What’s New in Payment Processing?
Cash may still be king, but its grip on the throne is slipping. As many as 80% of consumers now prefer to pay with their debit or credit cards over cash for payments, according to Fundera. And then there are electronic wallets like Apple Pay or Venmo. As digital natives grow into spenders, they’re turning to their phones for seamless digital payment experiences, and according to data presented by Finaria, the digital payments industry is predicted to hit $6.6 trillion in 2021.
In short, when you give your customers electronic and mobile payment processing options, you’re giving them what they want. If, however, you’re running an outdated system, you’re likely leaving customers frustrated.
So how do you find the system that keeps your customers coming back, boosts your efficiency and makes you money instead of losing it? Check out these guidelines for finding the payment processing setup that’s right for you.
Get familiar with the latest payment processing options
It’s not always easy to keep track of the latest in payment processing systems. Here’s a basic rundown of some of the types of payment options and the lingo you’ll see when finding options that suit your business:
- Payment processor or payment service provider. The system that processes payment between all parties involved—it verifies your customer’s form of payment and transfers it from their bank to yours.
- Gateway processors. This term is sometimes used interchangeably with payment processor, but they’re not quite the same. To facilitate transactions, you’ll probably use payment gateway processors like PayPal, BlueSnap, Square, Apple Pay, Amazon Pay or Stripe. This technology usually connects with card companies such as Visa and American Express to enable online payment transactions.
- NFC payments. Near Field Communication (NFC) uses wireless connectivity to transfer data from a payment method like mobile wallets and contactless cards to point-of-sale systems able to read that card. Apple Pay is a popular NFC method of payment.
Customers want contactless, mobile options more than ever
The pandemic has accelerated the rise of mobile and contactless payments.
If you’re operating a brick-and-mortar location, remember that customers are eager for contactless, automated transactions to avoid exchanging cash or cards—and germs. The U.S. had been behind the rest of the world in contactless payment, but Mastercard alone reported a 40% jump in them post-pandemic, an upward trend experts expect to continue across all card types. If you haven’t yet invested in a system that allows for NFC or mobile payments, now is the time.
The latest payment processing systems can upgrade your business
You may not realize all the different ways that upgrading a payment system can benefit you and your bottom line. Here are several to consider:
- Faster service. Old hardware runs on old speeds. By linking an upgraded payment system to the fastest network available, you can slash the time both your in-person and online customers have to wait to pay.
- Real-time payment. Do you provide a service one day, then wait days or weeks to bill your customers? It’s become an outdated way of doing business and has tons of downfalls. It’s an administrative headache to invoice and track down payment, it opens the door for sneaky customers to disappear without paying and it’s tougher to balance your budget. Don’t rely on the old ways. It’s easier and more affordable than ever to install credit card readers or accept mobile payments, so your customers can pay on the spot.
- Better tips. Contactless payment options not only offer the option for customers to tip using their cards, but also allow you to set options to help them leave the tip you and your employees deserve. In fact, Square found that people using the latest NFC payment technology tipped better than other customers.
- Improved e-commerce experiences. Busy online shoppers want convenience and to know they can trust you to securely process and store their financial information. New payment processing systems safely store consumer data, which helps build loyalty and drive sales by allowing customers convenient buying.
- Increased checkout conversion rate. About 18% of online shoppers who abandon their carts do so because the checkout process was too long or complicated, according to the Baymard Institute. Another 17% walk away if they don’t trust the site with their credit card info, and 7% because there weren’t desirable payment options. Get rid of your clunky, multipage buying processes and avoid giving your customers the chance to abandon ship.
- More done for you. Old credit card terminals simply accepted payments. Now, intelligent, streamlined systems enhance your business by linking to your online record-keeping tools, allow you to easily create rewards programs or promotions that drive sales, and store customer information to better manage reconciliation, even when customers didn’t keep a paper receipt.
Satisfy customers with upgraded payment options
Ask your customers where they would like to see you offer payment options. Maybe your business offers in-home services like plumbing or landscaping, and your younger customers don’t have checks. You could look into a system like Square that offers you a small card reader to plug into your smartphone, allowing them to pay by card as soon as you’ve done the job.
Do you have a salon where people can only tip in cash? A store plagued by long lines? A recently launched mobile app where you want to enable more in-app purchases? An e-commerce site with an abysmal conversion rate? All of these situations can benefit from upgraded, flexible payment systems.
Choose the provider that’s right for you
Once you’ve narrowed down what your customers need, ask yourself what you want to prioritize in a provider. Topping your list should be data security. Check a company’s track record on data breaches, how they were handled and their current methods of protection. Only choose a company that meets and maintains the Payment Card Industry Data Security Standard (PCI DSS).
One of the best security features to look for right now is the use of artificial intelligence to prevent fraud. Only AI can keep up with the complexities of cybercrime, detecting problems before they happen and ensuring that your provider (not you!) is the one worrying about security.
When you shop around, check in first with your current provider. They may have upgrade or add-on options you didn’t know about. If you use accounting software like QuickBooks, you can also check to see if you can include their payment processing services in your package.
If you’re starting fresh, you may find yourself drawn to household names like Apple, Google, Chase, Mastercard and Amazon, all of which offer mobile wallet payment systems. This can be a smart move—institutions like these have the resources to protect data, are recognized by consumers and set the standards for the latest and greatest payment features you and your customers will grow to love.
That said, these can also come with higher fees, as well as fewer options for customization. If you’re just starting out or don’t handle huge volume, you might find that companies like Square, Payment Depot, Veem, Clover or Stripe are more within your budget, have more options for personalization and have tech support and features more catered toward small business owners.
Whatever you decide is right for you, a fresh payment system could be the fresh start you need to take your business to the next level.
Product features may have changed and are subject to change.