Key Takeaways
Business launch day is on the calendar and approaching quickly. You'll promote your goods or services online, and maybe even in public at a pop-up event or small storefront. It's a solid plan.
But which forms of payment will you accept?
And which are best for your bottom line?
Let's discover the many possible payment methods for small business transactions, and the additional considerations to be aware of as you put a few of these methods into play.
There are various ways your customers can pay you for your goods or services. Below we detail the eight most popular options.
Some businesses only accept cash. This is common among farmers' market suppliers, pop-up shops, or other transient-type sellers. Larger businesses with full-time presences in brick-and-mortar locations usually accept cash too.
Some consumers prefer a cash payment option because they don't have to share any financial information, such as debit or credit card numbers. As a bonus, there are no transaction fees for you or your buyers when cash is used.
However, if you run an exclusively online business, you can't accept cash payments at the time of purchase. To mitigate this, you could offer a cash payment option when an item is picked up in person or a service (such as a class or event) is attended in person.
Purchase transactions from a debit card happen via electronic funds transfer (EFT). When a customer pays with their debit card issued by a bank or credit union, money is removed from their chequing account and immediately deposited into your business account.
This form of payment is only approved if the buyer has enough funds in their account to complete the transfer. If not, you will receive a message that the buyer has insufficient funds. At that point, you can ask for another payment method or decline the sale.
Another way buyers can make purchases is by writing a personal cheque or authorizing you to run their account and routing number as an e-cheque.
Like a debit card transaction, this requires the buyer to have sufficient funds in their account to make the purchase, or they risk a "bounced" or "dishonoured" cheque and likely a fee from their financial institution. If this happens, your business will need to seek another form of payment from the buyer.
As a seller, handling paper cheques requires extra steps for your accounting processes. Cheques need to be signed (or stamped) by your business representative, tallied on a deposit form, and submitted to your financial institution for deposit. Some banks offer electronic deposits, where you snap a photo of each cheque and submit them via a smartphone app.
Many buyers want to use credit cards because of the perks the issuer offers, including award points, cash back, or discounts at preferred retailers. Also, buying on a credit card allows the purchaser to spend money "on credit" and pay it back over time to the credit card issuer. This often allows for higher dollar-amount purchasing and impulse buying.
However, as a business, you're subject to an intercharge — a fee based on the cost of the sale to process the payment. The rates of intercharges vary depending on the card issuer and type of purchase: fuel, grocery, services, etc. Review your monthly credit card transactions statement to know exactly how much you're being charged by allowing buyers to use credit cards. The Canadian Federation of Independent Business has fought against these fees — and in October 2024, changes took effect to lower Visa and Mastercard credit card fees for small businesses.
Most mobile operating systems, including iOS (Apple Pay) and Android (Google Pay), offer the option to secure a digital (aka mobile) wallet on your device. This allows for payments direct to website forms, emailed invoices, or links accessed via your electronic device.
Digital wallets can also be used to pay for products and services acquired in person. For example, if a parent offers home-baked goods at the school carnival for purchase, a buyer could pay for their treats using their digital wallet. Funds are transferred from the account (debit card, credit card, prepaid card) linked to the digital wallet into the baker's business account.
This contactless type of transaction is initiated by the buyer clicking a button on their device, tapping their phone on a point-of-sale terminal, or scanning a seller's QR code that triggers a mobile payment.
If you sell goods or services online, you can choose to accept online payments. The purchaser might use their credit card, debit card, digital wallet, or a third-party payment processor.
If you're using QuickBooks Online to manage your business and send invoices, you can easily integrate QuickBooks Payments with popular third-party payment processors. When a customer opens your QuickBooks-generated invoice, they're directed to the online payment platform, which funnels the payment back to your QuickBooks-connected business banking account.
If your business offers a recurring product delivery, membership fee, or other ongoing product/service, setting up an automatic bill payment option allows consumers to sign up and enjoy automatic payment processing without manually paying a bill each week, month, or year.
For example, QuickBooks Payments lets you automate recurring invoices and gives your customers the option to set up autopay to pay invoices automatically.
If you offer high-ticket items or services for sale, you can offer your customers a payment plan. This means the total cost of their purchase is divided into a few smaller, more manageable payments. You may choose to tack on a one-time fee for this convenience, or not.
You can offer any of the previously mentioned payment methods alongside a payment plan. Setting up an automated bill pay system for the instalment payments makes your accounting easier and ensures you don't forget to send subsequent billing after the initial transaction.
Before you settle on any card or online-based payment methods, do a deep dive into the fine print for using these services as a business. Some may tack on fees, be overly complicated to set up or use, not align with your target audience, or not allow for international purchasing.
Most Canadian businesses offer a few payment methods to their customers. With a steady increase in online storefronts, it makes sense to offer online payments as one of the options.
Money movement services are provided by Intuit Canada Payments Inc.
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