The Ultimate Guide to Payment Processing for SMEs

There’s no question that having a seamless, secure payment system is crucial for the success of small and medium-sized enterprises (SMEs). Whether you’re operating online-only or across physical locations, providing payment accommodations for your customers is key, and can have a serious effect on your bottom line. 

From secure payment terminals for shoppers who enjoy visiting brick-and-mortar stores, to digital wallet options for online payments, having flexibility offers ultimate convenience for customers. 

In this guide, our experts aim to support SMEs like yours navigate the complex world of payment processing. Understanding the basics of online payment systems, choosing the right payment gateway, exploring various payment methods – it’s all covered right here. Let’s dive in and explore the essential aspects of payment processing tailored specifically for small businesses.

What Are Online Payment Systems?

Online payment systems, in a nutshell, are digital platforms that enable businesses to accept payments from customers over the internet securely. 

These systems facilitate transactions by providing a link between the buyer, seller, and financial institutions involved in the payment process. For small businesses, online payment systems offer a convenient and efficient way to process transactions and manage revenue streams.

Key components of online payment systems include payment gateways, merchant accounts, and digital wallets: 

Payment Gateways	Merchant Accounts	Digital Wallets
Payment gateways serve as the bridge between the customer’s chosen payment method and the merchant’s bank account, ensuring secure transmission of payment data.	Merchant accounts are specialised bank accounts that allow businesses to accept credit and debit card payments.	Digital wallets, such as Apple Pay and Google Pay, provide customers with a convenient way to store payment information and make purchases online.

Offering a variety of online payment systems means that small businesses can not only expand their customer base (and cater to their customers’ diverse preferences), but also increase sales and improve cash flow. These benefits really do have the potential to take your business to the next level.

The First Step To Accepting Payments Online: Choosing a Payment Gateway

As mentioned, a payment gateway facilitates the secure transmission of payment information between a customer’s chosen payment method and the merchant’s bank account. But with so many options out there when it comes to payment gateways, how can you ensure you’re choosing the right one for your business? 

1. Assess Your Needs: Before selecting a payment gateway, consider your business requirements, such as the types of payment methods you want to accept, your target market, and your budget.

2. Research Payment Gateway Providers: Explore different payment gateway providers and compare their features, pricing plans, and compatibility with your e-commerce platform or website.

3. Evaluate Security Measures: Security is essential in online payments – look for payment gateway providers that offer robust security features, such as encryption and fraud detection tools, to protect sensitive customer data.

4. Consider Integrations: Choose a payment gateway that seamlessly integrates with your existing business systems, such as your e-commerce platform or accounting software, to streamline payment processing and reporting.

After choosing the right payment gateway, you’ll be able to start accepting payments online, streamline your payment processing operations, and provide a seamless checkout experience for your customers.

Contact Fibonatix to discuss our payment systems for small businesses.

Understanding Credit Card & Debit Card Payment Processing for SMEs

Credit Card Payment Processing	Debit Card Payment Processing
Credit card payment processing is a vital component of online commerce for SMEs. With the growing prevalence of cashless transactions, offering credit card payments can enhance sales and customer convenience.	Debit card payment processing is an equally crucial aspect of online commerce for SMEs. Offering debit card payment options alongside credit cards can broaden the customer base and enhance convenience for shoppers.
Considerations	Considerations
To accept credit card payments, SMEs need to establish a merchant account with a payment processor or acquiring bank. You must choose a payment processor to facilitate credit card transactions. SMEs must integrate their chosen payment processor with a payment gateway to process credit card transactions online. Compliance with Payment Card Industry Data Security Standard (PCI DSS) requirements is essential to safeguard cardholder information. Credit card processing typically incurs transaction fees, which vary depending on factors such as the type of card, transaction volume, and processing method (online or in-person). Ensure that your checkout process is user-friendly, with clear instructions and secure payment pages to inspire confidence in customers.	SMEs need to integrate with payment processors that support debit card transactions. Similar to credit card processing, debit card payments require a merchant account and a payment gateway. Debit card processing often comes with lower transaction fees compared to credit card transactions. Unlike credit card transactions, which may take a few days to settle, funds from debit card transactions are typically available immediately or within a short timeframe. SMEs should prioritise selecting payment processors with advanced security features, such as encryption and fraud detection tools, to safeguard customer data. Debit card processing solutions should seamlessly integrate with the SME’s existing payment infrastructure, including online shopping carts and point-of-sale (POS) systems, to ensure a smooth checkout experience.

Types of Online Payment Gateways for Small Businesses 

When it comes to processing online payments, small businesses have several options to choose from. Each type of online payment gateway offers unique features and benefits, catering to different business needs and preferences. 

Here are the three main types of online payment gateways for small businesses:

Hosted

Hosted payment gateways redirect customers to a secure payment page hosted by a third-party provider during the checkout process. This means that sensitive payment information is entered directly on the payment gateway provider’s website, reducing the risk of security breaches for small businesses. Hosted payment gateways are easy to set up and typically have lower compliance requirements, making them an ideal choice for small businesses with limited technical expertise.

Self-Hosted

Self-hosted payment gateways allow small businesses to host the payment page on their own website, providing a seamless checkout experience for customers without redirecting them to an external site. While self-hosted gateways offer more control over the checkout process and branding, they require additional security measures to protect sensitive payment information. Small businesses opting for self-hosted payment gateways must ensure compliance with industry standards such as PCI DSS (Payment Card Industry Data Security Standard).

API Hosted

API (Application Programming Interface) hosted payment gateways offer the most customizable and flexible payment solutions for small businesses. With API integration, businesses can embed payment functionality directly into their website or mobile app, providing a seamless and branded checkout experience for customers. API hosted gateways offer extensive customisation options, allowing businesses to tailor the payment process to their specific needs and preferences. However, API integration requires technical expertise and may involve higher setup and maintenance costs compared to other types of payment gateways.

What is The Right Payment Method for Your Small Business?

We’ve looked at the types of payment processing and types of payment gateways available, but as an SME, how do you know that you’re selecting the right payment method for you and your customers? 

Here are some final factors to consider when choosing the right payment method for your small business:

• Customer Preferences: Understand your target audience and their preferred payment methods. 
• Security: Prioritise payment methods that offer robust security features to protect sensitive customer data and prevent fraud. 
• Integration: Choose payment methods that seamlessly integrate with your e-commerce platform or website. 
• Cost: Consider the fees associated with different payment methods, including setup fees, transaction fees, and processing fees. 
• Support and Services: Evaluate the level of customer support offered by payment processing service providers. 

Carefully considering these factors should help you choose the payment method for your small business that will make a positive impact on both your bottom line and your customers’ experiences. 
If you need any support when it comes to deciding on the best route to take when it comes to your business payment processing, don’t hesitate to reach out to one of our financial experts here at Fibonatix. We’re always happy to help.