How to Optimize Payments Solutions for Your Small Business
Ben Katz is a serial media and technology entrepreneur. In this video he speaks on how to optimize payment solutions for your small business.
Since I work in the payments business but in the past I ran a small business. A lot of my friends ask me how they should optimize their payments to improve customer conversion. Frankly they want to make more money with their business and they want to know how the payments industry can help the make more money.
The first advice I have is and it’s not that much of a surprise that you should accept cash. People prefer cash. It’s a dominant way that brick and mortar transactions take place with and it’s only real risk are employee theft or other theft and you can fix that using video cameras and drop boxes. And counterfeiting and you can fix that by making sure you check anything other than a $1 bill with a counterfeit detecting pen. Your fraud will be very low and your theft will be very low if you implement those.
The second thing you should do is of course you should accept credit cards and debit cards. If you’re not accepting credit cards and debit cards it’s probably because you’re trying to evade taxes. Not because you’re trying to optimize your revenue. If you want to accept credit and debit cards in a brick and mortar scenario, the best scenario to do is-- the best thing you can do is via VeriFone terminal. You could also if you’re a smaller business that only accepts one or two credit cards a day, probably get away with a square account or an Intuit GoPayment account and you have to use those with an IPhone or an Android phone but for most environments a VeriFone terminal would be the right answer for a medium a sized or small sized business.
And yes you need to accept American Express. You need to accept Discover or you’re really going to turn away extra revenue because the person is using an American Express and that cost you 70 basis points more cost that doesn’t make any sense.
Lastly you’re going to want to accept checks. If you trust your customer an have an ongoing relationship with them I don’t recommend that you accept checks as a small or medium sized business if you don’t have an ongoing relationship with the customer and it’s a first time customer because of fraud risk. These funds are actually your funds for several days and that for up to 60 days. So be careful with that.
And then as a bonus you could be offering gift cards. What’s nice about gift cards is if you sell a product you don’t even have to fulfill the product when you sell a gift card. You’re effectively selling a product in the future and there’s nothing better than getting paid $50 for something that cost $0 to provide but you might have to provide in the future. So it’s a way to build a cash flow positive aspect to your business. Plus some people lose their gift cards and more importantly it’s an easy way to let your customers give your service or product as a gift.
So to recap you need to accept cash. You need to accept credit cards including the expensive credit cards as well as debit cards. You should accept checks from loyal customers that you have a relationship with and trust and you should consider adding gift cards to your offering. If you do all that you’ll optimize your payments for your business.