The payment space is experiencing a ton of change these days and it’s not hard to see why. The payment world has worked the same for quite some time, with an disproportionate amount of the benefit going to the large credit and debit card companies.
How many times have you seen those signs at your local convenience store warning for no credit card transactions under $5 or $10? It’s cost prohibitive for those businesses to accept cards at those prices. Their profits are instantly eaten up by merchant fees. Thankfully, more and more solutions are entering the marketplace, allowing for increased flexibility and in many cases, lower fees.
Let’s take a look at our 5 best payment solutions for small businesses, both online and offline:
Google as a company makes wonderful products, but this is one that has struggled to take hold in the market over the last several years. There’s nothing that makes it stand out past other platforms. After some research I found fees for businesses under $3,000/mo in revenue are 2.9% + .30 per transaction. For revenue from $3,000 to $9,999, fees are 2.5% + .30 per transaction and continuing the tiered system from there.
The fees themselves don’t differentiate Google Wallet from PayPal or traditional processing systems.
What’s good about Google Wallet? Integration capabilities with the Google ecosystem, especially Google Offers. Which can help push offline sales with online deals. Yet the biggest benefits of Google Wallet (free receipt of money, secure storage of credit and debit card info) lie with the individual, not the business owner.
Paypal is the grandfather of alternative payment solutions. They are the default solution for many individuals and small businesses to move money online. With their easy online integration, Paypal is also a very flexible solution for businesses desiring multiple capabilities. Paypal has recently added a mobile card reader (similar to Square).
The problem? Merchant fees starting at 2.90% + .30 per transaction. While they’ve been around for a long time, PayPal doesn’t exactly offer the best rates for merchants and high dollar transactions. It also takes several days to transfer money from your PayPal Account to your bank account.
Dwolla’s mission says it best: “Allow anyone [or anything] connected to the internet to move money quickly, safely & at the lowest cost possible.”
A receiver pays $.25/ transaction if the transaction is over $10. Under $10? It’s free. It’s that simple. The catch? Both parties need to have a Dwolla account, or at least create one in order to receive money. Dwolla provides it’s own payment processing platform, which is how it side-steps fees from the large credit and debit card institutions.
The downside? Dwolla isn’t as widely used as other platforms. So using your Dwolla account anywhere you go isn’t exactly an option. It also takes anywhere from 0-3 days to move money from your Dwolla account to your bank account.
The way Square has revolutionized mobile payments, Stripe may be doing the same for online payments. Stripe is designed for easy online integration, maximum flexibility, and no hidden fees.
Costs are 2.9% + $.30 per transaction. More than traditional merchant fees, but similar to Square, Stripe argues fees are less in the aggregate since they don’t charge setup costs, storage fees, or monthly service fees. The downside is receipts are transferred to your bank account on a rolling 7 day basis.
However with Stripe’s robust platform and open API, it’s definitely a technology to consider if you’re an online business.
The first payment gateway to breakthrough mobile platforms and provide payment access to entrepreneurs anytime, anywhere. With Square you get free hardware, free software (including POS software), and a flat percentage fee on all transactions of 2.75%.
Last year, Square added a flat fee per month model at $275/mo for businesses under $250,000 gross revenue per year. The downside is Square does not currently offer payment processing over the web. So you won’t be using it for your new e-commerce store.
Mobile payments, payment processing, and the entire payment gateway industry is being turned upside. If none of these solutions fit your business, we’d suggest searching for the latest and greatest as new companies continually enter the payments market for all sorts of use cases. For example if you’re a blogger selling content on the web, check out Gumroad as a new potential option for your business!
Used any of these solutions before? We’d love to hear about your experiences in the comment sections below!Buffer