GUIDE: GET MY BUSINESS ONLINE | STEP EIGHT:
How to Collect Online Payments
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Collecting payments on the internet has never been easier. There are many ways to both offer your products and services on your website, as well as collect payments from customers who purchase your products and services. This step in the How To Get My Business Online Guide breaks down the simple methods of collecting online payments, as well as the more advanced options you can use on your very own website.
Cash Exchange Apps
If you are selling your products or services online, it doesn’t mean you can’t use the apps a lot of people use every day for casual exchanges of cash. Apps like Cash App, PayPal, and Venmo have easy-to-use mobile apps that allow users to request and send money easily to other users. When using these apps as a means of payment, the possibilities are basically endless.
One strategy you could use would be to host an order form somewhere on your website. When someone wants to order, they would include their handle or username on the app(s) you provide as a payment option. After you receive the submitted order form, you then send an invoice, or “request”, to the customer asking for payment. After they pay you, you would then begin building, making, and delivering your product or service to the customer.
You could also skip this step entirely and list your username or handle for payment on the order form itself. One potential issue with providing your username or handle first is that the customer could send you the wrong amount of cash, or none at all, after submitting the order. This could cause unnecessary headaches on your part as you may have to issue refunds because you gave up control of the transaction.
If your website is built using one of the many “drag and drop” building platforms, such as Wix, Squarespace, or Shopify, you more than likely have access to their own online store features and resources. To use these features, most of these platforms require you to purchase a premium subscription plan and connect your checking account to deposit funds after receiving them.
So, what are some important things to consider when trying to decide on a subscription payment plan for your business? To start, are there any limits on how many sales you can make with the subscription? How much do they charge to collect payments on your behalf? How long will it take to transfer funds to your account? How much does the plan cost per month? Per year?
Credit Card Processing Services
If you have a custom-coded website, perhaps built using WordPress or some other service, you may be on your own in deciding how to collect payments on your website. This isn’t the end of the world, though. There are a lot of great services out there, like Stripe and Square, that will collect credit card payments and deposit them into your checking account. Pricing can depend on how many transactions are processed on your website, as well as what kind of monthly plan you sign up for. If you have integrated a widget or payment tool onto your custom website, you may have to choose a different payment service if the widget or payment tool doesn’t offer it. Square and Stripe would be great options if this scenario fits you. Additionally, if you use a website builder like Squarespace, they may offer their own shopping cart/store, but you still would need to connect your own payment gateway. These options would work here as well.
Third Party Platforms
If your business includes listing your products or services on websites like Fiverr, RVShare, or AirBnB, you more than likely won’t have to worry about adding your own store and connecting a payment gateway for customers to use. These websites usually have their own store and credit card processing systems. They take care of advertising, collecting payments, legal documents, sales tax collection and remission, and more. These platforms are great for someone just starting out, or cannot afford to get their own website or payment methods set up.
Frequently Asked Questions
Do you have questions about collecting payments online? You should consider checking out our Resource Navigator. It houses the contact information of 400 of our most helpful partners from across the state who provide free to low-cost assistance to Iowa entrepreneurs and small business owners.
Q: How should I decide which payment methods to use?
A: This really depends on the products and services you are offering, the industry your customer works in, and what kind of budget you have. If you typically wouldn’t collect payment for your work until after a job is complete (contractors for example), then perhaps you don’t need a payment method online. If you don’t believe you can afford card processing fees, then maybe requesting a check, ACH payment (bank to bank), or cash.
Q: Are there any issues with using credit card processing systems?
A: There can be, but it all depends on your type of business, frequency of usage, and your budget. The main things to look for in the terms of the processing system are any transaction limitations and the fees associated with those transactions. Will you pay less in fees the more you transact? Will you pay more? After so many transactions, will the processor stop accepting payments unless you upgrade your plan? Is there even a plan?
Q: Do I have to accept payments on my website?
A: No. Accepting payments online isn’t necessary for all businesses. If someone can order something directly from your website, like a physical product, downloadable content or course, or some other service that doesn’t require an estimate, adding a way to easily pay may be in your best interest.
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NOTICE: The information included on this website is to be used only as a guide. It is not intended to cover all provisions of the law or every taxpayer's specific circumstances.
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