How to choose the best business payment methods

What’s the best payment method for small businesses? Some say cash is king, while others swear by credit cards. In today’s fast-paced world, however, more and more business owners are turning to digital payment options.

Ultimately, the best payment method for your business will depend on several factors. Consider your transaction size, who’s handling the payments, and how your accounting system integrates with your payment processes.

Let’s explore the payment options and payment processing tools that may fit your company.

• Types of business payment methods
• The best online payment methods for small businesses
• PayPal
• Venmo
• Square
• Stripe
• Apple Pay
• Google Pay
• Zelle
• ACH Payments
• QuickBooks Payments
• Choosing the right payment method for your small business
• Small business payment options FAQ

Types of business payment methods

The first thing you’ll need to decide is which types of payment your business can accept. Generally speaking, there are five payment options to choose from:

1. Cash payments: Cash remains a widely accepted payment method, with 55% of small to medium-sized enterprises (SMEs) preferring cash over card payments.
2. Check payments: Despite the rise of digital payments, many businesses continue to use checks. In 2022, about two-thirds of B2C payments were disbursed via checks.
3. Card payments: Card payments account for an average of 50% of small business total sales.
4. Online payments: The adoption of online payment methods is increasing, with 28% of small business owners accepting credit or debit card payments via their website, and 29% accepting online payments through a provider like PayPal. 
5. Mobile payments: Mobile payment acceptance is on the rise, with 33% of small business owners accepting in-person payments via mobile point-of-sale (POS) terminals, and 12% accepting digital wallet payments.

Cash payments

Consumers make cash payments with bills and coins, which are typically managed through a point-of-sale system. Until recent years, cash had been a primary form of payment, but digital payment options have steadily increased in popularity.

Benefits of cash payments

The benefits of accepting cash payments include receiving payment immediately rather than waiting for a transaction to clear. Cash payments also reduce overhead costs because there are no fees for accepting cash from customers. For small businesses with slim profit margins, credit card fees can be costly.

Drawbacks of running a cash-only business

With a cash-only business, you may run a higher risk of theft and mismanaged money. There’s also a chance you could also lose business by inconveniencing customers who only have a card.

Tips for managing cash payments:

Regardless of your industry, if cash is your preferred payment method, you can avoid an audit with diligent accounting. But what if you could streamline your payment process and speed up your cash flow at the same time?

Check payments

Checks are documents that authorize banks to transfer funds from your customer’s bank account to your business bank account. They document the payment amount and date, the payer’s account number, and the signature to authorize payment to the recipient.

Checks vs. eChecks

Paper checks peaked in the 20th century, but they have lost some of their popularity with the widespread adoption of electronic payment systems. eChecks, electronic alternatives to paper checks, are now commonly used to make online payments.

When checks make sense

Checks are common among small business owners who own rental properties and lawn service companies. often deal directly with individual customers, who may prefer checks for their convenience, security, and ability to provide a paper trail for payments. 

Additionally, checks help avoid credit card processing fees, which can be significant for small businesses. You only need a business bank account to start accepting them, but the US Small Business Association (SBA) recommends creating a bad check policy for your protection.

Risks of checks: If a check bounces, you could wind up in small claims court or use a collection agency to recover your losses. Both results can be expensive and don’t guarantee repayment. eChecks have become increasingly popular, along with ACH transfers from one financial institution to another.

Card payments

Whether it’s a debit or credit card, plastic has become the primary way consumers pay for purchases today. Paying with cards is convenient and can facilitate a smoother checkout process. Plus, it allows people to finance large transactions, so most customers expect businesses to accept at least one type of card.

Benefits of accepting credit cards

This type of payment benefits small business owners, too. Card payments broaden your customer base and legitimize your company. In most cases, card payments deposit into your small business bank account quickly, so they can help improve your cash flow. However, this type of payment method comes at a cost for small business owners.

Understanding transaction fees

The Durbin Amendment, a provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, caps debit card transaction fees to help make processing debit card payments more affordable to sellers and consumers. 

The Durbin Amendment set the fee cap for debit transactions at 0.05% of the purchase amount plus 22 cents. However, the amendment doesn’t impact credit card transaction fees, which can cost sellers significantly more.

Costs of credit card processing

Credit card transaction fees, flat fees, and incidental fees can significantly impact your bottom line unless you pass the expense to consumers. Each company sets its rate, with Visa and Mastercard leading the way, followed by American Express and Discover. 

You’ll need to cover the costs of the physical equipment and pay for merchant services and PCI compliance charges. And you might face monthly minimums.

Consumers have the right to dispute credit card charges if they’re unhappy with your product. Chargebacks can debit your account without warning, and when margins are tight, they can send your small business into the red. 

Some banks hold merchants responsible for credit card fraud, which adds another expensive liability, especially if your reputation is tarnished as a result.

Despite the drawbacks

Even with the costs, credit card payments have some benefits compared to alternative payment methods, particularly security, hygiene, and customer preferences.

Online payments

Online payments transfer electronically. They use a payment gateway to facilitate and authorize several types of payments, including eChecks, credit cards, and direct debit payments.

Not just for e-commerce

Online payments aren’t restricted to online businesses. They can also occur in brick-and-mortar stores using digital wallets or apps that store credit and debit card information on a mobile device.

Benefits of online payments

Online payments seem to be the way of the future in terms of cost and convenience. They offer a cheaper and faster way to get paid and give consumers options when they check out.

Cash and credit card sales require you to tally up the total price, including taxes. But the best online payment methods do this automatically, saving you time and reducing the risk of error. You’ll need to pay fees to accept payments online, but these fees are generally more affordable than what credit card companies charge.

E-commerce tools and costs

E-commerce online payment services often use a virtual shopping cart to calculate the total with shipping costs included and collect the customer’s shipping and payment information. Several providers offer free shopping cart services to small businesses. 

The ease and affordability have also made online payments more popular among brick-and-mortar retailers. Digital wallets, as well as smart debit and credit cards can enable contactless payments, which use near-field communications with card reader equipment to facilitate in-person payments.

Contactless and digital wallets

Digital wallets, like Apple Pay or Google Pay, are going mainstream, especially among younger consumers. The change indicates a tipping point for online payments wherein the advent of digital wallets is around the corner.

Mobile payments

Mobile payments use mobile devices, such as smartphones or tablets. Mobile payments can encompass a range of payment options, including:

• Payments made through digital wallet apps and near-field communication technology
• Money transfer apps
• Payments using a mobile card reader to swipe debit or credit cards

Mobile payments facilitate mobile transactions using a payment method, like cards or electronic money transfers.

The best online payment methods for small businesses

Online payment methods can help you gain more customers, cut expensive costs, and simplify accounting processes. But it’s smart to compare the best online payment methods for small businesses to find the right solution for your needs.

A few major players dominate the credit card processing industry. But many providers can help your company process payments online, and they’re all structured differently.

When comparing the best online payment providers, you’ll want to consider the following features:

• Price: How is the pricing set up? Which transactions are assessed a fee, and at what rate?
• Features: What unique offering does the provider bring to the table?
• Flexibility: Can customers choose whether to pay by credit, debit, or bank transfer?
• Functionality: How does the payment processing software integrate with your business?
• Security: Does the provider offer fraud protection? Are payments secure?

Let’s compare several online payment processors for small businesses. You can see how some of the most popular choices stack up against each other and who they’re best for.

PayPal

PayPal is one of the biggest names in online payments, with over 346 million customers. Its big reputation has earned businesses’ and consumers’ trust for security and risk management.

Who is it for?

PayPal has a range of features for businesses looking for standard payment processing and offers ways to accept payments both online and in person. Check with your shopping cart provider or e-commerce platform to confirm whether PayPal checkout is compatible with your site.

What types of payments does it accept?

PayPal users can pay using their PayPal account balance, PayPal CREDIT, a debit or credit card, or a bank account.

What does it cost?

If you sell goods or services through an online transaction in the US, you’ll pay a merchant fee of 2.99% of the transaction amount and a fixed fee of 49 cents. Micropayments under $10 are subject to a fee of 5% of the transaction amount plus a fixed fee based on the currency.

Depending on the size of your transactions, this payment method could be expensive for your small business.

Venmo

Venmo is known for processing peer-to-peer (P2P) payments, but the app also has a business side. Their social commerce platform can help build brand awareness because users can see, like, and comment on each other’s purchases.

Who is it for?

Venmo can be a good choice for street vendors who need a way to accept cashless payments. Users can quickly scan a QR code linked to your business account and send money to complete a sale. These payments come with instant confirmation of funds. You can also integrate Venmo as a checkout option on your app or website.

What types of payments does it accept?

To pay with Venmo, users must link their bank accounts or debit cards. Credit cards are subject to an additional charge. This payment method could deter customers who want to pay off purchases over time. Users can make payments using their Venmo balance, bank account, debit cards, and credit cards.

What does it cost?

For business transactions made through a Venmo business profile, you’ll pay a merchant fee of 1.9% + a fixed fee of 10 cents. There are no setup fees or monthly subscription costs. However, there is a fee for electronic withdrawals using the Instant Transfer feature. 

If you want immediate access to your money, you will pay a fee of 1% (minimum 25 cents, maximum $10).

Square

Square is a user-friendly payment solution that offers an integrated system for businesses of all sizes, focusing on ease of use and scalability. It is especially beneficial for those with physical locations or mobile businesses, offering a range of tools to manage sales, inventory, and reporting. 

Square’s ability to accept various payment types, both in-person and online, makes it a versatile option for business owners seeking efficiency and simplicity. Its transparent pricing model and low-cost hardware options further solidify it as an attractive choice for small to medium-sized businesses.

Who is it for?

Square is a versatile payment solution designed for small to medium-sized businesses, especially those that rely on in-person transactions. It’s ideal for retailers, restaurants, and service providers who need a reliable, all-in-one system for processing payments. 

Square’s hardware options, such as card readers and point-of-sale (POS) systems, make it a convenient choice for brick-and-mortar businesses. Additionally, its robust software features cater to businesses looking for tools to manage inventory, track sales, and generate reports.

For businesses on the go, such as food trucks or pop-up shops, Square’s mobile card readers allow for seamless payments anywhere. Its user-friendly interface and scalability make it appealing to new entrepreneurs and established businesses alike.

What types of payments does it accept?

Square accepts a wide range of payment methods, including debit and credit cards, digital wallets like Apple Pay and Google Pay, and contactless payments. 

Customers can also pay via Square’s online payment links, which make it easy to send invoices or facilitate online sales. The platform supports recurring payments and subscriptions, broadening its use cases for service-based businesses.

Square’s hardware options, such as the Square Terminal and Square Register, accept chip cards, magnetic stripe cards, and NFC (near-field communication) payments, ensuring flexibility for various customer preferences.

What does it cost?

Square charges a standard fee of 2.6% + 10 cents per transaction for in-person payments. Online payments or manually entered card transactions incur a higher fee of 2.9% + 30 cents. There are no monthly subscription fees for its basic plan, but advanced POS features or industry-specific tools may come at an additional cost.

Hardware costs vary, with card readers starting at $49 and full POS systems priced higher. Square offers transparent pricing, which makes it easier for businesses to predict and manage costs.

Stripe

Stripe is a powerful payment processor designed for online businesses that need advanced features and flexibility. Its customizability through API integrations makes it a top choice for developers, e-commerce businesses, and subscription-based services. 

Stripe’s international reach, support for numerous currencies, and diverse payment methods ensure that it can accommodate global operations. Its fee structure is straightforward, and its scalability makes it suitable for businesses that expect rapid growth or require specialized solutions.

Who is it for?

Stripe is a payment platform tailored for online businesses, developers, and startups seeking a customizable solution. It’s particularly well-suited for e-commerce stores, subscription services, and software-as-a-service (SaaS) companies that require advanced features like recurring billing, API integrations, and multi-currency support.

For businesses that prioritize global reach, Stripe is a strong contender. It’s available in over 40 countries and supports payments in 135+ currencies, making it ideal for those operating internationally.

What types of payments does it accept?

Stripe supports an extensive array of payment methods, including credit and debit cards, ACH transfers, digital wallets like Apple Pay and Google Pay, and regional payment options such as Alipay and WeChat Pay. Businesses can also leverage Stripe’s tools to accept recurring payments, manage subscriptions, and facilitate buy-now-pay-later options.

With Stripe’s API, businesses can create custom payment solutions tailored to their specific needs. This flexibility makes it a favorite for developers and tech-savvy entrepreneurs.

What does it cost?

Stripe charges a fee of 2.9% + 30 cents per successful card transaction. ACH direct debit payments cost 0.8% per transaction, capped at $5. Additional fees may apply for features like currency conversion, international cards, and disputes.

While Stripe doesn’t have monthly subscription fees for its core offerings, custom enterprise solutions may involve negotiated pricing.

Apple Pay

Apple Pay simplifies the checkout experience for customers by enabling quick, contactless transactions and enhances payment security for businesses with built-in encryption and tokenization features. 

By reducing the need for physical cards or cash, it streamlines the payment process while offering peace of mind through its advanced security measures.

Who is it for?

Apple Pay is an excellent option for businesses targeting tech-savvy customers who prefer digital wallets over traditional payment methods. It’s especially appealing for retailers, e-commerce platforms, and service providers who want to offer a seamless, contactless checkout experience.

What types of payments does it accept?

Apple Pay allows customers to make purchases using their iPhone, iPad, Apple Watch, or Mac. It supports payments via linked credit or debit cards and integrates with most major card issuers. Apple Pay also works with in-app and online purchases, providing a smooth experience for mobile-first customers.

What does it cost?

There are no additional fees for businesses to accept Apple Pay beyond standard credit card processing fees charged by your payment processor. Apple Pay’s integration with existing payment systems ensures that adopting it doesn’t add significant costs.

Google Pay

Google Pay is an excellent choice for businesses looking to provide a seamless, secure payment experience for Android users. Its widespread adoption ensures that businesses can cater to a diverse customer base, both online and in person.

Who is it for?

Google Pay is ideal for businesses that cater to Android users and want to enable quick, secure digital payments. It’s a great fit for both online and in-person retailers, as well as app developers looking to streamline payment processes.

What types of payments does it accept?

Google Pay supports payments linked to credit and debit cards, bank accounts, and PayPal. It works for in-store NFC payments, in-app purchases, and online checkouts, giving businesses a versatile solution to meet diverse customer preferences.

What does it cost?

Like Apple Pay, Google Pay doesn’t charge businesses extra fees to accept payments. Standard processing fees from your payment provider apply. Google Pay’s seamless integration with existing systems makes it a low-cost option for businesses.

Zelle

Zelle is a fast and convenient payment solution for businesses that want to enable direct bank-to-bank transfers. Its simplicity and speed make it a popular choice among service providers and small businesses.

Who is it for?

Zelle is designed for businesses that want to enable fast, direct bank-to-bank transfers. It’s particularly useful for service providers, freelancers, and small businesses that deal with repeat customers and prefer avoiding credit card fees.

What types of payments does it accept?

Zelle facilitates payments directly between bank accounts, eliminating the need for intermediary platforms. Customers must have a US bank account enrolled in Zelle to make payments. This simplicity appeals to businesses focused on local transactions.

What does it cost?

Zelle itself doesn’t charge fees for transactions, but participating banks may impose fees for business use. It’s worth checking with your bank to understand any associated costs.

ACH Payments

ACH payments offer a secure and cost-effective way for businesses to handle large or recurring transactions, reducing reliance on credit card networks and their associated fees.

Who is it for?

ACH (Automated Clearing House) payments are ideal for businesses managing high transaction volumes, such as subscription services, utilities, and B2B companies. It’s a great option for those seeking a low-cost alternative to credit card payments.

What types of payments does it accept?

ACH payments allow businesses to accept direct bank transfers for one-time or recurring payments. They’re particularly suited for larger transactions, payroll processing, and bill payments. Customers need to provide their bank account and routing numbers to complete an ACH transfer.

What does it cost?

ACH payments typically cost much less than credit card transactions, with fees ranging from 0.5% to 1%, often capped at a maximum amount per transaction. This makes ACH an affordable option for businesses handling large or recurring payments.

QuickBooks Payments

QuickBooks Payments is one of the most dynamic online payment methods for small businesses. It streamlines various accounting processes to save you time. You can access QuickBooks Payments by signing up for QuickBooks Money or QuickBooks Online.

Who is it for?

QuickBooks Payments is ideal for small businesses across industries, including online retailers, service providers, and brick-and-mortar stores. 

Whether you need a mobile card reader for a craft fair, an integrated POS system for a retail store, or a seamless way to send invoices, QuickBooks Payments adapts to your business needs.

How does it work?

QuickBooks Payments supports businesses of all types, integrating with platforms like Shopify and BigCommerce. It handles sales tax, processes payments, creates receipts, and records transactions automatically. 

With 128-bit encryption and fraud protection, you can accept payments securely using the mobile app, virtual credit card terminal, or a card reader with POS integration. Send invoices with a “Pay Now” option to get paid up to 4x faster.

What types of payments does it accept?

QuickBooks Payments allows you to accept customer payments via PayPal, Venmo, Apple PayⓇ, credit, debit, or ACH bank transfer. And you can choose how customers pay. For example, if you’d like to receive a bank transfer for an invoice of $500, simply turn off the card option.

With QuickBooks Online and QuickBooks Payments, you can also accept in-person payments using a card reader.

What does it cost?

QuickBooks offers simple pricing for small businesses. Card reader transactions (swipe, dip, or tap) cost 2.5% for Visa, Mastercard, American Express, and Discover. Digital wallets like Apple Pay, Google Pay, and Samsung Pay are also supported, with funds deposited immediately.

Online payments via invoice or quick requests cost 2.99%, while manually keyed-in transactions using the GoPayment app are 3.5%. ACH bank transfers cost just 1%. Best of all, there are no upfront fees, hidden costs, or termination charges.

Choosing the right payment method for your small business

The best payment solutions for your small business should be affordable and capable of integrating with your accounting software. 

Consider your business size and needs

Choosing the right payment method starts with understanding your business’s unique characteristics. For instance, the type of business you operate plays a significant role in payment options. 

Retailers may prioritize point-of-sale (POS) systems that handle in-person card transactions, while online businesses might need robust e-commerce integrations that support credit cards, digital wallets, and bank transfers.

Does my transaction volume matter?

High-volume businesses should consider systems with competitive processing fees and batch payment capabilities to save on costs and time. Meanwhile, smaller operations might prioritize user-friendly, low-cost solutions that match their scale.

What about my customer demographics?

If your target audience skews younger, digital wallets and app-based payments may align with their preferences. Where older customers may feel more comfortable with traditional methods like checks or credit cards.

Payment speed

For small businesses, cash flow is king—and quick payment processing is essential to keeping it healthy. Faster payment methods ensure you get paid promptly, helping you cover expenses and reinvest in your business. 

Payment solutions like Direct Debit or Instant Bank Pay can significantly reduce the time it takes for funds to appear in your account compared to traditional methods like checks or manual invoicing.

Instant payment options are particularly valuable for industries that rely on frequent or high-ticket transactions. For example, service providers using Instant Bank Pay can collect funds directly after completing a job, avoiding delays that can disrupt their operations. 

Payment collection automation

Automation can transform how your business manages payments, reducing administrative burdens and improving reliability. Systems that support recurring payments are especially useful for subscription-based models or businesses with regular customers. 

Top benefits: 

Free up time for other priorities: by automating the process, you eliminate the need to chase payments manually.

Helps minimize late payments: For instance, setting up automated reminders or recurring payment schedules ensures customers stay on track, reducing cash flow disruptions. 

Automation improves accuracy: By reducing human involvement, you decrease the risk of errors that could lead to delayed or missed payments. This efficiency can have a tangible impact on your bottom line.

Costs and efficiency

Understanding the costs associated with different payment methods is critical to choosing the most efficient option for your business. 

Top considerations:

Credit card payments: While popular, often come with higher transaction fees that can eat into profits. 

Direct Debit: This option typically has lower processing fees, making it an attractive choice for recurring payments or high-volume transactions.

Hidden fees: Some providers charge additional fees like chargebacks or flat rates that can add up quickly. 

Ways to boost efficiency:

Streamlined integration: Payment solutions that sync with your accounting software simplify reconciliation and save hours of manual work. This reduces administrative burdens while improving accuracy.

Avoid manual processes: Relying on multiple systems or manual payment handling increases the risk of errors. Streamlining your process can cut overhead and improve reliability.

Choose providers that balance affordability and functionality to maximize value. A smart choice now can lead to long-term cost savings and better efficiency. 

Streamline your payments and simplify accounting

Managing payments doesn’t have to be overwhelming. With the right tools and processes, you can stay on top of your accounts payable, avoid missed deadlines, and keep accurate records. Implement strategies like clear payment schedules and online bill pay to save time and reduce stress.

If you’re ready to simplify your payment process, consider using a solution that integrates seamlessly with your accounting software. Online bill pay services can help you schedule and track payments, reduce manual errors, and ensure your vendors are paid on time. 

Streamline your workflow and free up time for what matters most—growing your business.