Accepting electronic payments is easier and cheaper than you think. Really!

[PianoGuy]

I'm always amazed every time I have to deal with a vendor who only accepts payment by cheque. What, you mean I have to print the cheque, file the stub, put the cheque in an envelope, stamp it, walk to a mailbox to mail the cheque? And then you have to throw away the envelope, fill out a deposit slip and drive to your bank with it? And I have to pay for the cheque and the postage, and you maybe have to pay your bank's Items Deposited fee?

In 2012? For serious?

Fortunately, there are plenty of ways to improve upon this process. Here are some common ones that I use often:


PayPal

Never underestimate the power of PayPal. For anyone who says PayPal looks unprofessional, I urge them to look at the big companies that already accept it, such as Dell, ToysRUs, Cineplex, The Home Depot, and Starbucks. If it's good enough for them, it's good enough for you too.

Pros: No monthly fee, setup fee, or minimum. Transfers marked as "personal" are free, even between two business accounts.
Cons: If the transaction is not marked "personal", the merchant pays a percent to accept the payment.


Electronic Funds Transfer

Electronic Funds Transfer involves withdrawing or depositing funds directly into someone's bank account. I use this both for employee direct deposit and pre-authorized debit from my customers. I like Beanstream for this purpose.

Pros: Low cost - you needn't pay any more than $0.25/transaction. Everyone has a bank account already.
Cons: Not as easy to use as the other options mentioned. There will probably be a monthly fee and returned item fees.


Interac e-Transfer

My accountant discouraged me from using Interac e-Transfer because there is no audit trail. In other words, in the event of a dispute, there would be no easy way to prove who received the money. It's probably fine to use if you trust the recipient, but even still, there are cheaper options.

Pros: No holds; funds are transferred instantly.
Cons: Expensive for low-value payments. No audit trail.


Interac Online

I looked into this but with a transaction fee of $0.90 for transactions of $35 and higher, it's actually more expensive than credit cards for my use.

Pros: Inexpensive for large funds transfers.
Cons: Monthly fee.


Credit card

Credit cards certainly qualify as an electronic payment, though many vendors I deal with don't accept them because of the fees associated with doing so. If you're considering accepting credit cards, you may wish to contact a company such as Payfirma Corporation which will likely be able to give you a better deal than the big companies.

Pros: Just about everyone has a credit card.
Cons: The merchant pays a percent to accept the payment.


Thanks for reading. If you use a method of electronic payment I didn't post here, please let us know which one and why you like it.

[Kintoronto]

Thank you for good posting. How to set up Interact and credit card for website? What is best easy cheapest way (don't care about paypal).

[PianoGuy]

In a nutshell: first you need to contact a company like Payfirma that will provide you with a merchant account. You should advise them which shopping cart you are using or plan to use on your website to be sure that you can be sure that their gateway can be integrated with your shopping cart. If you don't yet have a shopping cart, you can install one yourself if you know how, or hire a web developer to install one for you and teach you how to use it. Does that help?

As for Interac Online, I've never used it, but as far as I am aware the process is the same. I was told it is less popular and doesn't integrate with as many shopping carts.

[HunkaHunkaBurningLove]

There are even ways to accept card payments using your iPhone. I saw a commercial on TV about it, and it looked pretty neat. Here's one I found from a quick search just as an example. There may be cheaper ones out there.

iPhone payments

[NEMESIS_2008]

Cheques are still widely used in Canada because it simply is the most cost effective. With the Competition Bureau targeting Visa and MasterCard for their high fees, hopefully one day we can all transition to electronic payment. But until then, in North America, credit card fees are the highest in the world. Have you read the article in the Toronto Sun/Star about stores only accepting cash to avoid the merchant fees? Ask any one of those small businesses and they will give you their side of why they don't like doing electronic payments. It's not that customers are stuck in the 1990's and failed to acknowledge that its 2012 (like you mentioned). You have to look at the whole picture here:

Look it from my situation where I pay my employees by direct deposit instead of cheque solely because they are contracted to work in various locations:

A cheque costs roughly $0.30-$0.40 (based on an order of 500 cheques) and a direct deposit costs $0.80-$3.00 per direct deposit. You can clearly see that paying employees by cheque is the most cost effective solution, yet I still do direct deposit because like I said, they are contracted to work in various locations. If there was just one location and all my employees work there, then sure, I would pay them by cheque. I calculated that it would be more cost effective to pay my employees direct deposit instead of cheque because I would save the hassle of driving to every location and delivering the cheques to them. This saves, time, gas, and more time....... Time=money.

In a small business store, the opposite happens: They like to accept cash (the old fashioned way) and not electronic payment because they get dinged 1.5-3% on merchant fees. Nevertheless, they still have to have a debit/credit card machine because it is 2012 and more and more customers are paying by electronic means. Making a sale by electronic form is better than having a customer not buying from you because you don't have a terminal, so stores have to have one even though they hate it with a passion.

[joshpereira85]

i still don't get someone that processes a lot, why they wouldn't take credit cards because why lose a sale in this credit rich cash poor economy?
Baffles me how much people will complain about a sale they probably wouldn't have gotten if they didn't accept visa/mc

[OracerO]

Anyone ever use those Iphone credit card payment attachments? (you see on paypal etc...) ??

[NEMESIS_2008]

i still don't get someone that processes a lot, why they wouldn't take credit cards because why lose a sale in this credit rich cash poor economy?
Baffles me how much people will complain about a sale they probably wouldn't have gotten if they didn't accept visa/mc

They still have the terminal to accept debit and credit card, but they persuade customers to pay cash. Take my recent experience for example: At a restaurant my family ate at, as soon as I flashed the credit card to them, they said, "sorry, cash only." They ensured that they had an ATM inside the restaurant to ensure that customers can pay by cash. I think that is a workaround: Have an ATM on site so they can pull the cash out, then pay by cash to avoid merchant fees.

What I am trying to say is: They DO have a POS terminal, but try to convince the customer to pay by cash. It's only when the customer says "sorry I have no cash and only plastic) is when they cave in and use the terminal. Or, like my experience above, they have an ATM on site so they can pull the cash and pay by cash.

Al of this trouble thanks to the high merchant fees from Visa and Mastercard.

FYI: Visa and Mastercard agreed to allow merchants to pass the merchant fees onto customers.

[joshpereira85]

Anyone ever use those Iphone credit card payment attachments? (you see on paypal etc...) ??

our company develops them. Free to use with our processing and $99 for the hardware. rates are 1,99% plus 25 cents per transaction

[joshpereira85]

They still have the terminal to accept debit and credit card, but they persuade customers to pay cash. Take my recent experience for example: At a restaurant my family ate at, as soon as I flashed the credit card to them, they said, "sorry, cash only." They ensured that they had an ATM inside the restaurant to ensure that customers can pay by cash. I think that is a workaround: Have an ATM on site so they can pull the cash out, then pay by cash to avoid merchant fees.

What I am trying to say is: They DO have a POS terminal, but try to convince the customer to pay by cash. It's only when the customer says "sorry I have no cash and only plastic) is when they cave in and use the terminal. Or, like my experience above, they have an ATM on site so they can pull the cash and pay by cash.

Al of this trouble thanks to the high merchant fees from Visa and Mastercard.

FYI: Visa and Mastercard agreed to allow merchants to pass the merchant fees onto customers.

Visa and Mastercard allowing merchants to pass merchant fees on will make a difference in non competitive markets. But anything with competition the guy that charges less will win on most cases.

[PianoGuy]

a direct deposit costs $0.80-$3.00 per direct deposit

I guess it's the volume that makes it profitable. Beanstream for example charges $0.25/transaction. There's a $15 monthly fee, but I do ~150 transactions a month (direct deposit and pre-authorized debit combined) so it's not really significant for me. The bonus is that since I'm using the service for my customers, I reduce my Visa/MasterCard fees.

Direct Deposit could be done for free with banks like ING DIRECT, but the lack of audit trail probably makes it unsuitable for business use.

[NEMESIS_2008]

I guess it's the volume that makes it profitable. Beanstream for example charges $0.25/transaction. There's a $15 monthly fee, but I do ~150 transactions a month (direct deposit and pre-authorized debit combined) so it's not really significant for me. The bonus is that since I'm using the service for my customers, I reduce my Visa/MasterCard fees.

Direct Deposit could be done for free with banks like ING DIRECT, but the lack of audit trail probably makes it unsuitable for business use.

Just curious why there is no audit trail when doing dd with ing

[PianoGuy]

If you use ING DIRECT's email money transfer, there is unfortunately no way for you to prove which account the money was deposited in.

[Sean_A]

We're set up for accepting credit cards, but really as the owner of the business it always pains me when a customer says they prefer to pay via credit card. Merely for the exaggerated fees (I pay about 2 to 2.5%).
Most of our payments right now come via cheques and I'm happy to keep it that way, my account lets me deposit some number of cheques per month for free, and when I have gone over that the most I have ever paid as charge for a month was $0.32. Faaaar from what I would pay for CC charges.

I think it really depends on your business. Most of our customers are other businesses, and most business do "cheque runs". So let's say on the 10th of every month, they write out all their cheques and post them all at once. So the whole procedure you explained of "put in envelope, walk to post box etc." is a little exaggerated. But I do agree that every business MUST be set up to accept CCs. If you lose a sale because you don't take it, that's 1 sale too many.
I do hope the competition bureau helps us reduce the fees for Visa and MC.