5 Things You Should Know About Accepting Electronic Payments

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Starting a business is difficult, but getting paid for your efforts should not be. Electronic payments can significantly improve this process by making it easier for your customers to pay you online. If you have questions about how to set up your business to accept electronic payments through online payment gateway, these five key factors will help you understand the basics and plan your next steps.

What are Electronic Payments?
To put it simply, electronic payments are digital transactions that take place without the use of physical checks or cash. Credit cards, debit cards, and ACH options such as eChecks are all examples of electronic payments.

1. Electronic Payment Methods
It can be difficult for a company to transition their customer base from legacy payments (like mailed invoices and paper checks) to electronic payments. Customers' payments can be collected using a variety of methods in most electronic payment systems. Many solutions support both one-time and recurring payments, as well as invoicing and online payment forms that can be linked to your website. Every business wants to be paid as ...
... soon as possible, and doing so frequently entails catering to a customer's preferences.
Invoices, for example, give your customers control over when they make a payment, whereas recurring billing debits the customer's account or card automatically, with no action required on their part. Consider your customers' preferences (control versus automation) in relation to the most effective method for your company. Also, take advantage of the variety of payment options provided by your payment system. When it comes to payment methods, careful planning will allow you to accommodate all of your customers.

2. Credit Card Processing vs. ACH Processing
Credit card and ACH (Automated Clearing House) transactions are the most common types of electronic payments available to small businesses. Most payment systems support both, and many businesses value the ability to provide more options to their customers.
When comparing credit card and ACH payments, there are numerous factors to consider.
What is the most straightforward payment method for your customer? Many of the other factors may be overruled by this.
How much is the payment? Credit card processing fees can become significantly higher as transaction amounts increase.
Will the payment be collected once, or will it be recurring? Credit cards have expiration dates; bank accounts do not.
These are just a few factors to consider when deciding between credit card and ACH electronic payments.

3. Funding Time for Electronic Payments
Another aspect of electronic payments to think about is funding time (the period of time during which the payment is processed). The standard funding time ranges from two to five days, depending on a variety of factors such as the type of payment (ACH or credit card), the processor, and the solution provider (a software provider, a financial institution, etc.).
The period between when a payment is entered through the best online payment gateway and when the funds from that payment are deposited into your bank account is known as funding time. Planning ahead of time can help you determine when to enter payments and what type of payment form to request.
Example: Say you have a large payment coming in from a client.
If you accept credit card payments, your transaction fee may be higher; however, the finding time will most likely be short.
Accepting ACH payments will likely result in a lower fee, but funding may take a little longer.
What is more important to your company? When you get paid, or when you pay the transaction fee?

4. Authorizing Electronic Payments
It is critical to obtain proper authorization for electronic transactions. Transaction authorizations are most commonly used during the review of specific payments. They are sometimes part of a random audit, or they are part of a dispute between a business, its customer, and their respective banking institutions or card issuers.

There are several ways to obtain authorization:

* A record containing customer and payment information.
** A recording of a phone call between your company and a customer
*** An electronic record of a payment made on a website (including the terms of sale)

Your company should have a vested interest in obtaining proper authorization for all payments, not only to protect itself during reviews and disputes, but also to document your customers' payments and protect itself from fraudulent activity.

5. Marketing Electronic Payments to Your Customers
When you decide to offer electronic payment methods, notify your customers of your new payment options.
Communication Method: The simplest way to inform your customers is to use the most effective form of communication with your specific customers. This may seem obvious, but businesses are occasionally tempted to include an insert in an invoice or mail a flyer. If these are not the most effective ways for you to communicate with your customers on a daily basis, then use the channels that are most effective for your company.
Communicate Value: Include the benefits of the new options, such as convenience and security, for customers who haven't been begging for the change. Don't be afraid to state unequivocally that this will benefit you. Small business customers prefer to support smaller organisations. Inform them that this change will make your life easier, and they will most likely be willing to assist.
There is a lot to learn and consider when accepting electronic payments for the first time, but if you evaluate the most important aspects right away, you'll be a few big steps closer to getting paid faster and providing better service to your customers.