, we have now entered into a “new normal” that involves consumers being accustomed to the convenience of online payment processing.

This guide will outline the various options you have for accepting mobile payments and processing online transactions.

A Brief Overview of Online Payments

Accepting forms of payment other than cash is nothing new, but you might not have put too much thought into the logistics. With an increase in revenue of 32.4%, online payments now make up close to 20% of all retail spending. Whether your customer is using a physical credit or debit card or using a service like Apple Pay or PayPal, a retailer needs to have a way to collect the payment. This is where payment processors come in. They act as a payment gateway to accept and process payments.

Between you, the merchant, and the cardholder, other players are involved that facilitate the transaction. These parties include an acquiring bank that processes payments and an issuing bank that extends credit to cardholders to make payments. Like ISOs (independent sales organizations), other organizations could also provide merchant services for e-commerce businesses and retailers.

A lot is happening on the backend of these processes. Still, the good news is that online payment processing systems are designed to work seamlessly, allowing you to accept various payment methods without needing to install a ton of equipment or have someone on staff managing the nitty-gritty details.

Popular Online Payment Methods

The number of online payment methods continues to expand, and keeping up with consumer preferences is essential to maximize your conversion rates.

At a minimum, consider accepting these popular payment methods:

  • Credit cards: You’re likely already familiar with accepting credit cards physically, but you can also accept them online, over the phone, and remotely off-site. For example, you could bring a mobile terminal with you to collect payments at a customer’s location or an event.
    • Debit cards also fall within the credit card category. They work much the same way as swiping or entering credit card information, except, instead of a customer paying the credit card company at the end of the billing cycle, a debit card transaction is deducted from the customer’s bank account within a couple of business days.
  • Digital wallets: A digital wallet stores different accounts that a buyer has, usually on a smartphone or other mobile device. Popular services include Google Pay, Apple Pay, and Samsung Pay.
    • For added security, buyers can limit their digital wallets to holding only set amounts of currency, which can be “topped up” when needed.
  • Bank transfers: A bank transfer, also called a payment or wire transfer, moves money directly from a customer’s bank account to yours. Businesses that engage in service-based and international transactions commonly use bank transfers. They can be swift, resulting in funds reaching your account within minutes, and they boast a high level of security.
    • Further, third parties can’t return it once the money is sent, which isn’t true with a check or credit card.
  • Buy now, pay later: The option to enjoy a purchase now and pay for it weeks (sometimes months) later is gaining appeal. Companies offering these services continue to crop up, and it can be hard to stay on top of which ones you should add as payment options. We recommend Afterpay, Affirm, Klarna, and Zip.
    • Afterpay, in particular, runs regular campaigns where they promote partners on their ever-growing social media accounts. From a business standpoint, this can give you a boost in brand awareness, revenue, and even SEO.

A mother and daughter high-five while shopping online.

Online Payment Processing Best Practices

To maximize your online revenue potential and create a delightful customer experience, we recommend following these online payment processing best practices:

Offer a Streamlined Checkout Experience

It’s estimated that 87% of consumers abandon an online shopping cart if the checkout process is too long or overly complicated. Ensure that your checkout process has as few steps as possible while maintaining brand consistency across each screen a buyer encounters.

Prioritize Security

Data breaches are becoming increasingly common, and the stakes are high for businesses to protect their customers’ information. Ensure that any payment provider you’re working with has prioritized security.

Compare Fees

There’s no uniform standard charge for the myriad of payment methods available. Different credit cards charge varying fees, and there’s also variation among methods like Apple Pay, Stripe, PayPal, etc. In addition to these fees, you’ll also want to consider other costs involved in online payment processing, such as hardware and software and technical integration with your existing business infrastructure.

Have a Fraud Detection System

If someone fraudulently makes a purchase (or several purchases), you could be out a lot of money. This can be particularly devastating if you’re a small business. Companies that have newly gone online can be more susceptible to fraud because they don’t know what to look for. They see a slew of orders come in, and they begin to celebrate without seeing telltale signs of fraud such as different shipping and billing addresses, mismatched IP addresses, and substantial charges.

When a customer files a chargeback, you might have already shipped the items, putting you in a challenging position financially. The best course of action is to have automated fraud detection in place so that you can evaluate any suspicious transactions.

Online Payment Processing for Less

Online payment processing is a must, not just for e-commerce businesses but also for physical retailers. At Accredited Interchange, our team of payment industry experts is committed to providing businesses with customized design solutions tailed to their unique needs. Over the years, our customers have achieved massive cost savings compared to our competitors while enjoying the personalized service that comes standard with Accredited Interchange.