Online and Mobile Payment Solutions for Small Businesses

If you run a small business a small business, it’s important to accept payments online and via mobile. Offering these types of payment options can increase sales and improve cash flow.

That’s because, the easier you make it for your customers to do business with you, the more likely they are to consider you first when they need something. According to Pew Research, 95% of Americans own a cell phone, while 77% own a smartphone.

Those facts illustrate why companies like Apple, Google, and numerous startups are so interested in online and mobile payments.

A quick search reveals plenty of options. Which should you choose? There are a number of third-party payment processors that allow small businesses to take payments from customers online and via mobile, while seamlessly incorporating the payment methods into their business.

Keep reading to discover some of the most popular payment services used by small businesses. We’ve included information to help you compare the services and choose the best one for your company.

PayPal

PayPal is a widely used service for accepting payments online.The company offers personal accounts as well as business accounts, and allows small businesses to accept payments from other PayPal users, credit cards, Venmo, and bank transfers.

Whether you are a traditional brick-and-mortar business or an online business, PayPal makes it easy to accept payments from all types of customers, but there are limitations. For starters, it’s not available in all countries internationally, so cross-border payments can be a problem.

PayPal charges 2.9% of the payment for an online transaction or 2.7% for a brick-and-mortar transaction plus 30 cents per transaction. Outside the U.S., those fees are 4.4% and 4.2%, respectively.

Nevertheless, it’s free to transfer from PayPal to your bank. You can also add up to 200 of your employees to have limited access to your account.

Acceptable payment methods: PayPal standards will accept credit and debit cards, direct payment from other PayPal accounts, and PayPal credit.
Integration methods: PayPal Checkout allows your customers to pay directly through your website. You can also send invoices from your PayPal account to customers’ email addresses. PayPal also has a card reader and a POS solution that allow you to take payments in person via credit card or PayPal card.
Costs/Fees: PayPal does not have monthly or sign-up fees. Transaction fees are based on in-store transactions or online, as stated above, and geographic region.
How long it takes to get paid: Receiving money into your PayPal account from another PayPal account is instant. Credit card payments usually take 3-5 business days. To send money to your bank from your PayPal account is free and takes one to three business days, but you can opt for instant delivery for a fee. Due to COVID-19, PayPal has temporarily suspended the instant delivery fee. You can also request a check with one to two week delivery for $1.50.

Square Mobile Payments

Square launched in 2009 and allows brick-and-mortar retail stores to integrate Square payments with their point-of-sale terminals and cash registers. Other brick-and-mortar businesses such as bars and restaurants, health and fitness clubs, home repair services, and professional services can also use it. Merchants can accept credit cards, debit cards, contactless and chip cards, magstripe, and more. You can even offer gift cards through Square.

The beauty of Square is that merchants and microbusinesses can accept payments either on the web or through mobile apps and hardware that connect to your established payments systems. The service also includes robust analytics that allow you to learn more about how your customers pay for your products and services. Square has a variety of fees for different merchant needs and almost all of them are lower than PayPal’s.

Using Square also enables you accept payments from Apple Pay users. The way Apple Pay works is: a customer loads their card into Apple’s payment app. When they visit a store that accepts Apple Pay, they simply authenticate the payment with their fingerprint or Face ID, hold their device over the payment terminal, and the transaction is done. Conversely, when shopping online, a customer just needs to click Apple Pay at checkout.

Contactless payment systems are more secure. Apple Pay assigns a unique number to your transaction instead of transmitting your card number — this is known as “tokenization.” The generated number is used only once, so even if a cyber thief got the number, there’s nothing they can do with it.

In addition to Apple Pay, Square supports Android payment solutions, such as Google Pay.

Acceptable payment methods: Square accepts mobile payments, credit cards, and debit cards.
Integration methods: Square has a point-of-sale app and a card reader. They also have a card-not-present option for websites, phone orders, and invoicing. You can also use Square Terminal to take orders on your own computer. If you’re building an e-commerce website, you can order a custom integration.
Costs/Fees: The POS app is free. The card reader is also free for the first reader, $10 for each additional reader. The transaction fee is 2.6% + $0.10. Square offers custom pricing for businesses that process $250,000 in card sales and an average ticket size of $15. Invoice transactions cost 2.9% plus $0.30 per transaction. Card-not-present and Virtual Terminal transactions cost 3.5% plus $0.15. E-commerce transactions cost 2.6% to 2.9% plus $0.10 to $0.30.
How long it takes to get paid: Transfers are next business day.

Stripe Targets Internet Businesses

Stripe, which launched in 2010, provides payment solutions for online businesses. Among other features, it allows online businesses to use the company’s API to beef up their own operations. One such innovation is the ability to issue expense cards for employees and other physical and virtual cards.

Stripe is also active in countries where PayPal is absent. Payment methods include bank transfers, popular wallets like Alipay and WeChat, other local payment sources in various parts of the world, local currencies, Apple Pay and Google Pay, and, of course, credit cards.

Like Square, Stripe offers an awesome dashboard with analytics, and it also features a robust development platform for small businesses that want to build a successful online business model. Payment fees start are 2.9% plus $0.30 per transaction. However, larger businesses can work with Stripe to create a customized package that meets their needs. PayPal is easier to use, but Stripe is more flexible for online business and e-commerce. More on e-commerce definition.

Acceptable payment methods: Stripe will receive payments from all major debit and credit cards from every country. Also, customers can pay with the major wallets: Alipay, Apple Pay, Google Pay, Microsoft Pay, WeChat Pay, and more. They also accept local payment methods from around the world including ACH, Bancontact, EPS, Giropay, SEPA, SOFORT, etc. And they accept 135 currencies.
Integration methods: They can integrate with mobile, websites, POS, Email invoicing, and popular content management solutions such as WordPress, Drupal, Magento, Shopware, and WooCommerce.
Costs/Fees: No setup or monthly fees. Stripe offers custom pricing for custom integrations with volume discounts, multi-product discounts, country-specific rates, and interchange pricing.
How long it takes to get paid: Country-dependent. In the U.S., the minimum is two days. High-risk businesses could take up to 14 days. Stripe does support multiple bank accounts for different settlement currencies.

Venmo: The Up-and-Coming Payments Processor

Venmo is the new kid on the block. The service launched in 2009, but for the longest time, it was nothing more than a way for friends to send money back and forth to each other without huge processing fees. Now owned by PayPal, Venmo has issued its own credit card and allows merchants to accept payment through PayPal Checkout or by integrating with Braintree, another PayPal-owned startup, for mobile payments.

Acceptable payment methods: Venmo is mostly a peer-to-peer payment app that allows friends to split bills at restaurants and send money to each other, but they have a business solution. Venmo has a debit card, but payment is usually within the Venmo app itself, so you need a Venmo account and you can download the app at Google Play and the Apple Store. This is a great payment method for microbusinesses.
Integration methods: Mobile, website, and app. It also integrates with Braintree and PayPal Checkout.
Costs/Fees: No monthly or annual fees. No fees to receive money, but there is a 1% fee to transfer funds to a debit card or bank account with $0.25 fee minimum and $10 fee maximum.
How long it takes to get paid: Instant.

Amazon Pay

Amazon Pay offers third-party merchants a way to accept payments from customers who are also heavy Amazon users. Anywhere customers can buy from Amazon, Amazon Pay is there to provide payment processing for businesses that need a way to process online payments. Their Global Partner Program allows merchants to integrate Amazon Pay into their business model.

Acceptable payment methods: Web, mobile, and Alexa Voice. Major credit and debit cards.
Integration methods: Website shopping cart and mobile. Amazon Pay is compatible with BigCommerce, Magento, WooCommerce, Shopify, and other popular e-commerce solutions.
Costs/Fees: Web and mobile cost 2.9% plus $0.30. Alexa Voice costs 4% plus $0.30. Amazon Pay adds a cross-border processing fee of 3.9% for web and mobile and 5% for Alexa Voice.
How long it takes to get paid: One to two business days.

FreshBooks

FreshBooks is a web-based small business accounting and invoicing solution. It’s easier to learn than QuickBooks and doesn’t include many of the robust features that small businesses typically don’t use anyway. It’s simple and easy to use.

Recently, FreshBooks quit supporting PayPal payments. Instead, they now support ACH direct payments. Because they are an accounting and invoicing system for small businesses, particularly service businesses, freelancers, and web-based businesses, their fee structure is not transaction-based. Rather, it is subscription-based.

Acceptable payment methods: ACH, major credit and debit cards, FreshBooks through WePay, and Stripe.
Integration methods: FreshBooks integrates with most banks, allowing you to receive ACH payments directly to your bank account. It also integrates with Stripe, which allows you to receive payments to your bank account. And FreshBooks integrates with WePay to send payments directly to your bank should customers choose that payment option. All of this is done directly from your customer invoice. FreshBooks also has a Virtual Terminal that allows you to receive payments from your own computer, in person, and over the phone. You can even set up recurring payments.
Costs/Fees: Self-employed professionals and microbusinesses can bill up to five clients per month for $15 per month. For up to 50 billable clients per month, the fee is $25. It costs $50 per month to bill up to 500 clients. FreshBooks also offers custom pricing. For these prices, you get the ability to send invoices, create estimates, and make project proposals. You also get accounting reports. FreshBooks offers a discount for subscribing annually. Additionally, you pay 2.9% plus $0.30 per transaction for credit card transactions and Stripe transactions, and 1% for ACH payments.
How long it takes to get paid: Usually, two days. ACH is a little faster than credit card transactions.

Payment Processors Popular in Europe

While Stripe and PayPal are both available in Europe, and Square has begun its European tour starting with the United Kingdom, there are other payment processors that focus solely on European markets. Two worth mentioning are SecurionPay and Skrill.

SecurionPay claims to accept every payment processing method. Literally. What sets it apart from PayPal is its targeted focus on software-as-a-service companies, digital content, and pay-per-use scenarios. Its unique features make it an excellent option for micropayments and subscription-based business models.

Skrill is based in the United Kingdom. It’s a popular application because Skrill has millions of users with an online wallet that allows them to make payments at merchants and online sites they use. Therefore, businesses have access to a wide user base right off the bat. There are some technical limitations to Skrill, but payment options are not one of them.

Other Payment Processors to Keep an Eye On

The science of processing payments online is ever-evolving. Several up-and-coming services are quickly changing the way merchants online and offline are accepting payments and allowing customers to pay for goods.

For example, if you use QuickBooks, and there’s a good chance that you do, look at Intuit GoPayment. You get the card reader and the app for free and swipe rates are 2.4% plus $0.25 or 3.4% $0.25 for keyed entries.

Two other solutions to take note of include Affirm and Klarna, which allow customers to pay for product purchases over time with fast and easy lines of credit approval at the point of sale.

Because U.S.-based Affirm and Sweden-based Klarna are technically loan service providers rather than payment processors, they only get a mention, but their unique arrangement with merchants that allow this payment method means merchants have another revenue stream that is effectively fee-less, making credit cards a less attractive option.

In Canada, National Processing and Helcim are respected alternatives. In Australia, Kash and AfterPay fill the void.

Final Thoughts

Whatever payment options you offer, you still need to make sure your customers are actually paying you. Our ZenBusiness Money app makes it fast and simple for small business owners to get paid. You can use it to easily send custom invoices, accept credit card and bank transfer payments, and manage your clients from an easy-to-use dashboard.

Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.