With the variety of options at hand to a business looking to make their products and services available to the online masses, this may be the first question you find yourself asking: What’s the best way to accept payments online?
The first step in setting up online payments is to identify your business needs, such as whether you need to process one-off payments or recurring subscriptions. Subsequent questions might follow: What method will best suit my business and my customers? How much will it cost? Is it worth it? Each and every business owner may answer the first three questions differently, but for any business, the question of, “is it worth it?” can be answered with a resounding YES. No matter what business you’re in, there are ways to increase your revenue online, making your storefront available 24/7 to a world market. You’re not limiting yourself to local customers; you have the potential to expand your target market horizon indiscriminately.
In this article, we’ll discuss the top two payment acceptance picks for retailers when they first make the decision to engage in e-commerce. Recently, many brick-and-mortar-based companies have closed their doors due to the persistence of this country’s poor economy. Storefront locations carry with them the burden of high overhead and the absolute need to draw in sales or face closure. Smart retailers have been able to absorb some of this loss by shifting their focus from selling face-to-face to selling online. They’ve also been attracting lots of new, loyal customers to their online storefronts, picking up previously unavailable customers due to the presence of their now-extinct competitors. An online storefront serves as the central platform where customers can browse, add items to their cart, and complete payments.
People are not only shopping online from the comfort of their own homes these days. Seeing as how we live in an “I want it NOW” society, the market is shifting even more towards mobile e-commerce sites. A potential customer might be stuck in traffic and remember they need to order a tail light for their truck. The company that gets this business is the company that extends itself to the customer in need on the spot. Offering flexible payment options, such as pay-as-you-go, memberships, subscriptions, and packages, can help build customer loyalty and increase revenue, particularly for service industries like restaurants that benefit from robust online ordering software. Just thinking about the potential situations where a buyer would make use of your online shopping platform could spawn a list consisting of hundreds of examples, but none of this means anything if you’re not ready to accept online payments in a safe, secure environment.
Introduction to Online Payments
In today’s fast-paced digital economy, the ability to accept payments online is no longer a luxury—it’s a necessity for any business looking to grow, improve cash flow, and meet customer expectations. As e-commerce and digital payments continue to rise, understanding how to accept payments online securely and efficiently is crucial for both small businesses and established enterprises.
At the heart of online payments are several key components: a merchant account, a payment gateway, and a payment processor, and understanding the difference between a merchant account and a payment aggregator can help you choose the right setup for your business. A merchant account is a specialized bank account that enables your business to accept credit card payments and other forms of digital payments. The payment gateway acts as a secure bridge, allowing your customers to enter their payment information safely on your website or online store. Meanwhile, the payment processor handles the technical side of the transaction, ensuring funds move from your customer’s bank account or credit card to your business’s bank account, especially when you partner with a merchant services company that specializes in secure, efficient processing for small businesses.
Choosing the right payment service provider is a critical decision. Leading providers like PayPal, Stripe, and Square offer comprehensive payment solutions, including payment gateways, online payment processing, and even tools for sending invoices or managing recurring payments. When evaluating payment service providers, it’s important to look closely at payment processing fees, monthly fees, and any hidden fees that could impact your bottom line. Security features such as encryption, tokenization, and fraud prevention tools are essential to protect your customers’ sensitive information and maintain trust.
Offering multiple payment methods—such as credit or debit cards, Google Pay, Apple Pay, Samsung Pay, and ACH transfers—ensures you can accommodate your customers’ preferred payment method, avoid the limitations of being a cash-only business, and increase the likelihood of completed online transactions. The more flexible your payment options, the more customers you can serve, both locally and internationally.
By accepting payments online, you streamline your payment process, reduce administrative tasks, and gain instant access to funds, which can significantly improve your business’s cash flow—especially when you work with a provider that offers comprehensive merchant services and payment processing FAQs to guide your setup and operations. Online payments also open the door to recurring payments, subscription models, and contactless payments, all of which can boost customer loyalty and drive online sales. With the right payment system in place, you can start accepting payments quickly and securely, positioning your business for long-term success in the world of e-commerce.
PayPal: Accept Payments Online
Let’s first look at what is most commonly recommended as the “newbie’s” go-to option for accepting online payments: PayPal. Known worldwide for its integration with (and as a property of) eBay and its ease-of-use, PayPal ends up being the choice of a majority of new merchants’ online payment gateways. PayPal enhances checkout conversion rates by up to 54% due to its brand recognition and fast onboarding process, making it especially attractive for small businesses just starting out. A payment gateway is defined as an e-commerce application service provider that authorizes payments for businesses online. PayPal might be a good fit for your business at first and help you get the hang of selling and processing payments online, but in the e-commerce world, it’s not seen as a desired permanent solution. One of the major pluses of using PayPal is that they don’t charge a monthly account maintenance fee. This may be important to you if you’re just starting out in e-commerce and are unsure of how much online processing you’ll really be doing and whether it’s worth investing in a more professional payment processing option. If you intend to sell your wares on eBay, you definitely need a PayPal account to accept payments through the auction site. If you have submitted payments through PayPal in the past, it’s quite simple to transition your account to be able to accept payments, as well.
PayPal allows small businesses to send invoices and collect payments directly from a customer’s bank account or PayPal balance, making it easy to manage delayed payments and streamline the process of collecting payments. Additionally, PayPal can be connected to accounting software to help manage business finances and simplify bookkeeping tasks.
Now for the bad stuff: yes, PayPal is easy to set up and to understand, but on your customer’s side, a merchant relying on PayPal to accept payments is viewed as a less trustworthy, less established, potentially unprofessional business. Your customers’ checkout process is interrupted. Upon checkout, your customer is taken to PayPal’s external website to complete the transaction, forcing the customer to sign up for a PayPal account if he/she doesn’t already have one. The major downside of this is that your customer may not want to sign up with PayPal. This plausible reaction will result in lost sales.
We’re not going to review transaction fees here because they are constantly changing, but in general, PayPal takes a noticeably large portion of each sale, especially when compared to how debit vs. credit transaction fees can impact your overall processing costs. Small businesses should carefully review the fine print regarding PayPal’s transaction fees and refund policies to avoid unexpected costs. PayPal does not visually integrate with your website’s storefront, meaning that you can’t customize colors, fonts, headings or maintain a look consistent with your brand’s image.
One last downside of relying on PayPal to process customer payments online is that after the checkout process is complete, you don’t have access to vital customer data. You haven’t learned anything about the person that just purchased from you: where do they live? How did they hear about your company? Did they find your site easy to navigate? All that relationship building information is lost to you. If you realize how important this information is to the growth of your business, you’ll want to move on to a different payment gateway as soon as possible.
Authorize.net
Let’s say you’ve gotten a PayPal merchant account set up but are looking to purvey a more professional image of your company online. You can keep PayPal around on your website as a payment option available to your customers that may prefer to pay through them. It’s important to offer whatever’s most convenient to your market. You may want to wait and see what kind of credit card processing volume you conduct through both PayPal and our second payment gateway option, Authorize.net, and then decide whether to keep one or both payment options present on your site.
Authorize.net is able to seamlessly allow your buyers to enter their payment information right on your site, making it easy to accept card payments online and ACH payments. It doesn’t force your customers to sign up for a third-party account and keeps your site’s appearance consistent. By accepting payments directly on your site, you project a more professional image to potential customers. When a purchase is made, those funds are deposited directly into your business’s bank account via credit card or ACH transfer, which can be a cheaper option for larger invoices. ACH transfers often have capped fees for high-ticket or recurring B2B payments, such as Stripe capping ACH fees at $5.
Integrating the payment processor into your website can vary depending on the provider, with many offering pre-built plugins or APIs for easier integration. It’s important to test your payment system using the payment processor’s testing mode before going live to ensure everything works properly. Once testing is complete, you can switch to live mode and start accepting payments from customers. Payment links can also be used to direct customers to a secure checkout page, providing additional flexibility for your business.
Alas, there’s always a downside: Authorize.Net charges you a monthly service fee. Like PayPal, there is a fixed transaction fee accompanying each purchase. Most payment processors charge a fee for each transaction, typically a small percentage of the transaction amount plus a fixed fee; credit and debit cards typically incur transaction fees of 2.6% to 3.5%, while ACH transactions are around 1%. Choosing between interchange-plus and flat-rate pricing models can further influence how much you actually pay in processing fees. Flat-rate pricing models may be easier to predict for businesses with lower transaction volumes, while interchange-plus models can save costs for growing businesses. Be aware of chargeback fees, which can cost £15 to £25 or more per chargeback, monthly fees for access to services, and higher processing fees for certain card types such as business or rewards credit cards.
You need to set up a merchant account (a merchant account allows your business to accept credit cards) with one of Authorize.net’s resellers, but that’s not necessarily a negative as any business will find having a merchant account essential to business survival, especially if they also have a brick-and-mortar location. Security measures are crucial—look for PCI-compliant payment processing, AI-powered anti-fraud systems, dedicated risk teams, and the Three-Domain (3D) Secure authentication protocol to protect your transactions and customer data. Monitoring your transactions regularly is also important to handle disputes or chargebacks and to track your sales performance effectively. Stripe is widely recognized as the industry standard for developer-friendly APIs and technical flexibility. Keep in mind that fully customized website integrations may require troubleshooting and resolving technical issues for optimal performance. At the time of this article’s writing, PayPal is not yet an option when conducting transactions face-to-face.
Take Home Message
In answering this article’s primary question, “What’s the best way to accept online payments?” it’s really up to you and your business’s situation. Do you want to test the waters to see if an e-commerce solution is something that would build your bottom line? Go with PayPal for a few months and see how you fare. Are you a larger business making hundreds or thousands of sales each day? I wouldn’t hesitate to make an immediate jump into Authorize.net; you’ll end up saving more money and receiving your payments in such a way that negates any thought of a monthly service fee being viewed as an encumbrance.
