Selling Online - What to consider when taking payments

Selling Online - What to consider when taking payments

The ability to sell your goods or services online as an individual or small business is absolutely essential. If you don't have a website where people can place orders without you needing to manually process it for them you're increasing the amount of money that making a sale costs you and reducing the profit you get from your sales. Your time is quite literally money so with that in mind, what are some of the most popular payment options if you choose to sell online?

1) Credit/ Debit Card payments. One of the easiest payment methods to take is a credit/ debit card, almost everyone's got one and there are numerous payment providers you can use to process these payments for you. But be careful, if you take credit/ debit card payments the number one thing you need to be aware of is that the payment data you're processing is done in a safe and secure manner. Taking payment on an insecure site which can be open to cross site-scripting, data interception and more means your customer data is at risk. Losing customer payment data not only is a terrible customer experience and one that's unlikely to get you repeat custom, it also opens you up to very large fines under GDPR. Another reason customers like credit/ debit cards is the protections that they have on these if there's a dispute with you. Chargebacks and section 75 credit charge refunds can quickly add up in costs to your business as well as build you a bad reputation with your payment provider. Too many of these and you'll find yourself without a provider. The final thing to be wary of around credit/debit card payments are fees. You'll almost always be charged transaction fees that are made up of a % (usually around 2%) of the cost price of your product and a set amount from the payment provider. On low value transactions in particular or regularly reoccurring subscriptions these could add up to more than you're expecting. 

2) Bank Transfers. Almost as easy as credit/ debit card payments bank transfers are getting easier all the time. With the ability to pay people even from just a telephone number combined with new name authentication procedures from banks these can be a very quick and secure method of payment. Plus you won't get charged a transaction fee so you walk away with more of the end price of the sale than you might for a credit/debit card. On the negative side of this bank transfers often add back in a manual step to order processing where because there's no automatic link between the goods ordered and the payment you'll need to check yourself that you've been paid the correct amount for the goods before shipping. On top of which if you do a very high volume of sales you'll need to ensure you have a robust order reference system that allows you to check against payments received or you might soon find it impossible to verify the number of orders you do in the time you have. And finally the number one blocker for bank transfers is one that as a business owner you'll often have no control over, how easily your customers' banks let them transfer money. With some of the new providers e.g. Starling/ Monzo you can often pay without precise bank details but with older banks you'll find customers having to dig out bank account references that are often not as easy to hand.

3) Cash/ Cheques. Selling online doesn't necessarily have to mean taking payments online. Particularly if you hand deliver to your customers it's worth considering taking payment upon delivery. Not only does this give you the sales opportunity to talk your customer through what great new things you might be stocking but it also allows you to build up a relationship to keep them loyal particularly if you're in a highly competitive business area. There's no transaction fees again and no security checks to worry about but be aware that you'll need to be extra organised with your accounts or you might find the entire endeavour gets a bit too much when it's time to submit your tax returns. Being paid by cash also means any required refunds are more difficult and often there's no supporting paperwork if there's a query about cost further downstream. In this time of COVID as well it's also worth noting that simply getting hold of cash can be quite difficult for a number of people so if you're going to start taking it we recommend you also have alternative methods of payment. 

All of the most popular forms of payment have their own advantages and disadvantages. If you're just starting off in your new business we suggest starting with Cash or bank transfers whilst you build your client base and push forwards to the next level,

Here at Small-Beans we're happy to talk you through each and every possible option to ensure your new business has the best chance to make your life the way you wanted it. Drop us a line and book your free phone call with us today