What is a payment? A payment is the transfer of money in exchange for goods and services that have been previously agreed upon by all parties involved. There are many different types of payment methods. A payment can be accepted in the form of cash, check, ACH payments, credit card payments, debit card, check, or from a mobile device.
Types of Payment Methods
Payments are made using various methods. The future of payment methods continue to evolve. Below are the 6 most common types of payments:
1. Credit Card Payments
Credit cards allow for a quick and convenient payment process. This method works by offering users a certain limit that they’re allowed to spend. Credit cards impose the condition that cardholders pay back the borrowed money, plus any applicable interest, as well as any additional agreed-upon charges, either in full by the billing date or over time. A vast majority of businesses let the customer make purchases with credit cards, which remain one of today’s most popular payment methodologies for buying consumer goods and services.
2. Debit Card Payments
Although debit cards look almost identical to credit cards, they differ in many ways. Debit cards are directly tied to a bank account and funds are immediately withdrawn when a payment is made. If someone doesn’t have enough money in their account, transactions can be declined. Like credit cards, debit cards are easy to carry around and are widely accepted by merchants. Although this payment method doesn’t include any fees, there is limited fraud protection and no credit score benefits.
3. ACH Payments
Do you collect recurring payments from customers or clients? Does your business accept large ticket purchases for products or services? If so, your business should be accepting ACH payments! Automated Clearing House (ACH) are electronic bank-to-bank transfers. These computer-based transactions support both credit transfers and direct debits. As one of the safest and most reliable payment methods, ACH payments are simple to set up. For businesses, these are a fast and convenient way to pay vendors and receive client payments. Unlike wire transfers, ACH payments can be reversed and do not have location limitations. By implementing this type of payment, you can cut your processing fees by as much as 75%!
4. Cash
As the saying goes, “cash is king!” Cash is one of the simplest payment methods. This involves the use of physical currency, which offers immediate tangible value. Cash remains widely used in smaller and local transactions and is universally accepted. By eliminating the need for internet and technology, you don’t have to worry about running into any transaction issues. Since other payment methods come with fees attached, many small businesses prefer being handed cash. With that being said, there are still some disadvantages to cash payments, as cash can easily be lost, stolen, or destroyed.
5. Mobile Payments
Mobile payments have gained popularity in recent years! Apple Pay, Google Pay, and Samsung Pay are some of the most commonly used mobile wallets. People love having the option to make a quick purchase by simply pulling out their phone. This allows for a convenient transaction with just the tap of a smartphone on the POS terminal. Although the mobile device makes for added security, a bad connection or dead battery leads to no payment access. These emerging payment methods are becoming more commonly accepted, and businesses must be prepared!
6. Checks
Due to advances in technology, checks are not used as often as they used to be. This is a traditional form of payment that provides easy record-keeping and allows for delayed payment processing. Although checks have fallen out of favor over the years, there are still certain circumstances where checks are the way to go. For example, checks have important value in legal and formal contexts. Since checks must be signed by the recipient, this adds a layer of protection.
Understanding Payments
Payments are ever-changing but inevitable! It’s important to keep up with both traditional and modern payment systems. As a business, you must accept a variety of payment methods from customers. Everyone prefers a different method, and each one is unique with its own positives and negatives.
Below are the benefits to offering multiple payment methods:
- Customer freedom and convenience
- Expand your market reach
- Faster transactions
- Accelerated cash flow
- Competitive advantage
- Stronger security
- Staying up to date with trends
When starting a business, you must decide how you want to accept payments. With the rapid growth in technology, it is highly recommended for businesses to offer digital payment options. Technology payment methods are becoming more convenient and allow you to track inventory and sales.
No payment method is the same. Each type of payment has differing benefits, drawbacks, and most of the time, fees. Therefore, it’s vital to understand the details of each type.
The Future of Payments | Contactless Payments
We are living through a time of great change in the world of finance and payments. Say goodbye to customers frantically fumbling for loose change, hunting for a pen, and getting stuck at a slow card reader. These frustrations are fading fast in the age of contactless payments. Beyond a simple tap, we’re on the verge of a payment revolution, and businesses need to stay ahead of the curve!
Whether through cards, mobile apps, or digital wallets, contactless payments use radiofrequency (RFID) or near field identification to communicate with the credit card readers. This saves time for everyone involved. Although near field communication (NFC) technology has been around for a while, the contactless payment experience still feels almost futuristic! As these payment methods advance, people must be ready to adapt.
As economies have evolved, so have the numerous ways consumers pay for goods and services. Embracing contactless payments meets modern consumer expectations and positions your business at the forefront of the payment revolution! Tap-to-pay, mobile wallets, and electronic payments are evolving technologies that offer easier ways to transfer money. As financial management moves more into digital spaces, the technology will only grow in popularity and availability.
How to choose the right Payment Methods for your Business
It can be difficult to choose the right payment methods for your business. It is a critical decision that can either positively or negatively affect your business. Before deciding on which payment methods to accept, you must consider a few factors.
First, you need to understand your customer base. Think about your customers’ demographics and preferences. This gives insight into what transactions they will most likely prefer. For instance, if your business targets young adults, you will definitely want to accept mobile payments.
You must also evaluate the transaction size and volume of your business. High-value transactions will benefit from checks or bank transfers, while cash payments are more appropriate for small transactions. This also relates to processing speed and what payment methods are quicker and more efficient.
Carefully assess the costs associated with each method of payment. If you’re including all the transaction fees, how does this align with your business budget?
Security should be one of your top priorities, and each method has different security features. Choose the types of payments that allow for safety and security that is needed for your clients and business.
Lastly, it is in your best interest to review the terms and conditions of each method. Pay close attention to policies, obligations, and penalties. When you fully understand these terms, you will get better insight into the payment methods and will be less likely to run into any unexpected challenges.
How Gulf Management Systems can help
GMS is your partner for fast and affordable payment solutions! We take a personalized, consultative approach and develop powerful management solutions customized to your business. Whether you accept payment methods in person, online, or through your software, GMS has you covered! We offer a full selection of payment solutions, including payment management software, automatic billing, ACH processing, merchant services, mobile payments, and other point-of-sale software options. With over 30 years of payment processing experience, it’s safe to say we are definitely the payment experts!
ACH Payments: Accept one-time or recurring checking or savings drafts from your customers.
Credit Card Processing: Never miss a payment again! Accept Visa, Mastercard, Discover, or Amex at your business.
Software: Use our software to manage your gym, nonprofit, etc.
Point-of-Sale: We offer stand-alone POS options for accepting payments at your retail business.
Direct Deposit: Eliminate the need for writing checks by making direct deposits into your employee’s bank account.
API & Gateway Options: Connect your website, software, or e-commerce website with our gateway or API.
Mobile Payments | Payment Made from Mobile Devices
Mobile payments are a type of payment made on a mobile device such as a mobile phone or tablet to pay for goods and services
Accept Contactless Payments at your Business
What are Contactless Payments? As the name suggests, contactless payments don’t require any physical contact between the buyer’s credit card or smartphone and the point-of-sale
ACH payments | What is ACH?
Do you collect recurring payments from customers or clients? Does your business accept large ticket purchases for products or services? If so, your business should
