Automate your finances. No more spreadsheets
As more and more things in our world go digital, payment processing software makes it faster and easier for your customers and clients to pay you, as well as for you to pay your company’s bills and expenses. With online payment software, such as accounts payable and accounts receivable, you can accept credit card payments, send e-invoices, keep track of accounts payable and accounts receivable, and more.
But with so many options, how do you choose? We’ve put together this guide to help you pick the right payment processing solution for your business. Keep reading to learn more.
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What is Accounts Payable & Accounts Receivable?
These two common accounting terms are also common features of most accounting software. Any great accounting software will have some level of ability to log your company’s incoming payments and outgoing payments.
Accounts Payable
Accounts payable generally refer to what a company owes to suppliers, vendors, or other creditors. Any accounting software should have a way to log these payments; however, a tool like Quickbooks also allows you to pay all your company’s bills directly in the software itself. This ensures that everything is logged in one system and helps ensure books are kept up-to-date.
Accounts Receivable
Accounts receivable generally refers to any money that is owed to the company, such as payments owed by customers or clients. Like accounts payable, a level of accounts receivable capabilities is key to any good online accounting tool. It is ideal to find an all-in-one accounting software, such as Netsuite, that has the capability to process payments directly in the software. This helps keep everything in one single system and makes payment processing and bookkeeping a streamlined process.
Invoice-to-Pay, eBilling, and Other Key Terms
Understanding these key terms will equip you to compare brands with confidence.
Invoice-to-Pay
Invoice-to-pay is an integral part of the payment processing cycle that involves paying an invoice due directly from the invoice itself. With invoice-to-pay, you can send your client or customer an invoice, and directly on the invoice will be a button for them to pay the invoice through. When included in your accounting or online invoicing software, Invoice-to-pay is one of the most convenient ways to process payments because everything is processed and logged in one central system.
eBilling
eBilling (short for electronic billing) lets you send bills to your customers and accept online payments. In doing so, you can collect payment faster and handle recurring bills more efficiently. It is more-or-less the same as an invoice-to-pay feature.
e-Invoicing
e-invoicing involves creating an invoice using structured data that a computer can understand. That way, accounting software can automatically process the invoice. e-Invoicing usually exists in EDI or XML format. When searching for online invoicing software, e-invoicing features are often synonymous with invoice-to-pay or eBilling.
Digital Invoicing
Digital invoices, not to be confused with e-invoices, contain unstructured invoice data in a PDF or Word file. Alternatively, a scanned paper invoice can be considered a digital invoice. Put simply, a digital invoice is a paper invoice you can read on a computer screen but cannot be processed directly from the invoice.
Benefits of Accepting Online Payments
Here are some benefits of accepting online payments.
- Reduces costs: By moving your payment processing online, you no longer have to buy paper, postage, and supplies to send invoices.
- Increases sales: Accepting online payments makes it easy for customers to buy and clients to pay. Online payment makes it easy for them to see their order get filled — this instant gratification makes them more willing to buy.
- Saves time: Creating invoices online is much faster than printing and mailing invoices. You can automate recurring bills to make them hands-off. Additionally, all records, from invoices to receipts, are kept in a central location and can be found easily.
- Betters cash flows: You can receive money in as little as a day, depending on what software provider you’re using, when you accept online payments.
- Improves customer satisfaction: Customers will enjoy the convenience that online payments provide. Additionally, they will trust you more.
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Useful Features to Look For in an e-Invoicing Tool
It can be tough to pick a payment processing application with so many choices out there. Here are some features you should look for that will narrow down your list.
Accepted Payment Types
It’s simple: the more types of payments you can accept, the more potential revenue you can earn. Most systems accept Visa and Mastercard. However, many may not work with American Express due to higher fees. Be sure to consider what your customers and clients prefer, or look for a software like Xero that accepts payments in different methods, countries, and currencies.
Business Types
Some payment processors are designed for product-based enterprises, such as eCommerce stores. Others cater to service businesses, such as consultants, freelancers, or tradespeople. Keep this in mind as you look through your options.
Recurring Payment Features
Do you provide a monthly or weekly service? Or perhaps you are on retainer for consulting with a certain client. In either case, recurring payment features can save you time while helping you capture more revenue. You simply set up all the information and let your accounting software run on autopilot.
Integrations
Like most small businesses, you use a few tools or software to keep everything running smoothly. Look for payment processors with APIs or plugins to integrate into your existing accounting, CRM, or ERP software. Doing so will reduce duplicate errors and save you a lot of time.
Additionally, consider payment processors that seamlessly integrate with your website. This provides customers a smooth shopping experience from beginning to end and ensures you receive your revenue without issues.
Customer Portal
Check if each payment processing application you’re considering makes customers log in to a customer portal pay, or if it lets them pay via credit card as a “guest”. Ease of payment for customers means they’re less likely to ditch the purchase at the last second.
PCI Compliance
Security is paramount in a digital business environment. Few things instill more confidence in your customers than adhering to the highest security standards. To accept payments online, you must adhere to the PCI Data Security Standard (PCI DSS). Most major online payment solutions are built with PCI compliance in mind, but always check just in case.
Tech Support
Available and helpful technical support can be a lifesaver if something ever goes wrong with your payment processing system. Without it, you won’t be able to receive money. Look for companies that offer your preferred methods of communication, such as email, phone, or live chat.
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How Do I Accept Credit Card Payments?
Advancements in technology offer you a variety of ways to accept credit card payments.
In-Person Purchases
In-person purchases occur when your customer swipes their card or inserts the chip into a physical credit card reader.
Online Payments
Online payments make it possible for you to sell over the Internet. Customers can usually save their payment information to speed up checkout each time they purchase.
Accepting online payments opens up the opportunity for easy recurring payments. If you’re a freelancer on retainer for a certain client, an accounting software like Quickbooks will have the option to automatically send a recurring invoice to this client.
Mobile Payments
With mobile payment features, clients and customers can pay you directly in-app from their smartphones or tablets.
Manual Entries
You can’t swipe a card over the phone. Payment processing software lets you enter the card information manually. Manual entry also comes in handy if they have their card in person, but swiping won’t work. That way, you won’t lose the sale if, say, your card reader isn’t working.
How Much Does Payment Processing Cost?
In general, payment processors charge a percentage of each transaction plus a small fee (such as 2% + $0.25 per transaction). Additionally, many may charge a monthly fee.
With that said, they tend to operate on three different pricing models:
- Flat rate
- Tiered
- Interchange Plus
Flat Rate
Flat rate is a straightforward pricing method for payment processing. You pay a flat fee on each transaction regardless of card type or how the transaction happens (in-store vs. online vs. manually entering the card information.
In addition, flat rate pricing makes it easy to work payment processing fees into your budgeting and forecasting — just deduct your fee percentage from your revenue. However, flat rate can be more expensive in some cases. You could end up overpaying for transactions that wouldn’t cost much under other pricing models.
Tiered Pricing
Tiered pricing splits transactions into different buckets, or “tiers”. Here is each type of tier listed in ascending price order.
- Qualified: Any debit cards and non-rewards credit cards that are swiped or inserted to have the chip scanned.
- Mid-qualified: Loyalty cards, membership rewards cards, and transactions entered manually.
- Non-qualified: Cashback credit cards, corporate cards, international cards, and any transactions where the card isn’t present.
Interchange Plus
Interchange Plus pricing is the most transparent, as payment processors using this pricing model break down your total fee into its components. You can then see the interchange fee and any processor fees.
Interchange Plus is a bit complex, but you can quickly identify if the card issuer, bank, or processor is overcharging you. Of course, this transparency makes it less likely that they’ll do so — leading to savings for you.
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Conclusion
Payment solutions provide you with a secure and straightforward way to collect more revenue in less time while increasing customer satisfaction.
Whether you’re an eCommerce business selling products or a service business selling time and labor, it’s vital to do your research. After making a list of the features you need, one of the best ways to compare brands is to read reviews. To save time on research, take a look at our expert reviews to help you choose the right payment processing solution for you.
