How to choose an online payment method for your business

How to choose an online payment method for your business

Choosing an online payment method for your business? It’s never been more important to choose effective payment solutions that work for both you and your customers.

There are different payment methods that can enable you to receive payments online - this guide will help you choose the right solutions for your business.

The payment method blueprint: for choosing the best online payment solutions for your business

We've developed a blueprint that every business can use to effectively evaluate some of most frequently important considerations when it comes to choosing an online payment method:

1. Processing fees

Payment platforms charge a wide range of fees to process transactions, typically between 1.50% - 5.00% of a transaction’s value, and most charge additional fixed fees. Differences in fees are significant, as they are a variable cost that affect every payment.

The most cost effective online payment method for your business is dependent on the volume and value of transactions.

2. Security and fraud

Security and fraud risks must be considered when it comes to accepting online payments; card-not-present fraud losses in the UK were greater than £470m in 2019.  

Credit and debit card payments are susceptible to card fraud due to frequent account information breaches where details such as card numbers, customer billing addresses and customer names are stolen and used fraudulently.

Account-to-account payment methods with banking app or online banking authentication offer merchants and customers bank account access levels of security.

3. Settlement delays

Unavailable or pending funds negatively affect cash flow and often pose a significant obstacle to growth.

Payment processors that hold transaction funds typically take between 2 - 21+ days to pay out, and ultimately release funds at their discretion, which in some scenarios can lead to even longer delays.

Account-to-account payment methods do not hold transaction funds, and payments are made instantly between customer accounts and merchant accounts.

4. Chargeback costs

Credit card and debit card payments are vulnerable to chargebacks. Chargebacks occur when a customer disputes a transaction, and requests that their card-issuing bank reverse it. There can be many reasons for a chargeback such as fraud or buyer’s remorse.

Chargebacks are costly to businesses due to: fees charged by payment  providers to investigate and resolve disputes, loss of disputed funds, loss of non-returned merchandise or services and administrative business costs.

Account-to-account payment methods disable the chargeback mechanism for customers to initiate chargebacks via card issuers. This enables merchants to effectively deal with legitimate transaction disputes without having to factor in significant chargeback fees charged by card payment processors.

5. Checkout experience

Giving customers seamless checkout experiences increases checkout conversion rates.

Credit and debit card checkouts require card details and billing address information. Online wallet checkouts require existing or new user wallet accounts. Account-to-account checkouts enable customers to pay by bank using their banking app or online banking details to authenticate.

Offer your customers a comprehensive range of payment methods to reduce checkout abandonment due to lack of preferred payment methods.

Additional factors

There are additional business-specific factors to consider when choosing a payment method including: geographic payment availability, ease of technical integration, customer support availability, market checkout preference, checkout UI, dashboard functionality, refund and chargeback processes etc.

Choose payment methods that align with your business

Selecting an online payment method is a process specific to each business's products/services and customers, and you should assess the suitability of your payment options as innovative payment methods emerge and your business grows.

Interested in enabling direct from bank account payments at checkout?

Find out if online account-to-account payments are right for your business.

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