The ease of which small businesses, not just big businesses, can send and receive payments is evolving very fast. One of the companies I work with sends me invoices via Freshbooks and links to paying the invoice through Zipmark a direct bank to bank payment option.
Jay Bhattacharya, CEO, Zipmark shares his thoughts and expertise about small business online payments.
Small and midsized businesses (SMB) are the backbone of an economy in recovery. For businesses to thrive, payments must be made easily. SMBs waiting for customers and clients to pay thousands of dollars in invoices face obvious cash flow concerns, and possible difficulties paying key expenses such as payroll or suppliers. Chasing down invoices and payments is when you have an already stretched team can be one of the biggest pain points facing small business owners today. Since the early days of the Internet boom, new methods for online payment have emerged that are allowing SMBs to get paid easier and faster.
Advantages of Online Payments
In the past, SMBs used credit cards, business loans, and/or lines of credit to keep the business afloat while waiting for payments. However, these funding sources are expensive and often put the owner’s personal credit at risk. Today, faster billing and payment platforms offer better solutions: Business owners no longer need to borrow money and pay high interest rates while customer payments are pending. Another benefit of online payment is that sales income quickly becomes cash flow for a business. The business can now pay staff, vendors, the landlord, utility companies, and other suppliers on time.
Online payment services make it possible for a small business to get paid faster or even immediately after completing a job. These new payment options are suitable for a wide range of businesses including service providers, manufacturers, and real estate firms. There is no longer a need for invoices, billing and waiting 30 days or more for a check to arrive in the mail. Online payments make it possible for a small business owner to concentrate on other aspects of the business such as customer relationships, marketing and/or expansion.
Different Types of Online Payments
The most established online payment service provider is PayPal. You can get paid in a variety of currencies, and can send, receive and transfer money. Your funds are delivered to your PayPal account and you can attach a checking account to transfer the funds or get a special debit card associated with the account. Paypal is extremely useful for many types of businesses who are willing to pay the fees and are able to manage the dual account process. Similar services include Dwolla, Google Checkout, Skrill, Square, and Payoneer. Our system at Zipmark uses a direct bank process that enables immediate digital check payment for certain types of trustworthy businesses.
New mobile technologies are helping small and midsized businesses to get paid using mobile devices. The companies leading the way in mobile payment are PayPal Here, PaySimple, Intuit GoPayment, and PayAnywhere. All use mobile devices including smartphones and tablets, but each has a different fee structure and method of processing payments. Some take photos of credit or debit cards using an iPhone and others require the business owners to plug a credit card reader into a smartphone and swipe the card. The cost of these services ranges from free, up to $36 per month. All services require transaction fees ranging from about 15 cents up to 3.5 percent for debit card and credit card payments. Financial institutions, such as Bank of America and Citibank, are also offering online payment services. Bank of America lets you connect mobile devices to a business checking account to facilitate payments.
As payment technologies continue to evolve, more businesses should be willing to give electronic payments a try. With a growing list of options, the transaction fees are becoming more competitive, so it’s cheaper for small business owners to use. Also, with a variety of payment types, there is no reason to take the old standby of credit cards as the only option available. The added benefits of security and faster execution of transactions are making online payments the solution to an age-old challenge for small businesses – receiving timely payments.