Choosing the best and most cost-effective payment method for small businesses: A how-to guide 

Expert: Anton Gurban, Visa Sr. Director, Head of Business Solutions in 17 countries. 

In modern commerce, the client’s payment experience is everything. Offered payment options are critically important for enhancing customer conversion and brand development. Luckily, the fintech market offers a wide range of payment methods to businesses, depending on how and where they operate. 

Goodbye cash! 

With such a rich pool of electronic payment options, SMEs all over the world are increasingly opting for cashless payments. Women-owned businesses in Eastern and Southeastern Europe, Central Asia and the Caucasus are no exception. Some 37 per cent of female entrepreneurs surveyed by Emerging Europe and Visa in their recent research under the She’s Next initiative stated that card payments are the most frequent method to pay for their goods and services, and 42 pe rcent said they prefer their customers to pay by card.  

In comparison, only 35 per cent of respondents claimed that their customers paid in cash more often, and only 28 percent preferred clients to stick to cash. 

Cashless transactions are not only convenient but profitable, allowing you to accept payments securely and quickly, generate revenue and even save money. There is no longer a need to have a place to store cash and take costly security measures, worrying about getting robbed. 

The main barrier to going cashless for SMEs is a lack of resources and knowledge. However, nowadays, there are payment solutions for any pocket and business model. 

From a classic direct bank transfer to turning your smartphone into a POS terminal 

A direct bank transfer is the most well-known payment method for moving money from one bank account to another. Being quite cumbersome and requiring tedious bureaucratic procedures like creating a payment order, it is gradually becoming obsolete. Another disadvantage of direct bank transfers is that they are time-consuming. The transaction takes from 40 minutes up to three business days to be completed, causing inconvenience to both the sender and the recipient and making them constantly monitor their accounts to check if the money has already been successfully transferred. Connecting a corporate card (for example, a Visa Small Business card designed to cater to special SMEs’ needs¹) to a bank account will facilitate this monitoring process and management of your financial resources, but in the fast-paced world we live in, such a delay is unacceptable. 

A point-of-sale (POS) terminal is the most popular method of accepting payments and best suits retail chains with physical stores open for a fixed period of time. Its mechanics are simple: a consumer makes a payment by tapping a plastic card or a smart device with enabled digital payments, and the money is transferred to the merchant’s account. However, a POS terminal has its drawbacks and requires additional expenses for technical maintenance and commission paid to the acquiring bank that installed the device. 

To facilitate the adoption of digital payments by small merchants, Visa offers a solution that turns smartphones with Android OS and an NFC chip into a platform for receiving contactless payments, Tap to Phone². With Visa Tap to Phone, your smartphone functions like an ordinary POS terminal without the device itself and, consequently, without the necessity to allocate costs for its maintenance and time for learning how it operates, installing and updating software, etc. The technology offers a new level of flexibility to ‘mobile’ businesses without a strict location—courier delivery, street vending, at-home services with a visit to the client (plumbers, electricians, private tutors, etc.)—and will also come in handy for entrepreneurs who are only planning to open their own business with a small starting capital. 

What about if you have no offline point-of-sale and do not physically interact with your clients at all? As online shopping has gained popularity after the Covid-19 pandemic, so have online card payments. This is the best payment method for online stores: the merchant has to simply set up payment on the website, and then the buyer can pay with a plastic or virtual card. 

Another interesting payment method—payment by card using a QR code—is not quite common yet but is gradually picking up steam, especially in the food industry. In this case, the payment process involves the merchant having a QR code displayed somewhere at the point-of-sale and the consumer scanning it with their smartphone and then entering card details to make a payment. Naturally, this payment method has both pros and cons: lower expenditures for merchants not having to install a POS terminal come with extra steps for customers (compared to simple tapping of a card or device). However, we can expect payments via a QR code to be simplified in the future, as they are becoming more widespread. 

Navigating the world of payments as an aspiring or even seasoned entrepreneur, it is easy to get lost and overwhelmed by various opportunities, but taking these considerations into account, you will be able to decide what suits you best based on your business’ size, needs and purposes.