7 popular payment methods that can get you paid three-times faster

It's no secret that the online world has opened new opportunities for businesses. With the wireless web as a medium, businesses can now venture into untouched markets. But, with greater reach comes greater problems, and the most significant among them is payment collection.

Understanding how your customers pay you is more important than ever. Providing your customers with a seamless payment experience can help your business boost conversions, which can be done by offering the right payment methods.

A study conducted by Stripe in 2023 showed that customers residing in different locations preferred different payment methods. For example, consumers in the US and UK preferred digital wallets for payments, while customers in Germany and Malaysia favored bank-based payment methods.

This article will dive deep into the nuances of payment methods and how you can make your customers' payment journey convenient by providing them with their preferred payment methods.

What are payment methods?

If you have ever paid for goods or services online, you would have noticed multiple ways to do so. You could have used Google Wallet or Apple Pay to transfer funds quickly, or if you are more traditional, could have used debit or credit cards. Payment methods simply indicate the way a consumer transfers funds from their bank account to the seller's bank account for a purchase.

Although identifying the right online payment methods for your customers can depend on the audience you serve, understanding the various payment methods can help you benefit from improved conversion rates and less cart abandonment.

Types of payment methods businesses should know

1. Debit and credit cards

Debit and credit cards are one of the most commonly used payment methods. Due to their long-standing use, these cards are accepted almost everywhere around the world, giving businesses enough reason to offer them as a payment option to their customers. Debit cards are usually linked to the user's bank account, allowing the cardholder to retrieve or spend funds available in their bank account. Credit cards, on the other hand, allow the cardholder to borrow funds which they can repay later, often in full, or in monthly installments.

While debit cards pave the way for convenience and security for faster payments, credit cards usually provide customers with high purchasing power. However, the use of both these cards can levy a processing fee on businesses, which is typically 1% for debit cards and up to 3.5% for credit cards.

Best suited for: Retail and ecommerce purchases

2. E-wallets

Popular e-wallets like Alipay, Google Wallet, and Apple Pay have replaced the need for physical cards. Thanks to their simplicity, digital wallets are becoming increasingly popular, and their usage is projected only to grow going forward. Chiefly used on mobile devices, e-wallets are payment applications that store your credit cards, debit cards, and bank account details.

Since all the necessary payment information is already stored in the application, users need not fish for their credit or debit cards to make a payment, eliminating the need for jumping through several screens to complete a transaction. For businesses, this serves as a major advantage—it reduces wait times, streamlines the checkout process, and improves conversion rates.

Best suited for: Subscription and on-demand services

3. Buy now, Pay later (BNPL)

Imagine borrowing money to purchase something and paying the money back later, in increments—that's Buy now, Pay later (BNPL). For example, say a customer of yours plans on buying $100 headphones through BNPL. They could do so by clicking on the buy now, pay later option available on the checkout page. Upon clicking, they will be rerouted to the BNPL provider's site where the service conducts a soft credit check and approves the payment in seconds.

You get the payment in full, and your customer gets to repay the amount borrowed from the BNPL service provider in installments, which is usually charged once every two weeks. As the customers opting for BNPL can purchase goods without committing to pay the full amount up front, it reduces cart abandonment and increases the likelihood of a purchase.

Best suited for: Retail and ecommerce purchases

4. Bank transfers

When you send money from your bank account to another, the process is called a bank transfer. Bank transfers are of three types: bank credit transfers, bank debit transfers, and bank redirects.

Also known as "push payments," a bank credit transfer is a process where you initiate for the funds to be transferred from your account to another.

If you've ever signed up for a gym membership by providing them with your bank details, you would've noticed the set amount of funds being pulled directly from your account. This is exactly how a bank debit transfer works, i.e, in bank debit transfers, the recipient's bank pulls payments from the sender's bank account.

Bank redirects reroute you to a more secure page for completing your payment. This is when the purchasing website takes you to your bank's page to complete the transaction.

Best suited for: Real estate and large payments

5. Autopay

Autopay is a payment method, where the payments get transferred automatically at a set date. This becomes beneficial for consumers with recurring payments, as they can pay their bills on time without the need to authorize the payment for every month.

Best suited for: Subscription services, utility bills

6. Checks

In the age of digital payments, checks might seem archaic. However, there are consumers who still prefer to pay with checks. A check is a written draft that outlines the amount of money the bearer owes the recipient. While there’s no limit on how much a customer can write a check for, businesses often find checks slow to process and vulnerable to fraud. To reduce risks, investing in a reliable check reader can be a smart solution for businesses.

Best suited for: Large payments

7. Cash

Last but not least, in the list of seven popular payment methods for businesses, is one of the oldest forms of payment: cash. Sometimes, consumers still pay for their purchases with cash. Consumers can pay with cash directly at the physical store or by selecting a COD option when they buy a product online. In the latter case, customers pay in cash at the time of delivery.

Best suited for: New customers who don't know about your service/product

How to accept online payments

Accepting payments online is simple—all you have to do is couple your billing software with your preferred payment gateway. Zoho Billing is an one-stop billing solution that ties up with a wide variety of payment gateways for you to choose from.

From popular services like Stripe, Razorpay, PayPal, PayTm, and the like to secure native payment services like Zoho Payments, we pair with services that provide numerous payment options so you can provide your customers with a seamless checkout process. Explore Zoho Billing's pricing to see how it can help your business.