In 2021, more than 23 million people used virtually no cash in the UK. Most of these transactions are facilitated by debit cards, accounting for 48% of all payments in that year. While cash transactions were still the second most commonly used method, they only accounted for 15% of payments. Considering this shift in payment preferences, businesses must prepare tools to accept payment beyond cash. This is especially important for startups that need consistent cash flow to keep operations running smoothly. In this article we breakdown 6 payment processing solutions every startup needs provide in 2023 to keep customers happy.
For most entrepreneurs, these processes usually begin with their bank where they provide their own smart processing solutions or have an associated provider. However, unlike dedicated processing solutions for small businesses, these may be more expensive and don’t provide business-oriented services.
There are multiple considerations when choosing your service provider, so here we list five payment processing solutions that offer different key processes for your business.
The 5 payment processing solutions every startup must offer are:
- POS systems
- Card machines
- Online payment processors
- Multi currency transactions
- Mobile app integrations
- Security against fraud
Payment processing hardware
For startups with a physical location, hardware is a critical part of accepting payments and monitoring business needs. Below are two types of hardware payment processing solutions:
1. POS system
Point-of-sale (POS) systems retain the essence of processing customer payments and keeping track of sale transactions, much like cash registers, but are much more advanced in their processes. Square offers POS software and hardware solutions for service-based startups that can process sales securely while handling administrative tasks efficiently.
Unlike most payment processing solutions, their basic application is free. Instead of charging a flat fee, they base their prices on business sales, charging transaction fees of 2.6% plus 10 cents for in-person transactions. On the other hand, online payments have fees of 2.9% plus 30 cents.
Their leading hardware includes a high-spec card reader that enables customers to enter their pins on the glass of a business phone or tablet, rather than through a keypad. Aside from payment processing, the platform provides detailed analytics and reports, sales forecasting, and several extensions that improve inventory and team management.
For newer startups with lower sales volume, Square can be a good POS solution that processes payments and provides an overview of business performance.
2. Card machines
Safety is often a startup’s concern when processing card transactions, which is why FIS software manages PCI DSS compliance without changing the ease of payments. They offer flexible card payment services for small businesses, letting businesses decide how to take payments, what equipment they need, and find a pricing plan that fits their budget.
Through Worldpay from FIS, startups can begin processing payments from any location with just a 1.5% transaction fee on Mastercard and Visa card transactions, with zero upfront and auth fees and no premium charges.
Depending on the nature of their business, startups can choose between a countertop terminal or a portable card machine that connects through a phone line or WiFi. Worldpay from FIS also provides 24/7 support from their Contact Centre to address any questions or concerns regarding payment processing.
As one customer from Telephone Lines recalled their experience:
“The first time I had to issue a refund to a customer, I called up Worldpay to find out how. The agent was really helpful guiding me through the process when I need some extra reassurance”
Overall, FIS can be a versatile option for startups looking for reliable card machines.
3. Online payment processors
As to recent statistics, consumer eCommerce accounts for 30% of the total retail market in the UK. In 2021, 82% of the UK population was found to have bought at least one product online— pointing towards the importance of including online payment processors as part of startup businesses. Listed are some critical features consumers look for when going through with online payment:
4. Multi-currency transactions
In November 2022, UK-based payments provider Berg Money opened its platform to enable businesses to open accounts in multiple currencies, encouraging the facilitation of international trade. While their platform is oriented towards small and medium-sized businesses (SMEs), startups can also benefit from decreased operating-associated costs and FX (foreign exchange) charges.
Using cloud architecture, businesses can pay and be paid and operate on multiple currencies almost anywhere 24/7. CEO Dennis Nemerov notes how their business aims to onboard and activate customers on the same day or within 48 hours— enabling businesses to facilitate transactions quickly and reliably.
In addition to its payment processing solution, Berg Business also enables eCommerce businesses to apply for business loans of anywhere from £1,000 to £500,000. However, at the moment, only businesses based in the UK, Europe, and the Middle East can sign up for their platform.
5. Mobile app integration
According to a report by GlobeNewswire, the 2022 mobile payment market reached a value of £795 billion, with an estimated CAGR of 41.1% from 2021 to 2028.
These mobile payments heavily rely on payment gateways, enabling processing directly from a consumer’s mobile application to a business service. Under the PayPal company, Braintree has become the go-to multifunctional service for mobile app payment gateways, servicing over 40 countries worldwide. It can process credit card payments in two days with a 2.9% and 30 cents transaction fee.
One of its best features is its developer-friendly nature, supporting six programming languages and compatibility with Android and iOS— making it a customisable payment solution to integrate into different mobile applications. Furthermore, it also supports a sandbox mode, enabling developers to test their integration with test values for different payment methods, transaction amounts, and card numbers, to name a few.
This can help startups ensure their payment tools are fully functional before the release of their mobile app.
6. Security against fraud
As mentioned earlier, safety is a primary concern when processing payments. With the advent of cyberattacks, small businesses need to take extra precautions in choosing a secure payment processing solution.
Formerly Sage Pay, Opayo is a comprehensive merchant account and payment gateway service optimised for startups. The biggest benefit for small businesses is its flat monthly fee of £32, with no further fees until the 350th transaction.
Its features include tight protection against theft or fraud, enabling organisations to opt for a multi-layered approach to detect suspicious transactions or fraudulent payments. Moreover, the platform also provides services for face-to-face payments like POS terminals and EPOS solutions, allowing businesses to unite online and in-store payment channels.
Aside from customer-business payment processing, electronic systems are also capable of streamlining payroll processing— ensuring businesses pay their employees on time while settling tax and other requirements.
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