How Small Businesses Set Up or Update Online Selling
Electronic payment systems and e-commerce
People are turning more and more to purchasing goods online, with e-commerce increasing 23 percent year over year. Electronic payment systems are at the core of online transactions, with digital payments expected to reach a record $726 billion in 2020, according to a study by Capgemini and BNP Paribas.
Even if you have or are familiar with electronic payment systems—the way of paying for goods and services through an electronic medium without checks or cash—the landscape is changing.
If your company has an older website with no online store, or one that is outdated, there is good news. Online payment processing and e-commerce features have gotten easier for small businesses to manage.
Here is what businesses need to know about electronic payment systems and related e-commerce tools going into the next decade.
Electronic Payment Methods
Electronic payment systems, also called an e-payment system or online payment system, are most often used with credit and debit cards. Alternative payment methods include bank transfers, electronic wallets, smart cards or cryptocurrency wallets. E-payments fall under two general categories—cash or credit.
Credit Payment System
These include credit cards issued by a financial institution; e-wallets which stores the user’s financial data to ease online transactions; and smart cards which are reloadable cards that can be preloaded with funds to make transactions.
Cash Payment System
These include direct debits where the account holder instructs the bank to collect a specific amount of money for goods; an e-check, which is a digital version of a paper check, tied to one’s bank account; e-cash where a certain amount of money is stored on a client’s device and made accessible for online transactions; and a stored value card, which has a certain amount of money that can be used to make purchases. A gift card would be an example of a stored value card.
Businesses can decide which types of payments to accept when setting up a payment gateway and e-commerce store. These should be reviewed periodically to keep up with consumer trends in how they like to pay. A few years ago, nobody had yet heard of e-wallets!
Advantages of e-payments
Customers can pay for items on an e-commerce website anytime and anywhere from nearly any internet-connected device. Businesses do not have to wait for a check to clear the bank so they can access the funds they need.
Lower transaction cost and decreased technology costs
There are solutions today that small businesses can add to their website without advanced technical knowledge. This reduces personnel time interacting with customers in a store. Transactions create a digital record and receipt, further reducing staff interaction. Customers do not have the expense of driving to a store or mailing checks. Plus, both the business and customer can look at their respective accounts online and see their transaction history, eliminating the need to generate statements.
Payment gateway providers offer highly effective security and anti-fraud tools to make transactions reliable, so this task does not need to be handled by staff. E-payment also eliminates the security risks that come with handling cash money.
Consumers carry around little cash—less than $50 for most people according to Bankrate. Accepting e-payments increases payment options and increases impulse buys.
Disadvantages of e-Payments
E-commerce fraud is growing at 30% per year. Companies need to protect customer’s sensitive financial information stored in a business’s computer systems from unauthorized access. There are additional costs in procuring, installing and maintaining sophisticated payment security technologies. However, these costs are largely only incurred with in-house e-payment systems. Using a third-party e-payment gateway typically alleviates these security issues, but there is a fee for the service.
The lack of anonymity
For most, it’s not a problem at all because of security protocols within payment systems. Just be aware some of customer data is stored in the database of the payment system, and it is a good idea to ask how that data may be used.
The need for internet access
If an internet connection fails, it may interrupt the completion of a transaction. Some shopping carts will retain customer products in the cart for a certain amount of time, and even remind customers they have items in their cart. Check if your e-commerce solution offers this feature.
If someone uses a stolen credit card and the actual card holder disputes the charge, it may be difficult to dispute such a claim. Read more about disputed transactions and avoiding fraud here.
Setting up a payment Gateway
You might already be familiar with payment gateways if you accept credit cards at a brick and mortar store. A payment gateway is a merchant service that can either be provided by your bank or by a payment service provider. The payment service provider accepts electronic payments from your customers by a variety of payment methods that you designate.
Some of the top online payment processors include Authorize.net, Stripe, Payline, Adyen and PayPal Payments Pro. You can read a review of these processors on Tech Radar.
Setting up an online store
If you don’t already have e-commerce, ie, an online store, set up on your website, there are several vendors to choose from. Here are the top six:
+ Big Commerce
+ Woo Commerce
+ Square Space
If you already have a website, you should pick a payment gateway and e-commerce solution that works well together. For example, both Shopify and Big Commerce work with a huge list of payment gateways. However, they both have preferred vendors that they work with by default, which could mean less troublesome setup and operations.
The other aspect to consider is the platform your website is built upon. WordPress is the world’s largest website builder platform, so if you have a WordPress site, choose an e-commerce solution that works well with it. Woo Commerce, Big Commerce and Shopify are popular choices for WordPress.
Some vendors, such as Wix, provide a website with e-commerce features. This is a good DIY option for smaller stores just starting out.
When choosing an e-commerce platform, consider what you are selling. One platform might be more oriented toward digital downloads while another on physical products. See what each service offers as far as design customization to make your store look great and match your branding.
Also consider what apps and integrations are available like drop shipping, email marketing services, contact management software, accounting software, etc. Those tools will be essential to grow your ecommerce business more efficiently.
Finally, look for good support options that are free or low cost. This can save a ton of money as you build an e-commerce business.