Accepting payments online: available solutions and the most secure methods
Payment security is one of the most sensitive aspects of online commerce. Nowadays, for a startup that intends to sell products or services, giving up web sales is, in fact, impossible. Therefore, if you want to venture into this business, you absolutely need to know how to provide your customers with a payment system that is secure, as well as practical and fast. In fact, actually, your goal should be to be able to offer multiple payment methods, so as to meet different needs and minimize the risk of having to give up some sales.
More and more people, even in Italy, prefer not to use cash for their payments, opting to use credit cards. Not only that, online shopping is becoming increasingly popular these days. It is equally true, however, that many people are still reluctant to give up cash or to buy what they need on the web, for fear of running into scams or more general inefficiencies. This does not mean, however, that you should exclude these people from your target audience: the real challenge ahead is to convince them that you are able to receive online payments safely.
Credit cards were mentioned a moment ago; in this regard, it is useful from the outset to mention that this payment tool allows you to make purchases in physical stores via Pos (Point-of-sale) or reader, but also remotely (i.e., online). Equally important, however, is to emphasize that credit cards are only one of several online payment methods that your startup can and should provide for.
If you want to find the best solution(s) for receiving online payments, you need to focus your attention not only on your customer base but also on your own company. The choice, in particular, is related to some specific characteristics of the startup, such as, for example, the type of products or services you offer, the volume of online orders you expect to handle, and the sales channels you choose. This last aspect is, probably, the least intuitive: it’s time to delve into it together.
Sales channels that require online payments
Before discussing online payments, it is necessary to clarify what a sales channel is: this term refers to the way in which products or services can be brought to market and made purchasable by consumers.
Online commerce, on the other hand, refers in a nutshell to the practice of selling and buying products and services on the Web. In this precise field, the most common sales channel is the creation of an ecommerce site, that is, an actual online store through which to sell products to customers.
Opening an ecommerce site, however, requires specific skills or the help of ecommerce consultants, proper organization, a business plan with precise strategies to be implemented over the medium to long term, and a detailed marketing plan. For some smaller startups, opening an ecommerce site may not prove to be the easiest and most useful choice: there are, in fact, other online sales channels that can be exploited.
An alternative (or, in some cases, complementary) solution to the ecommerce site for selling online is the marketplace. You may not know it, but Amazon, eBay, Alibaba (as well as, of course, Facebook Marketplace) belong to this category.
The term marketplace refers to a platform made available by a company for the purpose of allowing businesses and consumers to get in touch and proceed with the sale/purchase of products and services. Transactions between companies and customers, on such a platform, are simplified but, clearly, there are some disadvantages for companies that decide to use this solution: the main ones are related to the payment of a commission for each sale completed in the marketplace and to the wide competition, since these platforms host the products and services of several companies.
You should know that the possibilities, for you who want to sell your products or services online, do not end at these two options just mentioned. In fact, some social networks, such as for example Facebook and Instagram (soon also Titk Tok and Youtube), give the possibility of opening a shop within them: in practical terms, it is an online showcase that users can explore and then proceed to purchase directly within the social platform.
Another interesting sales channel that has recently been introduced is the so-called virtual store: this is a physical place (usually a retail outlet) where customers can purchase products or services online through special terminals, which also offer the possibility of exploring product features in more detail thanks to fact sheets, video content and reviews by other users. What makes the difference here, compared to a more traditional ecommerce site, is the ability to receive real-time support from salespeople.
Having arrived at this point, it is worth noting that the management of online payments has become, nowadays, an increasingly articulated matter for companies, which have the possibility of offering their customers different paths to proceed with their purchases: these include the payment link or Pay-by-link (a link sent via e-mail, text message or other messaging system or social network, which, when clicked, redirects the potential customer to the web page where they can enter their credit card information and proceed to purchase), the Buy Button (the mechanism of operation is the same as the payment link, but the check-out page is accessed by the customer via a button inserted on the web page) and the QR code (in this case to reach the check-out page the customer must scan the code with the smartphone camera or using a special app).
It is now time, however, to look at the most secure online payment methods.
The safest (and most common) solutions
If you want to sell your products or services online, as mentioned, it is essential that you are able to provide your customers with one or more secure and reliable payment systems.
It will not surprise you to learn that among the most widely used online payment methods in the world today is still the credit card. It is a convenient and fast payment system for both sellers and buyers. There are, however, some security aspects to take into consideration: to avert the risk of fraud, for example, it is necessary that the transaction takes place within a site with a secure connection. In this regard, you should know that, precisely to make the web more secure, the “https” protocol was created, an acronym that stands (in English) for “Secure Hypertext Transfer Protocol.” Not only that: to avoid the risks of using a credit card for online payments, security certifications issued by specialized companies are required. In addition, modern antivirus programs provide specific solutions to encrypt online credit card payments and transactions (but not only).
Another option that has become very common for proceeding with the purchase of products or services online is to use an e-wallet (digital wallet): this is an electronic payment tool, usually in the form of a digital application, that securely stores virtual versions of credit and debit cards and allows consumers to pay without having to enter card data each time (and without the need to have the cards with them physically). Among the best known and most popular are PayPal, Apple Pay, Google Pay, and Amazon Pay.
The use of a prepaid card is another popular solution that offers greater guarantees in case of fraud: this is a particular method of electronic debit payment in which the credit is not deducted from the bank account of the person using this type of card, but is deducted directly from the current funds recharged on it. In addition, some prepaid cards, thanks to the presence of an IBAN code, also allow some transactions typical of a bank account, such as the ability to make and receive wire transfers.
The latter is an aspect that should not be underestimated because it is precisely the wire transfer, despite the emergence of more modern and practical methods, that still resists among the most secure and widespread online payment systems. The possibility of resorting to the instant transfer, moreover, has now done away with the major limitation of the traditional transfer, for which it is necessary to wait a few days before the money actually enters the availability of the recipient.
From a tool that is certainly not very recent to one that has propelled us straight into the future: although it is not yet a very common solution to date, it is already possible to receive online payments in cryptocurrencies, especially Bitcoin. Payments made in this mode are secure and transactions are certified on the blockchain.
Finally, there are other forms of payments:
gift cards; similar to prepaid cards, gift cards contain a certain amount of money; once spent, the gift card amount cannot be used again, unlike prepaid cards that can be ‘topped up’ with funds over and over again. Gift cards can help you promote your brand and attract new customers, especially on key retail dates and occasions.
buy now pay later; the term is used to refer to interest-free credit providers. Platforms such as Scalapay, Afterpay and Klarna , offer customers a way to spread the cost of their purchase or simply pay for their items later rather than paying in full up front. Your startup could benefit from these interest-free platforms because they remove one of the biggest obstacles to closing a sale-insufficient funds-which means your customers can essentially spend money they don’t have yet.
cash on delivery (COD); it allows customers to pay for goods in cash/card in person directly to the courier upon delivery. Among the main advantages of this payment method for your customers is the guarantee that they will receive the goods they paid for, without risking losing or wasting their money, checking the product for damage before handing over the money, and not having to provide their financial information to make an online purchase; this is why it is still so popular.
Oberlo, a dropshipping app that can be implemented in Shopify’s e-commerce platform, conducted research on the most popular payment methods in 2021; we report the result of the research below:
Comparison of some of the most popular payment methods
Up to this point, we have limited ourselves to listing in a general way the most common sales channels and payment methods. To understand what solutions your startup should offer customers, however, you need to know in more detail about the various payment systems you have the option of adopting.
Impossible not to start with the aforementioned Paypal: it is a very popular system for receiving online payments and easy to integrate with some of the most common platforms for building ecommerce sites. Paypal, moreover, allows several payment methods (from Pay By Link to QR Code via Buy Button) and is particularly popular with consumers because of the possibility of using a prepaid card. You have to consider, however, that, for sellers, transaction fees are not among the cheapest.
Amazon Pay is also a payment system that can be easily integrated with most common ecommerce platforms. By adding the Amazon Pay button you can offer customers the same secure and fast payment experience that Amazon offers on its site. Customers can make purchases without creating a new account or entering credit card information. With Amazon Pay, customers also have the option of purchasing products or services through Alexa.
Apple Pay is a standard application on every iPhone, Apple Watch, Mac, and iPad. This payment method is widely popular and used for making online purchases, subscribing to TV services, and buying apps and games. More generally, Apple Pay can work anywhere that contactless payments can be made. Payments can be made securely because they are authenticated via Touch ID or Face ID.
Google Pay, on the other hand, is designed for users using devices with the Android operating system. This payment method is also widely accepted and, as a result, widely used by customers, who can pay via fingerprint or password, taking advantage of NFC technology. Card data is always encrypted.
Here are the payment methods compared based on a study commissioned by Credit Suisse:
The limitation of the latter three payment methods, as you may have guessed, is that they can only be used by those with Amazon accounts or using certain operating systems (iOS for Apple Pay and Android for Google Pay). These are, however, now widely used platforms.
Less well known are the various Revolut, Stripe, SumUp and Satispay: these are other solutions for receiving online payments suitable for startups and small businesses, each with specific features.
Revolut, for example, began as a prepaid card but now provides businesses with a complete solution for managing finances and receiving payments online. It is inexpensive, allows payment by a variety of methods, and can be quickly installed on popular ecommerce sites. The multi-currency account option makes it especially useful for those who need to receive online payments from around the world.
Stripe, which is suitable for businesses of various sizes, allows, thanks to available APIs, to create custom payment flows with the help of a web developer. This option can also be quickly integrated with many ecommerce platforms.
SumUp, which began as a smartphone POS, now offers a wider range of services, making it an easy and immediate solution for those who want to start receiving payments online. It is fee-free and you only pay when you use it, but it is especially suitable for those who handle a low volume of transactions.
Satispay Business allows merchants to receive payments in-store or remotely, but it can also be implemented on ecommerce sites. Commissions on remote payments are very affordable, but in order to be used by customers, they must be enrolled in the service.
The importance of accepting multiple payment methods
By now it must be clear to you: nowadays there are so many effective solutions for receiving online payments. You will have, moreover, undoubtedly realized that the comparison just made is not intended to lead you to choose one payment method, no matter how much this may seem on paper to be the most suitable for the characteristics of your startup and your potential customers.
Instead, the best solution is to offer different payment options. The main reason is quickly stated: by doing so, a wider range of needs and desires can be met, since each method is optimized for precise needs.
Not only that, the spread of the different payment systems mentioned above is not homogeneous, and for this reason, offering more alternatives also gives you the opportunity to preside over different markets, both locally and globally.
There is, moreover, another great advantage: agreeing to receive payments online by several methods allows you to guard against possible technical glitches because, in the event that one payment system momentarily experiences problems, your customers could still proceed with the purchase by selecting another from the available alternatives.
Don’t underestimate the importance of offering several alternatives when it comes to payment methods: online commerce is constantly evolving, and what may appear to you today as the most suitable and effective solution for receiving online payments may prove to be permanently outdated in a few months.
Consumers also tend to very quickly desist from making an online purchase if their preferred payment option is missing (or, as mentioned, in the event that technical problems arise). Especially in the early days of your business, you cannot afford to forego some sales simply because you have not provided multiple payment alternatives.
I know it may seem difficult for you to respond to your customers’ diverse needs or, even, anticipate them; know, however, that overcoming this challenge will make the possibility of achieving the success you so desire that much more tangible. Do you need extra motivation? Remember the teaching of Raymond-Claude-Ferdinand Aron:
“Be everywhere, do anything and never stop surprising the customer”.