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6 digital payment types your small business needs to succeed

Thursday, November 03, 2022

Innovation in fintech (financial technology) is constant, not to mention complex.

We get it. Keeping up with payments trends alone can be challenging. Sifting through the hype to separate the must-have functionality you need from flashy, nice-to-have features can be even more daunting.

It's time to put those worries to rest. In this post, we'll bring it all into focus for you. Read on to learn about what's driving the relentless evolution of payments technology and the six payment types your small business can't succeed without.

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The pandemic changed digital payments forever

So what ultimately drove payments innovation? In a word: COVID.

Here's a brief history: In 2020, traditional brick-and-mortar (B&M) businesses that relied primarily on in-person traffic and card-present transactions were forced to embrace ecommerce practically overnight. Digital payments technology — and the convenience that comes with it — created an army of online shoppers that helped businesses survive. But it also set an expectation: that all businesses operate online, with the ability to digitally serve their customers and take payments with ease.

Two years later, that expectation hasn't changed. In fact, it's grown. With the partial re-opening of physical locations, customers now demand omnichannel capabilities that blend online and in-person service perfectly.

In other words, consumers want a frictionless commerce experience whether they're at your checkout counter or on their couch.

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Business owners are embracing digital payment methods

While meeting that demand may have felt overwhelming at first, you've likely since joined the majority of small businesses in beginning to embrace progress as eagerly as your customers have. And it's no wonder. Ensuring you're visible online gives you access to a virtually limitless marketplace and plenty of cash. According to Transaction Trends, the value of worldwide payments will likely reach $250 trillion within the next five years.

Expanding the payments methods you accept is the best place to start making inroads. By the end of this year, 53% of small businesses are already planning to. 60% say they plan to add digital wallets, while 51% will adopt digital invoicing.

That means if you haven't already, it's time to establish core payments functionality. So what is that exactly? We define it as must-have digital payments technology that equips you to:

  • Accept all of the ways your customers want to pay
  • Deliver a flawless, omnichannel customer experience
  • Get paid faster by streamlining processes
  • Rely on a robust tech stack that positions you well for the future
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The 6 digital payments you need the ability to accept now

Get your business up and running with solutions that make it easy to take the following payment types.

1. All major credit and debit cards

This category includes Visa, Mastercard, American Express and Discover cards.

If your business has a physical location, you need hardware that allows customers to tap their cards and pay via contactless payments, like NFC, or insert EMV chip cards into a card reader. Since physical locations aren't always necessarily B&M shops, this type of capability can look like a slimmed down version of a robust point of sale (POS) system or a mobile card reader. And if your business is on the literal move — like a food truck or pop-up shop — that doesn't mean you have to forego the ability to easily accept credit cards.

Not only is this tech convenient for customers, but it also helps your business comply with PCI standards. If you fail to achieve compliance, your business could be at risk of breaching its merchant agreement, losing the ability to accept credit cards or becoming a victim of a billion-dollar grift.

According to CardRates.com and CNBC, businesses worldwide are projected to lose $34 billion to credit card fraud over the next year. If trends hold steady, US businesses alone will shoulder roughly a third of that burden ($11.3 billion), making America the most credit card fraud-prone country in the world. All the more reason to rely on tech you can trust.

2. Digital and mobile wallets

Apple Wallet.® Apple Pay.® Samsung Pay.® You know the big-name examples of digital and mobile wallets. And although they function a little differently, we're grouping them together here because they are equally important — and popular among consumers.

According to NerdWallet, four out of five people make purchases using digital wallets or mobile payments apps. And a 2022 trends report revealed that roughly 4.4 billion consumers worldwide will pay with a digital wallet within the next year.

That means that over half (52%) of global ecommerce purchases will be made using a digital wallet. And while the trend isn't as prolific in physical locations, it's still significant. The report also states that 30% of payments made at the POS over the next year will come from a digital wallet.

So whether consumers want to tap their mobile device in-store, or use their digital wallet to make purchases online, it's important to be able to accommodate anyone who wants to pay with a mobile device. Otherwise, you risk losing out on a significant chunk of business.

3. Phone and online

We've covered how it's important for you to offer convenient ways for your customers to pay. We've also talked a lot about digitizing transactions and processes. But what happens when those two things don't connect? What about payment options for those customers who still want to pick up the phone?

Virtual terminal capabilities could be the answer. This technology allows your business to securely accept and process credit and debit card payments without the card being present. Interactive voice response technology also makes it easy for customers to pay by phone without requiring someone to physically take the payment. An automated menu walks callers through what essentially becomes a digital transaction.

Virtual terminals may also be ideal if you don't need a complete POS system, but still want the ability to accept, enter and process payments through a digital device, like a computer or tablet.

4. Links and digital invoicing

Invoicing may be the last thing you think of when it comes to digitizing payments. But it deserves high priority. Relying on manual, paper-based processes drives increased, unnecessary expenses, in terms of both lost time and hard costs.

According to Paystand, it takes 35 days for the average B2B payment cycle to run its course, and almost half of invoices are paid late anyway. Between reviewing, correcting, printing, mailing and reconciling invoices, various industry resources estimate it costs businesses between $12 - $30 to process a single invoice. If you're dealing with invoices regularly, that's no small amount.

But there's good news. Automation can reduce those costs and help you get paid faster, improving your cash flow. Pay links allow you to create and share custom links through almost any channel — text, email, you name it. And digital invoices allow you to send an invoice and request payment with the click of a button, while also creating a documented trail that reduces the ability for payers to say they never received a bill.

5. Checks and ACH

While shoppers writing checks to pay for a retail or grocery haul may sound like ancient history, plenty of businesses still use checks regularly to accept payments from vendors or pay employees.

If you're one of them, and you use tedious processes to manage paper checks, it's time for a change. Consider embracing electronic checks and using ACH transactions to manage transfers between yourself and your vendors, customers and employees.

Not sure what ACH is? It stands for Automated Clearing House, a network used to electronically transfer money between bank accounts. You might know it as “direct deposits” or “direct payments.”

Not only is this a faster, cheaper, more reliable way to move money, but it also makes back-end accounting easier by eliminating the need for manual reconciliation. Always a plus.

6. Short-term financing

Installment loans — not to be confused with traditional business loans — allow consumers to make purchases over a series of payments. A certain percentage is always due at checkout. After that, the payment installments are divided into equal amounts.

At first glance, you may be thinking short-term financing sounds pretty much the same as making a purchase with a credit card. While both involve delayed payment for an item, there are pretty stark differences in the details.

For example, if buyers qualify for a credit card (and many can't), they have the ability to carry a credit card balance indefinitely — and the ability to incur credit card debt due to steep interest rates. On the other hand, the short-term financing model gives end-consumers several low to no interest payment installment loan options, which they can quickly and easily qualify for.

Originally an online-only payment method, short-term financing is moving into B&M stores. As a result of its growing popularity across different channels, it's certainly worth considering as a must-have layer of your business' tech stack.

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Choose your provider wisely

When it comes to equipping your business with the payment solutions you need, separating the hype from the must-haves is crucial. Working with the right partner can help you stay on track.

When choosing your payments provider, it's important to select a partner who can equip your business to accept the fundamental, online payment types we just covered together. But that's not all. It's also important to make sure your provider's customer service model meets your needs.

At Heartland, we can do both.

From eBilling and invoicing, to mobile wallets, online payments, ACH transactions and so much more — Heartland offers powerful digital payment solutions backed by a suite of flexible financial service technologies that allow you to accept all the ways your customers want to pay from anywhere. Best of all, we make it easy for you to get the help you need quickly. Whenever you need a helping hand, you can simply email or call one of our specialists. They're quick to respond and invested in your success.

Contact us whenever you're ready to chat.

Apple Pay® and Apple Wallet® are trademarks of Apple, Inc. All trademarks contained herein are the sole and exclusive property of their respective owners.

Samsung Pay® is a registered trademark of Samsung Electronics Co., Ltd.

Heartland is the point of sale, payments and payroll solution of choice for entrepreneurs that need human-centered technology to sell more, keep customers coming back and spend less time in the back office. Nearly 1,000,000 businesses trust us to guide them through market changes and technology challenges, so they can stay competitive and focus on building remarkable businesses instead of managing the daily grind. Learn more at heartland.us.