5 things electronic payments can do for your business
Worldpay Editorial Team
July 08, 2019
As a small business owner considering electronic payment services (also simply referred to as online payments), you may wonder if investing in such an endeavor will pay off. After all, aren't electronic payment services designed for larger enterprises?
Not necessarily. With online retail sales in the US up 15% to $517 billion in 2018, small businesses can have just as much opportunity to benefit as their larger counterparts.
If you have not yet implemented electronic payment services for your business, you're not alone— 64% of US small businesses do not even have a website. So why should you start accepting electronic payments? What do you need to do to accept credit cards online? What are some of the main challenges with online payment processing?
Stay with us as we explore these questions so you can choose the right merchant services provider for electronic payment services.
What are electronic payments and why you should accept them
Electronic payments refer to any digital payment such as those made with a credit or debit card online or via ACH. For purposes of this article, when we talk about electronic payments, we are referring to payments made online. There are many reasons why it makes sense for a small business to accept electronic payments. Here are the top five:
- Reach more customers. More and more consumers are shopping online. In 2019, 209.6 million US consumers browsed or shopped online. And this number is projected to increase to 230.5 million in 2021.
- Sell more. All this online consumer traffic is driving sales. The US Census Bureau reports that the eCommerce 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 omnicommerce shoppers whose buying journey encompasses online, instore, and even direct mail experiences.
- Enhance security. The migration to EMV has raised concern about fraudsters targeting online transactions instead. But many of today's eCommerce solutions incorporate enhanced payment security measures to help protect against data breach and fraud.
- Increase productivity. By automating certain business processes, eCommerce saves time and effort. Easy online payments reduce—or eliminate—manual tasks such as data entry, processing paper invoices, and managing customer disputes.
What you need to accept credit cards online
So you've decided to begin accepting payments online. Where do you start? The best place to begin is by reviewing your business needs.
First, do you have a website? If you do, you'll need a payment solution that makes it possible for your site to accept payments. This is most commonly in the form of a shopping cart with checkout functionality. One of the ways to accomplish this is with an eCommerce payment gateway that connects your website to your payment processor.
If you don't have a website, you can build a customized site or you can use a template. Web templates typically have the payments piece built right in. If you are building a custom site, you'll want to consult with a merchant services provider. Here are some questions you can use to start the conversation:
- How long will it take to set up my site and begin accepting payments?
- What type of navigation tools will the site offer (e.g. search bars and filters)?
- What payment types will I be able to accept in addition to credit and debit (e.g., gift cards, ACH, e-check, and mobile wallets for in-app experiences)?
- Will this solution integrate with my other business applications such as inventory management and accounting programs?
- What type of notification features does your solution provide (e.g. order and shipment confirmations, easy returns)?
- Will the site translate well from desktop to mobile platforms?
- What types of payment security tools does your solution offer (e.g. address Verification Service (AVS), fraud screening, chargeback prevention, and tokenization)?
3 challenges of online credit card processing
As with any business system, electronic payments pose some challenges. Here are a few, and 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 purchase. At 69.57%, the average rate of shopping cart abandonment is shockingly high.
- 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.
- Chargebacks: Some merchants view chargebacks as simply a cost of doing business. But in reality, chargebacks can result in big losses to a business's bottom line, as well as to their reputation. eCommerce chargebacks happen for a few reasons. They can be due to fraudulent activity, but can also happen when a customer does not receive the products they ordered, or when they are unsatisfied with their order.
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.
AVS is a valuable tool which 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.
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 need not be overly complicated. By familiarizing yourself with the ins and outs of electronic payments, you can begin moving towards taking credit cards online and offer a valuable service your current—and future—customers will appreciate.