5 ways electronic payments can benefit your business
Worldpay Editorial Team
July 08, 2019
That “e” in e-commerce, it’s short for electronic but might as well be “essential.” No matter the size or scope of your business, if you’re not accepting electronic payments, you’re missing out on significant revenue. Today, online sales are more than typical – they’re expected.
Not there yet? Well, you’re not alone. As of 2019, 64% of U.S. small businesses don’t even have a website.
So why should you start accepting electronic payments? If you’re weighing the costs of not accepting online sales, read on to discover how the benefits of electronic payment processing can also be “easy.”
What are electronic payments?
Electronic payments refer to any digital payment such as those made with a credit or debit card online or via ACH. For the purposes of this article, when we talk about electronic payments, we’re referring to payments made online.
Top five ways electronic payment can benefit your business:
- Reach more customers. More and more consumers are shopping online. In 2019, 209.6 million U.S. consumers browsed or shopped online.
- Sell more. All this online consumer traffic is driving sales. The U.S. Census Bureau reports that the e-commerce estimate for Q1 2019 rose 12.4% from Q1 2018, while total retail sales increased 2.7%.
- Meet consumer demand for a consistent experience across sales channels. Today's consumers are combining their online shopping with other channels. The majority—73%—are omni-commerce shoppers whose buying journey encompasses online, instore and even direct mail experiences.
- Enhance security. The migration to EMV had raised concerns about fraudsters targeting online transactions instead. But many of today's e-commerce solutions incorporate enhanced payment security measures to help protect against data breach and fraud.
- Increase productivity. By automating certain business processes, e-commerce saves time and effort. Easy online payments reduce—or eliminate—manual tasks such as data entry, processing paper invoices and managing customer disputes.
How to accept credit card payments online
First, you’ll need a website and a payment solution that makes it possible for your site to accept payments. This most common comes in the form of a shopping cart with checkout functionality. One way to accomplish this is with an e-commerce payment gateway that connects your website to your payment processor.
There’s a lot to consider when choosing the right payment processor for your business needs, however. Your options include merchant account plus payment gateway, all-in-one solutions and simplified credit card processors. Each comes with its own advantages and drawbacks.
We’ll take a quick look at all three:
Merchant account plus payment gateway is a more traditional method for online payment acceptance, pairing your merchant account with a payment gateway. The gateway connects your online store to your business bank account – much like what is used in your physical store location. You’ll need to apply for both your merchant account and the payment gateway, but dependable customer service is usually standard with this option.
All-in-one solutions combine the account and gateway option for simpler, faster setup. Like the merchant account and gateway pairing, fees will be associated but less frequently – often only a monthly fee. Common all-in-one solutions like PayPal allow you to customize your checkout experience and can be combined with alternative payment methods, giving your customers a preferred option at checkout.
Simplified credit card processing won’t require the standard merchant account or payment gateway which removes many of the customary application procedures and associated vendor fees. However, in addition to its simplicity, this processing option leaves you with little customer support should you need it – something to keep in mind.
Three challenges of online payment processing
As with any business system, electronic payments pose some challenges. Here are a few and some of the ways you can address them:
- Shopping cart abandonment: As easy as it is for consumers to shop online, it can be just as easy for them to leave a site without completing their purchases. At 69.57%, the average rate of shopping cart abandonment is shockingly high.
But there are ways for small businesses to help prevent shopping cart abandonment. These include letting shoppers know about shipping and return policies upfront, simplifying the checkout process, sending reminder emails to customers who have not completed their checkout and providing easy customer service via email, chat or a dedicated toll-free hotline.
- Fraud: Thieves always follow the money and with more online spending comes more potential for fraud. Small businesses can employ payment security technology and best practices to help prevent and reduce the instances of fraud.
AVS is a valuable tool that validates the identity of the cardholder by verifying the cardholder's billing address with the card issuers. In addition, tokenization and encryption technologies are engineered to protect against theft of sensitive data.
Best practices businesses can take to reduce fraud include being diligent about passwords (e.g., changing default passwords, not sharing passwords, granting systems access to select individuals), ensuring firewalls are in place and keeping antivirus protections up to date.
- Chargebacks: Some merchants view chargebacks as simply the cost of doing business. In reality, chargebacks can result in big losses to a business' bottom line as well as to their reputation. But e-commerce chargebacks happen for a few reasons. They can be due to fraudulent activity, although they can also happen when a customer does not receive the products they ordered or when they are unsatisfied with their order.
Prevention is the best medicine for chargebacks. Using package tracking and delivery confirmation can help prevent undelivered-goods chargebacks. Providing detailed product descriptions and customer reviews can help reduce customer dissatisfaction. And posting product shipping, delivery and return information clearly on your site can help set customer expectations before the sale.
Getting started with electronic payment services doesn’t have to be complicated. By familiarizing yourself with the ins and outs of electronic payments, you can begin moving toward taking online payments and offer a valuable service that your current—and future—customers will appreciate.