Collecting money from customers is a key function in any business, and the more automated this process is, the better. The payment function varies by type of business, but more and more, there are online options available for collecting money over the internet. Here are few tips on what that looks like.
Your Website
The perfect place to collect money from a customer is your website. Or is it? Actually, it’s not, but wait, let me explain first.
A typical website is not as secure as it needs to be to collect credit card information from customers. You almost always need an additional app for that. But what you can do on the website is add a link (usually behind a button) or an entire webpage (a sales or product page) to your site that seamlessly takes the customer to a secure site – a shopping cart with a payment gateway — to enter credit card details.
So, the only way your website gets involved is that it has the link or button that provides the bridge to the payment site.
The Payment App
The payment system needs to handle three functions:
In the first step, you need shopping cart software to handle the function. Common retail solutions include Shopify, WooCommerce, and Magento, to name a few. But these don’t, by themselves, get you paid. They just process the transaction in a secure environment.
The second step requires a payment gateway application. The most common stand-alone gateway is Authorize.net, and you typically would connect this to your shopping cart. The third step is handled by your merchant account, and sometimes, a separate processor is involved too. From your merchant account, which is connected to your gateway, you typically get a reconciliation of the daily settlements that hit your bank account. You would also handle customer complaints and disputes with them.
In recent years, the second and third steps have often been combined into the same vendor. Companies like PayPal, Stripe, and Square act as the gateway, the processor and the merchant account, all in one, which is really nice, and so much more streamlined than a decade earlier.
Some vendors go a step further and combine all three functions into one vendor. PayPal is the quintessential example. Together, WooCommerce and WooCommerce Payments team up to provide an all-in-one solution.
Getting Paid in Service Businesses
A shopping cart is standard for online retail businesses, but what about service businesses? Service businesses that package their services and charge in advance can use a shopping cart just like retail.
If the service business bills their customers after the fact, then the payment setup is connected to invoice distribution instead of a shopping cart. In this case, you would need to find out which solutions work with your specific billing system, or if there is an add-on you can use to extend your billing system’s capabilities. For example, QuickBooks users can sign up for QuickBooks payments, and Xero users can use Stripe.
When the invoice is sent to the customer, it will include a payment link the customer can use to pay. These service business payment solutions are fairly industry-specific; for example, you might have noticed medical and dental offices use different solutions than personal care service businesses.
Different Choices
When you are selecting a payment system for your business, some people simply look at the credit card fees to make a decision. While that’s important, don’t stop there. Here are some final tips on what to look for and look out for:
Adding an online payment system is smart business and can save a ton of accounting time. Just make sure to choose the best payment system for your specific needs.
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