For small businesses looking to maximise sales opportunities, card payment solutions are now essential. The UK Payment Markets Summary of 2020 details how card payments overtook cash as the preferred method of paying for goods and services in 2018. While the necessity to offer more hygienic solutions meant many businesses, during the Covid pandemic, have actively discouraged the use of cash.
2021 has seen a coronavirus vaccine, but habits have changed, and so many consumers now do not carry cash. If you refuse to move beyond just cash, you will simply lose business as consumers will put back their items and go elsewhere.
The good news is that there are a multitude of options and card payment solutions that can get small businesses up and taking payments very quickly. The type of solution you choose will depend upon your business size and how you need to take payments. Please read this article on our blog – How Small Businesses Can Take Card Payments: Understanding Payment Terminology – if you are unfamiliar with the key terminology and components of a payment solution, otherwise read on to find out how to successfully evaluate the right payment solution for your business.
Payment Facilitator Solution Provider Versus Self-Sourcing
Once you understand that you need a merchant account and have decided if you need a card reader or a payment gateway – or perhaps both – the most important decision you need to make is whether your source all those elements yourself, or go with a payments solution facilitator who provides an all-in-one solution.
Understanding why they have done that, and what they offer, will help you decide.
Merchant Account Application Difficulty
Payment solution providers came about because of the difficulty, time and fee structures involved in getting a merchant account.
Difficulty – A merchant account isn’t the same as a normal bank account. There is a risk for an acquiring bank to allow you to take payments. This results in a lot of paperwork to fill out about the nature of your business, time you have been in business, and credit history. This is time-consuming and you are not always approved.
Time – Approval won’t be in a matter of days but can be months. Meanwhile, if it is an online business, you simply cannot start. Whereas, if it is offline you have to take cash and potentially lose business while you are waiting.
Fee structures – Many merchant account providers have a fee structure with per transaction costs, and monthly minimum fees. This can be a problem if you are a small business.
A merchant account and a payment processor come hand in hand. But then, depending on whether you want to take online or in person payments, you will need a card reader or a payment gateway, and point of sale, invoicing and other payment software. If your merchant provider doesn’t have all of these items, then you will have to integrate them together. This is a cost both upfront and ongoing as you need the expertise to monitor and solve problems.
Even more importantly, if you take both online and in person payments, then you have a more complicated integration. And the added problem of syncing all that data across disparate services. It is not convenient to have to have to check in two apps for customer data. And not be able to get analytics that give insight across all your data, just siloed results.
Payment Facilitator Solution
If you go with a solution that includes a merchant account it means you can get set up within days with minimal paperwork. It usually means no contract or upfront costs, and with a suite of software ready to go to help you run your business. You will pay a little extra in transaction fees but the value in this kind of solution has been proven.
Why Source Your Own Solution?
Numerous businesses specialize in selling each of these individual components, meaning that creating a solution is right for many businesses. The advantages of sourcing yourself are the ability to create a more unique customised solution. And, if your payments turnover is sufficiently high, reduce transaction costs.
For smaller companies it may be fairly obviously that a payment facilitator solution is the best option. Whereas, for others, it may be the case that they have a unique way of taking payments that possibly might not available in an all-in-one solution. For example, you still need to take swipe and sign for tourists, international payments or you need a particular kind of recurring payment. Otherwise, it may be that your transaction volume is enough each month to negotiate better rates.
The answer is to understand the infrastructure that is needed to take payments, your requirements, and the costs and solutions of different providers. You can then make a decision that is the best blend of features and costs for your business.
Choosing the Right Payment Facilitating Solution
If you have decided a payment facilitator solution is the right way for your business, the next question to examine is which one of them will better suit your needs. There are several solutions in the market: Square, Sumup, and Hoof, among others.
To help make the decision think about how you are doing business. Are you a small retail business who is mostly going to be taking payments in person at the counter? Or are you a service business taking remote payments in the field and issuing invoices? If it is a former, then a card reader and PoS terminal are key. If it is the latter, then a solution that offers not just invoicing but the ability to create, and for customers to accept, quotations online will be key to helping you win more business.
Hoof’s focus is to serve that field service and tradesperson sector. With our solution you get a notification if the quote was accepted or not, giving you the opportunity to amend or easily convert it into an invoice. This functionality saves you a lot of time and ensures you can respond in a timeframe that makes the difference between winning and losing business.