Ever grabbed a pack of candy from the display near the cash register, ordered takeout because you didn’t feel like deboning a whole duck, or taken a cab even though the subway was just a few blocks away? Despite our best intentions, sometimes (or perhaps a lot of the time) convenience takes the wheel and drives our behaviors.
It should come as no surprise, then, that making your products more accessible can increase sales. By building an ecommerce store and accepting online payments, you eliminate the effort it takes customers to drive to a store, deal with cash, and carry bulky packages. With digital payments, customers can shop from anywhere, anytime. Here’s how to build a user-friendly shopping experience.
Ways to accept payments online
Offering multiple payment options ensures access to the largest possible pool of customers. These are five popular online payment methods:
Debit and credit card payments
Debit and credit cards are the most popular payment methods for online transactions. Accepting various credit and debit cards—including Visa, American Express, and MasterCard—gives you access to the broadest customer base. Credit cards typically charge fees for online transactions, and those fees vary by credit card company.
You can simplify credit card payments by using a payment service provider like Shopify Payments or PayPal. Such platforms can handle key aspects of the payment process and ensure compliance with PCI DSS (Payment Card Industry Data Security Standard).
Digital wallets
Digital wallets, or e-wallets, are secure electronic payment platforms that store customer payment information for online and mobile transactions. Apple Pay, Google Pay, and PayPal are all examples of digital wallets. Digital wallets are convenient, enabling customers to purchase goods across a wide range of websites with a single username and password.
ACH transfers
An ACH payment is a direct bank-to-bank transfer that takes place over the Automated Clearing House (ACH) network, a US electronic system for processing financial transactions. With ACH transfers, you can accept online payments from customers without credit cards. ACH payments are only available to individuals with bank accounts in the United States.
Direct debits
Direct debitpayments involve merchants withdrawing funds directly from a customer’s bank account with the customer’s prior authorization. Customers without debit or credit cards can use this direct payment method to make online purchases. Direct debits also allow for recurring payments for subscription services.
Digital invoicing
Digital invoicing is a way to request payment for products or services. It involves creating digital invoices (documents requesting payment) and passing them along to customers via email or with invoicing software, like QuickBooks or FreshBooks. As the issuer, you choose which payment methods to accept, including credit cards, bank transfers, and digital wallets.
Benefits and drawbacks of accepting online payments
Setting up online payments is an essential step for every ecommerce business. If you conduct business online, customers expect the ability to make digital payments. Understanding the benefits and drawbacks of accepting digital payments can help you make informed decisions as you build your online ordering experience.
Benefits
Adding an online payment option has numerous benefits for you and your customers, including:
- Convenience. With online payments, customers can shop at their own convenience. As long as they have access to a steady internet connection, they can purchase items at their leisure.
- Transaction speed. Digital processing lets you instantly complete transactions and collect payments.
- Access. Implementing online payments can help you reach customers beyond your local area—even international customers if you’re properly set up.
- Enhanced record keeping. Digital payment processors can simplify data management and financial record keeping by maintaining a complete transaction history.
Challenges
Knowing the potential issues that can occur with online payment processing can help you make a plan to mitigate risks. Here are some aspects to consider before you start accepting online payments:
- Security risks. Accepting payments online involves handling sensitive customer information. Stored data may be vulnerable in the event of a breach.
- Transaction fees. Payment processing tools and credit card companies usually charge a small fee for each digital transaction. Payment processing tools often charge between 2.4% and 2.9%, and credit card fees range from 1.4% to 3.5% of the transaction.
- Technical issues. A website glitch or payment gateway error can create a negative customer experience and jeopardize a sale.
- Chargebacks. If a customer disputes a digital transaction, it may result in a payment reversal, also known as a chargeback. Chargebacks can lead to revenue loss and may trigger platform fees.
How to accept payments online
- Assess your payment needs
- Research security policies
- Choose a payment processor
- Select a payment gateway
- Design a checkout experience
- Test and optimize
A seamless checkout experience is essential for online shopping. A smooth purchasing flow maintains customer satisfaction and reduces cart abandonment. Here’s how to build a strong online payment process:
1. Assess your payment needs
Think about the types of payment you want to accept, your projected order volume, whether or not you want to accept international orders, and whether you need to accept recurring payments. Consider these factors to help you choose the most effective payment processing tools.
Payment processors have different pricing structures. Depending on your order volume, choosing a tool with a flat monthly fee may be more economical than a pay-per-transaction model. If you plan to accept foreign currencies, you need a processor that supports currency conversions.
2. Research security policies
Brush up on security policies for handling financial information and credit card data. Online stores are required to adhere to PCI DSS standards, which regulate the processing of payment information. Selecting a PCI DSS–compliant tool, like Shopify, Stripe, or Square, ensures your website meets these requirements. You might consider implementing additional security features like:
- Encryption. Encryption converts data into secure, coded formats.
- Tokenization. Payment tokenization replaces sensitive information with secure tokens.
- Fraud detection. These tools monitor website activities for suspicious behavior.
3. Choose a payment processor
Ecommerce websites typically require both a payment processor and a payment gateway.
Payment processors facilitate interactions with financial institutions like banks and credit card companies and are responsible for acquiring and transferring funds. Popular processing tools include Shopify Payments, Stripe, Square, and PayPal.
Look for a payment processor that integrates with your ecommerce platform and accepts all of your desired payment methods. Consider platform transaction fees, set-up fees, and stated processing times—all of which vary by platform. Check how the platform handles returns, chargebacks, and disputes as some services charge additional fees for these interactions.
4. Select a payment gateway
Payment gateways are responsible for verifying and encrypting financial information and work in tandem with payment processors to securely collect and transmit information. Think of gateways as intermediaries between you and your customers offering an additional layer of security to both parties.
Look for a payment gateway that integrates with your ecommerce platform and offers a user-friendly checkout experience. Compare fee structures, customer support services, and fraud detection tools, and ensure security by selecting a PCI DSS–compliant platform. Some major payment service providers, including Stripe and Square, offer both payment processing and gateway tools.
5. Design a checkout experience
Build a smooth checkout flow for your online store. Think about the experience from your user’s point of view. Ensure that form fields and buttons are clearly labeled and easy to read. Consider implementing an address look-up feature to make adding shipping info simple.
Limiting the number of steps can streamline the checkout process and reduce the order drop-off rate. You can also offer a guest checkout option to encourage orders from users who aren’t ready to open an account.
Ensure that your website performs well on mobile devices by using responsive design elements like scalable images and flexible grid layouts. Preview your page on a smartphone and confirm that all of the input fields are visible and text elements are legible.
6. Test and optimize
Test your platform using each of your accepted payment methods to confirm that payments are going through and the experience is logical. Some payment processors offer a testing feature that lets you create mock orders.
Once your checkout page is live, monitor performance and look for improvement opportunities. Pay attention to customer feedback and take note of frequent page errors. Many payment processors have their own analytics tools to support performance tracking.
How to accept payments online FAQ
How much does it cost to accept payments online?
The cost of accepting online payments varies depending on platform fees and the payment method. Payment processors typically charge a percentage-based fee ranging from 1.4% to 2.9% per transaction. Other potential payment processing fees include set-up fees, chargeback fees, and international transaction fees.
Can you accept online payments on Shopify?
Yes. You can use Shopify Payments, Shopify’s built-in payment processor, or select a third-party tool to begin accepting online payments. Many popular payment processing tools, including Stripe and PayPal, offer Shopify integration.
How can I safely take payments online?
Follow best practices for data safety by partnering with PCI DSS–compliant payment processing and payment gateway platforms. For additional protection, consider implementing security features such as two-factor verification.
