Payment Methods

Accepting cash, checks and credit cards takes some preparation and you’ll need to make arrangements ahead of time. Customers appreciate when you allow them to pay the way they want. By offering a variety of payment types, you’ll increase customer satisfaction and will make it easier for customers to give you payment. 

Cash

The usage of cash is declining significantly, as credit cards take over as the primary payment method.  However, some consumers use cash for all purchases because they do not have access to checks or credit cards. Some states even require businesses to accept cash, so you may have no choice but to accept cash. 

• Benefits: Cash is immediate payment. Works best for small purchases made in person.
  
   
• Drawbacks: Cash payments are vulnerable to counting errors, theft and pilfering. There is some risk of receiving counterfeit bills. Cash requires trips to the bank for deposits and cannot be easily used in eCommerce transactions. Customers do not always have enough cash on hand which can limit purchases and delay payment.
  
   
• Preparation: Purchase a cash register or cash box to secure the money during business hours. Be prepared to invoice your customers promptly and consistently.   If you have too much cash sitting around, remeber to head to the bank often, so that you can reduce the likelihood of theft.
   

Checks

Checks are another common form of payment, although they are declining in usage. If you plan to bill your customers, you should be prepared to accept checks. 

• Benefits: Checks require no change and are not as easily stolen as cash. Checks are often mailed to businesses in response to an invoice. Checks work well for purchases made in person and for payment of bills through the mail.
  
   
• Drawbacks: Checks require trips to the bank to deposit and a check can take up to 7 days to clear. Check fraud is common.  The business accepting the fraudulent check is often liable for the loss, so you need to be diligent about checking IDs when accepting checks.
  
   
• Preparation: Open a bank account so that you can deposit the checks. Most banks require a DBA registration to open a business banking account.  If you are a retail store, develop a policy on what requirements you have to accept checks.  Many retail stores require the cusotmer to show a valid driver's license with their check payment.

Credit Cards

Credit cards and electronic payments are the fastest growing payment method, representing 63% of consumer purchases in 2008. Credit cards are versatile and work well for invoice payments, ecommerce and can be completed over the phone.

• Benefits: No trips to the bank are required and funding takes less than 3 days. People spend more when they use credit cards because of their increased buying power. Works for transactions made in person, over the phone or on the web.
  
   
• Drawbacks: Credit card fraud is common. So, be sure to check the ID of someone using a credit card.
  
   
• Preparation: Open a merchant account with a reputable payment processor.

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