The Evolution of Online Payments Brings More Security and More Players For Small Businesses To Consider

Accepting and making payments online is becoming the norm in business these days. If your business isn’t accepting online transactions in the year 2013 then, frankly, you’re long left in the dust. Thankfully these businesses are few and far between and many small-to-medium companies have embraced the change, particularly since the advent of  services like PayPal., another payment processing service, is “the fastest-growing business payments network in the nation” with 240,000 users and the company recently announced a new method of authentication, which it claims is less invasive for the customer. Instead of requesting authentication on every step, which can be cumbersome, will continually monitor all activity and prompts the user for second factor authentication, if needed, to avoid any possible risks.

“Unlike other basic ‘out of band’ authentication on the market today,’s process is smart and non-invasive,” said Shirley Inscoe, Senior Analyst from Aite Group, an independent research and advisory company for business and technology. “This feature not only protects banks and their small business customers like never before, it also lets business go on without constant, unnecessary interruptions. The Banking Platform is making it easier than ever for banks to better serve their small business customers and for small businesses to finally be able to embrace online banking with full confidence and few hassles.”

David Bakke of financial advice website Money Crashers is an advocate of and a regular user of the service. “One of the major benefits of is that it syncs up nicely with many popular forms of accounting software such as Quicken and Microsoft Money,” he says. “It also offers a quick and easy way to keep all your bills in one place and pay them conveniently.”

The market for online payment methods is now fiercely competitive and showing no signs of letting up, especially with the release of PayPal’s newest app that will allow its users to pay on the go with their credit or debit card or bank account and avail of deals and discounts via the app. Currently PayPal is the most widely platform for online transactions, with 110 million active accounts. PayPal maintains leadership and one of the disadvantages noted by David with is the company’s paid membership, which he describes as “a bit costly, especially if you don’t have a lot of bills to pay.

Speaking of cost, this is one factor that all businesses should consider when looking to add a payment solution to their business, as the costs vary from provider to provider. For instance, will allow you to pay and get paid electronically at $.49 per transaction, but there is also a monthly fee,the minimum solo plan being $24/month. Paypal allows online payments, which transfer from your customer to your paypal account, which you can then withdraw to your bank (notice…a few more steps are involved here). The costs vary, depending on the amount of money transferred each month, but averages at about 2.9% plus $.30 per transaction – so if you receive $500 from a customer it will cost you $14.50 plus $.30 for a total of $14.80.

Relatively new player, Zipmark, is making waves in mobile payments, where customers use their checking accounts to transfer funds to others, without Zipmark holding any money in the cloud. It’s a single step bank-to-bank secure transaction process that integrates with a number of invoicing solutions including Freshbooks, Working Point, Zero and others. The cost per transaction using Zipmark is 1%, with a max $5 charge, no setup or monthly fees involved. So on that same $500 your customer sends, you’ll pay just $5 and the money is directly in your bank account in 24 – 48 hours.

Regardless of what solution you choose, you’ll always want to take a hard look at what the costs and security of each are. Those two factors will play a major part in your small business.

What is your preferred method of online payments? Tell us in the comments section below.

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Jonathan Keane

Jonathan is a freelance writer who writes in the fields of business, tech and entertainment. You’ll find him on Twitter @J_K9

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