The New World of Small Business Payments

Managing Cash Flow

It wasn’t so long ago that the biggest issue facing smaller businesses was whether or not to accept credit card payments. For many small businesses, barriers such as cost, technology and financial instability made it difficult to make the leap to credit transactions using merchant services. Today, the issue isn’t whether they should accept credit payments as it has been clearly established that without them, a business will struggle or die; rather, the issue is how to harness the power of new payment technology to grow the business, regardless of its size. With commerce and consumer choice evolving at digital speed, it is more important than ever for small businesses to be able to support multiple payment types.

Although the costs of credit transactions and processing may still be an issue for small businesses, powerful new payment technologies have allowed them to turn their focus instead to enhancing customer value and increasing profits through more effective management of their businesses. In fact, new payment technologies can not only lower or remove the barriers to credit transactions; they can also level the playing field for small businesses striving for a bigger piece of the pie.

What’s Driving Payment Technology?

Multi-channel Point-of-sale

Driven largely by the consumer’s desire to “purchase it my way,” an increasing number of businesses, large and small, are beginning to operate through multiple channels from brick-and-mortar outlets to on-line stores. Most types of businesses must be able to handle the e-commerce or mobile transaction with the same deft and efficiency as an in-person transaction while providing a positive customer experience.

With online sales growing 30 percent annually, it’s more important than ever for businesses to create an integrated payment structure that supports multiple payment types from multiple devices. The good news is that smaller businesses can adopt newer technologies quickly.

Security and Privacy Needs

Consumer concerns over security and privacy have increased exponentially with the major cyber-security breaches of some of the country’s largest retailers and financial institutions. The fear of future breaches has opened the door for rapidly developing payment technologies that won’t require the actual exchange of credit card information. New contactless payment technology doesn’t require the swiping of a credit card through a terminal, keeping the credit card information out of the hands of the merchants.

Leading the way are EMV chip cards introduced in the United States in 2015. They look similar to a regular credit card, but they contain a special micro-chip with encrypted data. The chip creates a new security sequence each time it is used to make it more difficult for hackers to steal the data.

Why should small businesses begin adopting EMV chip reading technology? Beginning in October 2015, the card companies absolved themselves of any fraudulent charges incurred by a merchant which doesn’t utilize EMV. That means, if you choose not to adopt EMV, your business is on the hook for fraudulent charges - not a risk many small businesses can withstand.

It’s expected that more than 2 billion EMV cards have been issued since the beginning of 2016, so now would be the time to upgrade your equipment. The good news is that EMV-compatible equipment can cost as low as $300 to $500.

Mobile Payment Services

Mobile payment technology has taken a quantum leap forward with the advent of smart phone wallets. Apple and Google have introduced mobile payment services that enable payments to be made wirelessly with a near field communications (NFC)-enabled terminal. By tapping or waving the smart phone over the terminal, the merchant doesn’t receive any credit card information; rather, a one-time code is issued authorizing the transaction. Similar contactless technology is also being deployed through Visa payWave and MasterCard PayPass.

For most small businesses, adopting these mobile payment services should be fairly simple. Aside from an equipment upgrade to NFC, there is no additional infrastructure or cost required.

Cash Flow Management Solutions

At one time, merchant services were a simple means to an end as a way to facilitate a credit transaction, from charge to processing to payment. With new payment technology residing primarily on the Internet, small businesses can now fully integrate their payment methods and control them from a single screen on their computer or tablet. The process has become so streamlined that transactions and processing that once required manual efforts over days are now automated and completed within hours.

Because transaction data is compiled in the cloud, businesses can access and manage important business data, such as sales, inventory, receivables, payables, etc. Some systems can even track customer purchase histories and provide valuable customer relationship management capabilities.

Business Survival versus Business Growth

“Even if you’re on the right track, you’ll get run over if you just sit there.”

This famous Will Rogers quote can certainly apply to many aspects of running a business and none more so than the way your business conducts transactions. The question small business owners should be asking themselves can no longer be “how much will it cost me to accept credit and debit cards?” Rather, it should be, “how can I utilize payment technology to capture new customers, improve relationships, and take my business to the next level?”

Yes, there are, and always will be, overhead costs to contend with, including merchant discounts, interchange fees, and equipment costs. You will still need to shop and compare among banks and merchant services to find the right level of merchant services for your business needs. However, there are few aspects of a business that can generate a better long-term return than an investment in payment technology.

for different stages of business with the ability to add services as business growth dictates. Meeting with a small business specialist to assess your payment needs and plans for growth could be the best investment of your time right now.


Only deposit products are FDIC insured.

The information provided is not intended to be legal, tax, or financial advice or recommendations for any specific individual, business, or circumstance. TowneBank cannot guarantee that it is accurate, up to date, or appropriate for your situation. Financial calculators are provided for illustrative purposes only. You are encouraged to consult with a qualified attorney or financial advisor to understand how the law applies to your particular circumstances or for financial information specific to your personal or business situation.

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