Which payment types should your business accept?
Getting paid is a critical part of any business. Your customers want options when it comes to paying you. How should you decide which payment methods to accept?
The Canadian Federation of Independent Business survey “Changing the Way We Pay: Getting the Transition Right for Small and Medium businesses" explains different payment methods. Overall, the most common method of payment accepted by businesses is by cheque (89%). However, the payment methods accepted by businesses vary by industry sector. Retail and hospitality businesses are more likely to accept cash (98%), credit cards (95%) and debit cards (93%), and less likely to accept cheques (74%). In other industry sectors, businesses are more likely to accept cheques (98%), but less likely to accept cash (81%), credit cards (64%) and debit cards (46%).
When deciding which payment types to accept in your business, you need to balance the benefits of each option with the risks and costs.
How do your customers want to pay? Most retail and hospitality industry customers prefer to pay with credit card (35%), debit card (27%) and cash (19%). Other industry sectors prefer by cheque (58%), with credit card being a distant second (17%). If you offer your clients a variety of payment options, it may increase your chance of making the sale.
Will you get paid? If you offer store credit, some customers may never pay their bill. Cheques sometimes bounce and cash is sometimes counterfeit. Credit card payments over the phone could increase the possibility of fraud.
Are there any fees involved? Some payment methods involve equipment rental or processing charges that can cut into your profits. Be cautious in passing on those fees to your customers.
How easy is it for you and your staff to handle? Each payment type comes with a learning curve. Staff and business owners will need to learn how to operate equipment, process transactions and verify the payment.
Keep track of how your clients like to pay and of any issues and costs you encounter. This will help you figure out what is best for your business.
Check out our section on Bookkeeping and acounting for tips on keeping your books in order and much more.