5 best payment methods for small business success and growth

Key takeaways:

• Offering diverse business payment methods can help your small business gain new customers.

• Credit and debit cards are the most popular payment methods in Australia, so limiting your payment methods to cash alone might exclude potential customers.

• However, merchants have to pay processing fees to accept card payments.

Small business owners have a lot on their plate, and managing financials and growth opportunities are important parts of a balanced business diet. The payment methods a small business accepts play a role in both aspects, and they’re key to developing your business into new markets.

Most of us have taken out cash before going to a local market or stopped by a corner store and thought, “I hope they take cards.” While some businesses hold onto ‘cash-only’ transactions, even solo merchants have found opportunities to accept digital payments online and in-person.

Digital payment popularity is growing globally, with 50% of global eCommerce purchases made by digital wallets, and 34% covered by credit and debit cards¹. So, offering the right mix of payment options as a small business owner can help expand your customer base, open opportunities for eCommerce, and even help business owners grow globally. Let’s explore the pros and cons of popular payment methods.

1. Cash

You probably already accept cash at your business. Cash is a go-to method that’s free to accept and easily processed through your bank.

While cash is convenient and familiar, it’s also quickly becoming a relic of the past. In fact, many experts agree that Australia will be a cashless society by 2030². More consumers and businesses are moving away from cash to easy-to-carry cards or mobile payments, so limiting your payment methods to cash alone might exclude a lot of potential customers.

On top of that, you can’t grow online if you only accept cash payments, limiting your long-term business potential.

2. Credit and debit cards

Cards are now king, with Aussies charging over A$85 billion on Australian-issued cards in July 2024³ alone. They’re convenient for customers and businesses, and maintaining digital payment records.

You’ll need a payment service provider (PSP) or other processing method to accept cards. Luckily, it’s easier than ever to find the right processing service with specialised SaaS and eCommerce payment systems for every business.

But card processing isn’t free. Small businesses typically pay a fixed fee plus a percentage rate of the total sale amount to process the payment. Combined, this is the Merchant Discount Rate (MDR).

Still, most businesses find the cost is worth the reward when they can accept payments from more customers. Letting customers pay with credit and debit cards means that you can grow your business online and internationally.

3. Direct debit

Direct debit isn’t common for small businesses. However, businesses with large purchases or recurring transactions are more likely to partner with a payment system that offers direct debit and pulls funds directly from the customer’s bank account.

This cashless payment option allows merchants to pull funds on a schedule (with customer approval), so there are no processing hang-ups or missed invoices that impact subscription services. This scheduling means it’s more efficient and affordable than card payments for cashless transactions.

But, like credit cards, you’ll need to find an independent direct debit provider to accept automatic debit transactions. Fees vary, but these providers typically charge rates per transaction.

4. Digital wallets

Digital payment alternatives are growing, with digital wallet apps like Apple Pay built directly into smart phones. These on-the-go alternatives work in stores and online, and they can make credit or debit purchases even more convenient than cards.

This is the first step into digital payments for many small businesses. A range of small businesses – from independent crafters selling at markets to established retail shops with global online orders – have adopted digital wallet payment solutions that match their needs. And with so much flexibility, these methods can easily grow with business goals.

5. Gift cards

Gift cards are popular with consumers and have several perks for small businesses, including boosting revenue and improving customer loyalty. Depending on your business setup, you can offer physical and digital gift cards for guests to buy, give to others, or redeem.

Ultimately, these work like credit and debit cards – you’ll need an appropriate payment processing or POS system to accept them. But aside from the initial transaction to sell the card, you don’t owe any additional fees to process gift card payments.

However, you’ll also need to consider the cost of physical gift cards, including designing and printing. There are also specific gift card regulations you need to know and follow.

How to choose what payment methods to offer

There’s no one right payment method for every business, but as digital payment methods and providers continue to surge in popularity around the country, they certainly give some food for thought.

Here are some key considerations as you decide which payment methods your small business should offer:

• Geographical location of your customers: brick-and-mortar businesses looking to go online must consider accepting credit and debit cards, and digital payments.

• Cost: some methods, like cash, are nearly free to accept, while cards and digital payments may require a payment processing provider that charges transaction fees. Businesses should weigh these fees against the benefits, such as increased revenue potential.

• Customer preference: Gain an understanding of your customers and their payment preferences. An older audience may prefer more traditional payment methods like credit cards or bank transfers while younger audiences may prefer digital wallets.

Many small businesses will want to accept cash and card payments from the start. There are many processing service providers that are good for small businesses to look at for digital payments.

Choose a payment platform that grows with your business

Once you start digging, you’ll be surprised just how many payment methods are available for small businesses. From tried-and-true cash to modern mobile wallets like Apple Pay, small businesses can operate and accept payments from anywhere in the world.

But a great business account is the first step to accepting any customer payments. Airwallex allows small and established businesses to open a Business Account, where you can open Global Accounts and accept online payments via low-code checkout solutions, or Payment Links and Plugins.

If you’re already with an existing eCommerce platform, tap into our no-code plug-and-play integrations with popular platforms like Shopify, Magento, WooCommerce, and more.

Sources:

1. https://www.statista.com/statistics/1111233/payment-method-usage-transaction-volume-share-worldwide

2. https://www.forgov.qld.gov.au/information-and-communication-technology/queensland-government-digital-futures-and-foresight/signals/the-future-is-cashless#:~:text=She%20estimates%20that%20Australia%20will,to%20help%20navigate%20the%20transition.

3. https://www.rba.gov.au/statistics/frequency/retail-payments/2024/retail-payments-0724.html