Top option of payment system for small business

How a payment system works

A payment system plays a crucial role in ensuring smooth and secure transactions for businesses. Whether processing credit card payments, ACH transfers, or digital transactions, the system follows a structured process to move funds from the customer to the business’s bank account. This typically takes one to three business days.

1. Payment initiation

The customer initiates a payment using a POS system (for in-person transactions) or a payment gateway (for online purchases).

2. Transaction processing

The payment system receives the transaction details and encrypts the data before sending it for authorization.

3. Authorization request

The payment system forwards the transaction request to the customer’s card-issuing bank or financial institution for approval.

4. Verification & approval

The card issuer or bank verifies the transaction, checking for sufficient funds and fraud risks. Once approved, an authorization message is sent back.

5. Settlement & processing

The payment system finalizes the transaction, ensuring funds are processed and recorded in the merchant’s account.

6. Fund transfer to business bank account

After settlement, the funds are transferred from the merchant account to the business’s bank account, typically within one to three business days.

Why does a payment system matter?

A reliable payment system ensures secure, fast, and efficient transactions, reducing delays and enhancing customer trust. It also acts as a bridge between the customer, financial institutions, and the business, facilitating seamless fund transfers while maintaining compliance and security.

By using a robust payment system, businesses can streamline their transactions, improve cash flow, and provide a better payment experience for their customers.

What to consider when choosing a payment system for a small business?

Did you know that 88% of online shoppers are less likely to return to a website after a bad user experience? One of the biggest factors in customer satisfaction is having a seamless and secure payment system for small businesses. Whether you run a B2B ecommerce or B2C ecommerce store or a physical shop, choosing the right payment software for small business is essential for smooth transactions, customer trust, and business growth. Here’s what to consider when making your decision.

1. Transaction fees

First, think about the transaction fees. These are the extra costs you pay when a customer uses a card. Credit cards, debit cards, and Automated Clearing House (ACH) transactions all have different fees. Credit card fees are usually higher than debit card fees, and ACH transactions can be cheaper. Understanding these differences is vital when selecting business payment services.

2. Online vs. in-person fees

Next, consider the fees for online vs. in-person payments. Some business payment systems charge more for online transactions than for in-person ones. So, if you sell a lot online, look for software with low online fees. This can help save money in the long run.

3. Pricing structures

There are different pricing structures to consider:

• Flat Rate: You pay the same fee for every transaction.
• Interchange-Plus: You pay the cost from the card network plus a small fee.
• Subscription Models: You pay a monthly fee instead of a per-transaction fee.

Think about which pricing model best suits your business. Different business payment services offer different pricing structures, so choose one that aligns with your sales volume and transaction types.

4. Customer service

Choose a reliable payment system with 24/7 support that offers great customer service. If something goes wrong, you need help quickly. Good customer service is essential for smooth business operations and promptly resolving issues.

5. Simplicity and specific business needs

Finally, choose software that is simple to use and meets your specific needs. You might not need a complicated system if you have a small store. But if you run an online shop, you need something that handles online payments smoothly. Suitable business payment systems make transactions straightforward and secure for you and your customers.

6. Compatibility with existing systems

Check if the software is compatible with your existing systems. This means it should work well with the tools and software you already use in your business. If you use a specific accounting software, ensure the payment processing software can easily share data. This helps in keeping everything running smoothly and avoids extra work.

7. Ease of integration

Consider how easily the software can connect to your current systems. This is called ease of integration. You want business payment services that can easily plug into what you’re already using without causing problems. For example, if you have a website selling products, the payment software should work smoothly with your website.

8. Security and compliance

Security is one of the most critical aspects of choosing a payment system for a small business. With rising fraud cases and cyber threats, ensuring that your payment software for small business is PCI-DSS compliant (Payment Card Industry Data Security Standard) is non-negotiable.

Key security features to look for:

• End-to-end encryption to protect customer data.
• Fraud detection and prevention tools to minimize risks.
• Tokenization technology for extra security. 
• Compliance with industry standards to avoid legal issues.

A secure payment system for small businesses protects both you and your customers, ensuring a trustworthy and hassle-free payment experience.

Now that we’ve covered the basics, let’s explore some top payment system options that small businesses swear by.

Top payment system options for small businesses

When choosing business payment services software for your small business, several options stand out with their unique features and benefits. Clover offers versatile POS (point-of-sale) solutions with customizable hardware and software, while Square provides user-friendly mobile payments and free POS software plans. Stax specializes in transparent pricing and volume discounts, while Stripe offers seamless online payment processing and support for high-risk merchants.

Payment Depot stands out with its subscription-based pricing model and quick deposit options, and Helcim offers comprehensive omnichannel payment processing with robust security features.

WizCommerce, on the other hand, provides the industry’s lowest transaction fees with highly secure payment processing, ensuring businesses can maximize profits while maintaining top-tier security standards. With advanced fraud protection, PCI-compliance, and end-to-end encryption.

With 1.3 trillion non-cash transactions made globally in 2023 and expected to reach 2.3 trillion by 2027,it is more crucial than ever to have dependable, secure payment processing software to take online and cashless payments. The business payment services provide a range of features and benefits, allowing small businesses to streamline their payment processes effectively. Here is a detailed discussion of the top payment processing platforms:

1. WizPay by WizCommerce – The best B2B payment system

For small businesses handling B2B transactions, WizPay is a game-changer. Designed for flexibility, security, and cost-effectiveness, it supports multiple payment methods, flexible Net 30/50 terms, and seamless refunds—all at the industry’s lowest transaction fees. Unlike traditional payment processors, WizPay helps businesses get paid faster while reducing costs.

Key Features:

• • • Flexible payment terms – Accept payments on Net 30, Net 50, or custom schedules.
    • Multiple payment methods – ACH, payment links, tap/swipe cards, stored credit details, credits, and offline payments.
    • Seamless refund processing – Issue refunds directly from the app with minimal effort.
    • All-device compatibility – Accept payments on mobile, tablet, or web for a smooth experience.
    • Automated account updater – Reduce payment declines by automatically updating expired or lost cards.
    • Advanced dispute management – Track and resolve chargebacks directly from your WizPay dashboard.
    • Seamless integration – Sync with QuickBooks, Xero, and other accounting tools to simplify reconciliation.
    • End-to-end encryption – PCI-DSS compliant security with tokenization for fraud prevention.

Pros:

• • • Lowest transaction fees – Keep more of your revenue with cost-effective processing rates.
    • 24/7 customer support – Dedicated support team available round the clock.
    • Smart reporting & real-time insights – Stay in control of your business finances with detailed analytics.

Cons:

• • • Best suited for B2B businesses – Not ideal for micro-retailers with single-payment transactions.

2. Clover

Clover, launched in 2012, is a cloud-based business payment services provider and POS system that offers in-store and online payment processing. It utilizes a flat-rate pricing model, charging 2.3% to 2.6% plus 10¢ per transaction for in-person payments and 3.5% plus 10¢ for online payments.

Here are some features

• • • Mobile device payment capabilities

    • Wireless payment processing

    • Advanced POS systems

    • Virtual terminals for online transactions

    • Detailed analytics and reporting tools

    • Integrated merchant accounts for streamlined operations

    • A broad app marketplace for enhanced functionality

Pros

Clover provides extensive features that support various business operations. It excels in inventory management, employee scheduling, and customer relationship management with integrated CRM and offers advanced analytics for better business insights. This makes Clover a versatile partner for businesses seeking comprehensive payment processing solutions.

Cons

Cost is a significant consideration for small businesses, and Clover can be expensive. Monthly software subscription fees can go up to $69.95, higher than many competitors. Additionally, the cost of POS hardware, ranging from $49 to $1,649, can be prohibitive for small business owners.

3. Square

Square is an affordable business payment services provider that operates on a flat-rate pricing model with no monthly subscription fees. Square charges 2.6% plus 10¢ for in-person transactions and 2.9% plus 30¢ for online transactions.

Here are some features:

• Comprehensive POS systems

• Free invoicing tools

• Complimentary mobile card reader

• API integrations for customization

• Detailed analytics and reporting

• Specialized software solutions for retail and restaurants

Pros

Square’s cost-effective pricing is a significant advantage, with no fees for early termination, activation, refunds, or chargebacks. Additionally, Square does not charge for monthly subscriptions or PCI compliance, which ensures secure payment transactions. Users also benefit from free POS software and a mobile card reader, making it an attractive option for startups and small businesses.

Cons

Square does not support high-risk merchants, limiting its applicability to businesses flagged as having a higher risk of fraud or chargebacks. Furthermore, 24/7 customer support is only available with Square’s paid plan options, which might be a drawback for some users.

4. Stax by Fattmerchant

Stax is a business payment services provider that operates on a membership model, charging businesses a monthly subscription fee between $99 and $199. In addition to this fee, businesses pay interchange fees and a per-transaction fee ranging from 8¢ to 15¢.

Here are some features:

• Round-the-clock customer support for continuous assistance

• Advanced Point of Sale (POS) systems to streamline transactions

• Secure physical credit card terminals

• Complimentary virtual terminal for online transactions

• Versatile payment gateways for various payment methods

• Options for same-day funding to improve cash flow

• Ensured PCI compliance for transaction security

• Fully integrated merchant accounts for seamless operation

Pros

Stax’s key advantages include 24/7 customer service and same-day deposit options. PCI compliance ensures secure transactions. The interchange-plus pricing structure, which avoids additional percentage-based processing fees, can be particularly cost-effective for businesses with high transaction volumes. Additionally, Stax does not require long-term contracts, offering businesses flexibility.

Cons

The flat-rate monthly subscription fee of $99 to $199 may not be economical for businesses with low transaction volumes. Moreover, Stax does not cater to high-risk merchants, limiting its applicability to some business types.

5. Stripe

Stripe is a credit card processing company and payment business services that uses a flat-rate pricing model, charging 2.9% plus 5¢ for online payments and 2.5% plus 30¢ for in-person transactions.

Here are some features:

• Offers a virtual terminal for online payments.

• Provides a physical terminal for in-person transactions.

• Includes a vast library of platforms and extensions.

• Supports international payments in over 135 currencies.

• Provides 24/7 customer service.

• Integrates billing and invoicing capabilities.

Pros:

Stripe doesn’t charge monthly subscriptions or set-up fees and provides 24/7 customer service. It supports payments in 135 different currencies and offers various extensions for sales analytics, inventory management, customer management, and tax calculation. Additionally, Stripe includes invoicing and billing functions within its platform.

Cons:

Stripe isn’t suitable for high-risk merchants. Moreover, its application programming interface (API) requires more software development skills than many competitor platforms.

6. Helcim

If you are looking for a business payment services provider, consider Helcim. They charge interchange fees plus 0.3% of your total transaction cost and 8¢ per transaction for in-person payments. For keyed transactions, interchange fees plus 0.05% of the total transaction cost and 25¢.

Here are some features:

• Ensures PCI compliance to keep your transactions secure.

• No monthly fees, ensuring cost-effectiveness.

• Provides integrated merchant accounts for seamless processing.

• Offers a virtual terminal for convenient online transactions.

• Includes a POS system for in-store payments.

• Allows processing through mobile devices for flexibility on the go.

Pros:

Helcim doesn’t charge a monthly subscription, set-up, PCI compliance, or cancellation fees. Plus, if your business processes more than $25,000 in transactions a month, you get discounts.

Cons:

They don’t support high-risk merchants or provide 24/7 support. Also, their volume discounts suit high-volume businesses better than low-volume ones.