How To Take Payments Online: 8 Effective Payment Methods
By Sam Nguyen
This comprehensive guide is going to explore the intricacies of eight effective payment methods, from traditional credit card processing to cutting-edge digital wallets, which empower you to transact with customers across the globe seamlessly.
8 Ways to Take Payments Online
Credit and Debit Cards
Card payments have revolutionized how we transact, providing convenience and security for both businesses and consumers. Hence, if you’re seeking guidance on accepting online payments, your primary focus should be this method.
In the United States, credit cards are particularly popular on a daily basis, with 54% among 9% of card users, and debit card users make up the remaining proportion, as stated by Forbes Advisor in 2023.
Its prosperous benefits include:
- Convenience: Cards offer a hassle-free way to make payments, eliminating the need for physical cash.
- Security: Card payments come with built-in security measures, reducing the risk of theft or loss.
- Rewards: Many credit cards offer rewards, cashback, or points for every transaction.
- Global accessibility: Cards are widely accepted, making them suitable for local and international transactions.
For online payments, customers enter their card details during checkout, and the payment gateway securely processes the transaction. Once approved, funds are transferred from the customer’s account to the merchant’s.
A merchant account, a type of bank account, is needed to start accepting credit cards online. Similar to linking any standard bank account, you’ll establish a connection between your merchant account and your website. After a customer attempts to purchase on your website, the merchant account temporarily holds the funds while specific financial verifications are conducted.
Some specific costs that can be incurred while using the card payment method are
- Transaction fees: A percentage of each transaction’s value is paid to the payment processor.
- Interchange fees: Paid to the card-issuing bank for processing the transaction.
- Chargeback fees: Incurred if a customer disputes a transaction.
Payment Gateways
Payment gateways are essential for businesses and customers engaging in e-commerce. Its simple set-up process with no required cost and acceptance of the major credit cards make it an exceptional option for various industries.
For businesses, providing a secure payment process is crucial to attract and retain customers, reduce the risk of fraud, and comply with industry regulations. They are paramount in building trust and protecting sensitive financial information during online transactions.
A payment gateway can provide a lot of advantages for both merchants and customers, such as:
- Security: Payment gateways use encryption and other security measures to safeguard data, ensuring safe transactions.
- Convenience: They enable various payment methods, enhancing customer convenience.
- Global reach: Payment gateways allow businesses to accept payments from customers worldwide, expanding market reach.
- Quick settlements: Funds are typically transferred to the merchant’s account within a few days.
- Reduced fraud: Gateways often include fraud detection tools, reducing the risk of unauthorized transactions.
- Professionalism: A well-integrated payment gateway adds professionalism and credibility to the online shopping experience.
It works as a tool to connect your website with payment providers such as Visa, Mastercard, and American Express. This connection allows for seamless checkout integration, either by embedding the checkout process on your website or directing your customers to the payment gateway’s website to finalize their purchases.
So, how can we integrate a payment gateway? Its process of setting up required just a few steps below:
- Choose a payment gateway: Select a suitable provider based on your business needs.
- Set up an account: Create an account with the chosen payment gateway provider.
- Integrate with your website: Integrate the payment gateway API with your website or e-commerce platform.
- Test transactions: Conduct test transactions to ensure the integration works smoothly.
- Go live: Once testing is successful, put the payment gateway into live mode and start accepting payments.
Shopify, a leading all-in-one e-commerce platform, offers a versatile selection of payment gateways. One standout feature of Shopify is its in-house payment solution, Shopify Payments, which is integrated directly into the platform with no transaction fees. Otherwise, its integration with over 100 third-party payment gateways provides flexible online payment options.
Other popular payment gateways, such as
- Stripe: one of the most versatile payment gateways, offering extensive customization options. You can seamlessly integrate a stylish checkout experience into your website at no monthly cost or setup fee. Stripe Billing is a standout feature of Stripe, allowing you to effortlessly create recurring bills or one-time invoices efficiently and flexibly.
- PayPal: a widely trusted payment solution used by millions worldwide, offers straightforward checkouts that can be effortlessly integrated without any charges. One of PayPal’s standout features is the One-Touch checkout, which provides customers with a streamlined and polished experience.
- Square: an ideal choice for small businesses seeking affordable online payment solutions, offers a user-friendly payment gateway. Additionally, you can leverage Square Online to create a free website for your business.
eChecks
An eCheck, short for electronic check, is a digital version of the traditional paper check used for making payments. It provides a secure and convenient way to transfer funds electronically, simulating the process of writing a paper check without needing physical documents.
Electronic checks’ processing resembles paper checks but with notable speed and the interference of technology, leading to time savings. A few steps included in a process are:
- Request authorization: Prior to processing the transaction, the business must obtain consent from the customer. This can be done through You can do this through a signed contract, an order form, or a recorded phone conversation.
- Setup payment: You need to capture the customer’s payment details and then input them into the online payment processing software. For recurring payments, this information encompasses the specifics of the recurring timetable as well.
- Complete and send: After inputting the information accurately into the payment software, the business selects “Save” or “Submit” to initiate the ACH transaction procedure.
- Fund transfer: The payment is automatically deducted from the customer’s bank account, followed by the online software sending a payment receipt to the customer. Subsequently, the payment is deposited into the business’s bank account, which is available in the merchant’s account within three to five business days.
You would gain these benefits when using eChecks:
- Cost-effective: eChecks often have lower transaction fees than credit card payments, making them an attractive option for businesses.
- Convenience: eChecks eliminate the need for physical checks and offer a faster payment process, as no manual handling or mailing is involved.
- Wider acceptance: Many businesses accept eChecks, making them a versatile payment option for various transactions, including bill payments, online purchases, and business-to-business payments.
- Eco-friendly: eChecks are environmentally friendly as they reduce paper usage and the need for physical transportation, contributing to a greener payment method.
Digital Wallet Payments
A digital wallet, also known as a mobile wallet, is a secure electronic tool that allows users to store payment information and make electronic transactions, both online and in physical stores, using a mobile device or computer. It’s estimated that around 2.8 billion mobile wallets are currently in use globally. Clearly, it turns out to be a perfect option for a long-term strategy that integrates with a full range of payment functions and checking accounts at banks.
Two well-known digital wallets nowadays are Apple Pay and Google Pay.
- Apple Pay: Exclusively for Apple devices. The service uses a combination of device-specific numbers and unique transaction codes to process payments, adding an extra layer of security ideal for stores and platforms that support contactless payments.
- Google Pay: Google Pay is Google’s digital wallet, available for Android devices. It enables users to store credit/debit cards, loyalty cards, and make in-app and in-store payments.
Users can make payments with a simple tap or by scanning a QR code, making the checkout process quick and hassle-free, especially for in-store and online purchases.
Digital wallets employ multiple layers of security, including tokenization, biometric authentication (such as fingerprint or facial recognition), and encryption. These measures significantly reduce the risk of card information theft during transactions.
Click-to-Pay Email Invoices
Click-to-Pay email invoices represent a modern and efficient way for businesses to request and collect customer payments. It leverages the convenience of email communication and integrates it with secure payment processing.
The automated invoice software integrates your website, the invoice payment form, and the customer database into a unified platform, providing a comprehensive view of payments received and the total earnings from invoices to date.
Some popular automated invoicing software businesses use to streamline their invoicing processes are Invoice Simple, Zoho Invoice, TimeSolv, Ariba, and many more.
Recurring Billing Software
Recurring billing software is a tool that enables businesses to automatically bill their customers or clients at regular intervals (such as weekly, monthly, quarterly, or annually) for products or services provided on an ongoing basis, which is completely ideal for subscription-based businesses.
Recurring billing software works in several aspects:
- Subscription setup: The business sets up subscription plans within the recurring billing software. These plans define the pricing, billing frequency, and any other parameters related to the recurring service or product.
- Customer management: The software allows businesses to manage customer information, including billing details, subscription preferences, and historical billing data.
- Automated invoicing: When a customer subscribes to a plan, the recurring billing software automatically generates and sends invoices to the customer at specified billing intervals.
- Payment processing: The software integrates with payment gateways to handle the collection of payments from customers. This integration ensures that the billing process is seamless, secure, and compliant with payment industry standards.
If you’re interested in creating an online store, it’s essential to understand that e-commerce website builders like Shopify or Stripe can facilitate sending recurring orders, invoices, and subscriptions by utilizing third-party applications.
Cryptocurrencies
For the last several years, the world has witnessed the significant development of cryptocurrencies like Render, from being obscure and potentially risky to becoming increasingly recognized and embraced as a more commonly utilized form of payment. Cryptocurrency payments involve using digital currencies, such as Bitcoin, Ethereum, or others, as a medium of exchange for goods and services.
Unlike traditional currencies issued by governments, cryptocurrencies operate on decentralized networks based on blockchain technology. Transactions in cryptocurrencies are verified by network participants, providing security and transparency.
The benefits of this payment method can be:
- Global reach: Cryptocurrencies enable businesses to accept payments from customers worldwide without the limitations of traditional banking systems or foreign exchange fees.
- Reduced fees: Cryptocurrency transactions often have lower processing fees than credit card transactions, especially for cross-border payments.
- Security: Blockchain technology ensures high transaction security, reducing the risk of fraud and chargebacks.
- Innovation: Accepting cryptocurrencies showcases a forward-thinking image, attracting tech-savvy customers and potentially leading to new opportunities.
However, accepting a newcomer as a cryptocurrency payment can potentially challenge businesses with specific risks:
- Volatility: Cryptocurrencies’ value can be highly volatile, leading to price fluctuations that may impact business revenues if not promptly converted to stable fiat currencies.
- Limited adoption: While the adoption of cryptocurrencies is growing, it’s not as widespread as traditional payment methods, which could limit the customer base for crypto payments.
- Regulatory uncertainty: Cryptocurrency regulations vary by country, and businesses must navigate legal and tax implications.
- Technical complexity: Implementing and maintaining crypto payment systems may require technical expertise, and businesses need to stay updated on security best practices.
The process of implementing cryptocurrency payments may slightly differ based on each platform:
- Set up a crypto gateway: Select a reputable cryptocurrency payment processor that integrates with your online store or payment system. Popular options include BitPay, Coinbase Commerce, and CoinGate.
- Select accepted cryptocurrencies: Decide which cryptocurrencies you’ll accept based on customer preferences and business goals.
- Integration: Integrate the chosen payment processor into your online store, ensuring a smooth and secure checkout process for customers.
- Monitor and adapt: Regularly monitor the adoption of crypto payments, stay informed about industry trends, and adapt your strategy as needed.
In-App and In-Game Payments
In-app or in-game payments refer to the capability of making purchases directly within a mobile application or game. This functionality allows users to buy various digital goods, exclusive services, upgrades, or premium content without leaving the app, making the transaction process seamless and convenient.
App developers integrate various payment methods within their applications, such as credit/debit cards, digital wallets (like Apple Pay or Google Pay), and mobile carrier billing. This integration is typically achieved through payment gateways or APIs provided by payment service providers.
This payment method adapts to the mobile environment, benefiting both app developers and users:
- Convenience: Users can make purchases without leaving the app, leading to a smoother user experience and potentially increasing conversion rates.
- Flexibility: Users can choose payment methods that suit them, making it more likely for them to complete a purchase.
- Monetization: In-app purchases generate revenue for app developers, enabling them to offer free apps while earning money from premium features or virtual items.
Developers must employ strong encryption, secure payment gateways, and prioritize user data protection to ensure payment security. Building trust involves transparent handling of personal information, adhering to privacy regulations, and maintaining a secure environment within trusted app stores for iOS and Android.
So how do you make money from a free app? There are quite a few ways to do that.
- In-app purchases: Offer users the option to buy virtual goods, premium features, subscriptions, or content within the app.
- Freemium model: Provide a free app with basic features and offer premium versions or content for a fee.
- Subscriptions: Offer recurring subscriptions for access to premium content or services.
- Ad revenue: Incorporate ads in your app, earning revenue based on ad impressions or clicks.
- Sponsorships and partnerships: Collaborate with other businesses for sponsored content or cross-promotions.
How to Accept Payments Online: Summary
To sum up, the online payment method you accept for your store depends on the type of business. We offer eight basic and popular but effective payment methods that businesses can consider:
- Credit and debit cards
- Payment gateway
- eChecks
- Digital wallet payments
- Click-to-pay email invoices
- Recurring billing software
- Cryptocurrencies
- In-app and in-game payments
FAQs
- Convenience: Transactions can be completed from anywhere, at any time, eliminating the need for physical presence or paper-based processes.
- Global reach: Online payment capabilities break down geographical barriers, allowing businesses to access a wider customer base and expand their reach beyond local boundaries.
- Increased sales: The seamless process encourages impulse purchases, reduces cart abandonment rates, and facilitates faster transactions.
- Flexibility: It accommodates diverse payment methods, including credit/debit cards, digital wallets, and bank transfers, catering to various customer preferences.
- Security: Reputable online payment systems prioritize security, utilizing encryption and advanced authentication methods to safeguard sensitive financial information.
- Security and fraud prevention: Ensure the payment gateway offers robust security features.
- Supported payment methods: Check if the payment gateway supports relevant options for your target audience.
- Integration: Ensure the payment gateway integrates smoothly with your website, e-commerce platform, or mobile app.
- Global reach: If you plan to serve international customers, verify that the payment gateway supports multiple currencies and has a global presence.
- Transaction Fees: Understand the fee structure, including transaction fees, setup costs, monthly fees, and any additional charges that align with your budget.
- Implement SSL encryption: Secure your website with SSL/TLS to encrypt data transmission between users and your server.
- Comply with regulations: Follow data protection laws, minimize data collection, and obtain explicit customer consent.
- Regular security audits: Conduct frequent assessments of your website and payment processes, addressing vulnerabilities promptly.
- Enhance authentication: Implement two-factor authentication (2FA) and ensure strong user passwords.
- Stay updated: Keep software and platforms updated to leverage security patches and enhancements.
