What are Electronic Payments and How to Accept Them

Say goodbye to jingly pockets, wallets stuffed with creased bills, and cheque books. Payments are trending away from cash and paper cheques. Electronic payments are becoming more and more prevalent, and businesses that fail to accept these payment methods risk losing customers and falling behind.

But what do you need to know about electronic payments? This guide has answers to all of your questions—including what these payments are and how to accept them.

What are Electronic Payments?

Electronic payments are when a customer pays for a product or service electronically, rather than exchanging physical cash or a paper cheque.

Electronic payments are especially common for e-commerce retailers who complete online transactions and need their customers to pay online. However, electronic payments can also happen in person through a debit card or credit card payment.

Types of Electronic Payments

Let’s look at electronic payments a little more broadly. Typically, these payments fall into one of two categories:

  • One-off Payments: As the name implies, this is a single, one-time payment. For example, if a customer uses a credit card to purchase a cake at a bakery, that’s a one-off electronic payment.
  • Recurring Payments: Electronic payments can also occur on a repeated schedule, which means that a customer payment is made automatically on a set date. For example, say you offer monthly website maintenance to clients. You might therefore deduct an agreed-upon payment from their bank account on the last business day of each month.

Now that you understand the different payment frequencies, let’s dig into the different electronic payment methods. There are three common types.

Credit cards and debit cards

Debit and credit card payments are the most common electronic payment methods. In fact in 2019, debit cards account for 28% of all payments, and credit cards account for 29% of all payments.

For these payments, payment details are entered manually during a checkout process, or the physical card is processed at a point of sale (POS) system.

There’s usually a debit or credit card processing fee, which the business owner needs to pay. Fees range anywhere from 1.5% to 3.5% of each transaction. However, credit and debit card payments typically will clear into your bank account faster than other electronic payment methods.


  • It’s the most commonly used payment type, which means customers will expect it.


  • It has higher payment processing fees.

INTERAC e-Transfer

An INTERAC e-Transfer is a lot like when a customer pays with a debit card. The difference? Instead of typing in a pin or tapping a machine, they can send money transfers via e-mail or SMS through their online banking.

The money is then taken directly out of their bank account to pay for the purchase, and sometimes there is a fee involved. Be aware that banks can take several days to process and clear this type of payment, so you likely won’t get the money immediately.


  • It has lower fees than card payments or electronic fund transfers.


  • It’s not as familiar or as convenient to customers as card payments.

Electronic fund transfers

An electronic funds transfer, or EFT, is a paperless transfer, deducted from one account and almost immediately sent to another account. EFT payments serve many purposes, including customer billing, collections, and direct deposit payroll. You can use this payment method for one-time charges or to deduct reoccurring charges, such as monthly membership dues.


  • Once the bank accounts are linked, payments are simple and convenient.


  • Many banks have limits on the amount you can send through an electronic fund transfer.

Benefits of Electronic Payments

The payments landscape is becoming increasingly cashless, and Moneris predicts that Canada is pushing towards a cashless society with a 70% drop in cash transactions by 2030.

But why? Well, electronic payments offer a number of advantages to both businesses and consumers.

1. Greater convenience and efficiency

Electronic payments are an easy form of payment for any business owner. This payment method goes straight to your POS system, which simplifies your bookkeeping and omits a lot of manual entries saving you time to focus on the things that matter.

Electronic payments are quick and easy for the customer too. As customers continue to demand higher levels of convenience, it is important to keep up with the latest technology, including accepting mobile payments. If customers have to choose between a business that doesn't accept their preferred form of payment verse one that does, they will choose one that is more convenient for them and their shopping habits.

2. Boosted revenue

You’ll need to cover some processing fees when accepting electronic payments. While those can feel daunting, offering different payment methods can mean good things for your business’s bottom line.

Many experts claim that people are willing to spend more when they pay with a credit card versus when they pay with cash.

A classic study conducted by two MIT professors tested this idea by splitting participants into two groups. One group had to pay cash for tickets to a basketball game, and the other had to pay by credit card. The group paying with a credit card was willing to pay more than twice as much for the tickets as the people who paid cash.

3. Improved customer relationships

More than ever, customers want options. That not only applies to choices between brands, products, and services—it applies to payment options, too.

Requiring your customers to use a certain type of payment method can make them feel pigeonholed and lead to a negative customer experience. According to CustomerThink, 50% of consumers say they’ll abandon a purchase if their favourite payment method isn’t available.

Adding electronic payments to your list of acceptable payment options gives them the variety they crave and can help you close more sales.

Why Your Small Business Needs to Consider E-Payments

Since COVID, keeping in-person businesses as sanitary as possible is a top priority. Offering e-payment solutions will give people a contactless method of paying – keeping you and your customers safe.

Accepting cash payments also adds risk to your small business because it’s easy to steal. Therefore, implementing an electronic payment system will reduce the risk of theft in your store.

By adopting electronic payment services you are saving clerks about an hour a day by automating their department’s accounts payable process. With E-payment solutions you don’t need to worry about those repetitive manual tasks, so you can focus on important value-adding areas of operations.

How Do Electronic Payments Work?

Regardless of which of the above electronic payment methods your customer is using, they all technically work the same way.

Electronic payments are processed using an electronic funds transfer (EFT). It’s exactly what it sounds like: funds are transferred from one account to another electronically.

So, the gist is that money is electronically moved from bank account A to bank account B. But there are a number of players and moving parts involved in this process, depending on the electronic payment method that’s being used. Here are a few payment processing terms you should know:

  • Payment Gateway: Think of this as the messenger between where the sale is made and the bank. The payment gateway encrypts payment information and passes that information between the payment processor and the merchant account.
  • Payment Processor: This receives the payment details from the payment gateway, analyzes that information, and then approves or rejects the payment. Many payment systems combine a payment processor and gateway in one.
  • Merchant Account: You’re required to have a merchant account to process card payments. When a customer pays with a card, the money lands in your merchant account, where it’s processed by a third party. Once that’s processed, the money moves from the merchant account to your normal business bank account.

Now that you know who’s involved in the process, let’s give a quick overview of how this works. Imagine that you have an e-commerce site where customers can order your handmade candles:

  1. A customer submits their credit card information on your website to purchase a variety pack of your scented candles.
  2. Their payment information is submitted to the payment gateway.
  3. The payment gateway encrypts the customer’s credit card information so it can be securely sent to the payment processor.
  4. The payment processor reviews those details to ensure everything is in order and then approves the payment.
  5. The payment processor tells the payment gateway that the payment is approved.
  6. The customer is notified with a confirmation page or “success” message, and then you fulfill their candle order.

It sounds like a lot of information bouncing back and forth, but amazingly, this entire payment process happens in just a few seconds.

How Long Do Electronic Payments Take?

When it comes to accepting electronic payments, many business owners understandably want to know how long they need to wait to get their money. The answer depends on the type of electronic payment that’s being processed:

  • EFT: In general, the process can take up to three business days.
  • INTERAC e-Transfer: Depending on security features these payments are processed almost instantly or within 30 minutes.
  • Credit card or debit card payments: Typically are processed within one to three business days

How to Accept Electronic Payments

You want to accept electronic payments. Now what? Getting up and running is relatively simple. You’ll need to do the following:

  • Sign up for a Merchant Account: Remember, this is a necessity to accept card payments, regardless of what payment gateway or processor you use. Start by talking to your current bank about merchant account options for your business.
  • Get the Correct Tools: You’ll need a payment gateway and a payment processor. Keep in mind that many platforms (including QuickBooks) combine both of these tools into one easy-to-use solution.
  • Include Electronic Payments in your Checkout Process: Once you have those core elements set up, you need to give customers the option to pay electronically. Depending on your type of business, this might include:
  • Adding a card reader to your POS system so you can accept electronic payments in-person
  • Creating an online storefront with the option to accept various types of electronic payments from customers
  • Using an invoicing tool that lets you enable different electronic payment methods, so customers can pay an invoice using the best option for them

Sync Your Favourite Electronic Payment Services through QuickBooks

Accept every type of payment with QuickBooks. Sync your favourite payment app to your accounting software, which will make it easy to accept credit cards, debit cards, EFTs, INTERAC e-transfers, and more. Learn about the best payments apps here.

Do you run an online business? QuickBooks integrates with the most popular e-commerce platforms. Do you send invoices to your clients? Your invoices will include a “pay now” button where you can accept electronic payments. Whatever the type of payment or business, QuickBooks will give your customers the payment flexibility they need—with no headaches or hassles for you.

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