Since March 2020, hundreds of thousands of businesses across the United States have closed permanently. Yet applications for new businesses simultaneously skyrocketed, with more than 4.3 million applications submitted in 2020. That’s an increase of about 24% over 2019, and it marks the largest number of new business applications submitted in a year dating back to 2004.
The businesses that have weathered the pandemic and those that are just getting off the ground have shifted their operations to an online, e-commerce format. But that shift to e-commerce creates other considerations — including the need for speedy and secure payment processing. For many small businesses just beginning to explore e-commerce, a payment service provider (PSP) can make a world of difference.
The Challenges of Small Business E-Commerce
Small businesses generally have fewer resources than large companies and corporations, so establishing online payment capabilities can present hurdles. But the ability to collect payments is just one element of e-commerce. You’ll also need to create a website that provides the infrastructure for payment collection, which can seem intimidating if you are pressed for time or not particularly web-savvy.
Additionally, the only way to grow your business is to attract customers online. Major corporations like Amazon and Walmart are at the forefront of commerce, which can make it challenging to establish your online presence. Competition might be fierce, but e-commerce sites for small businesses are absolutely critical for long-term success. The key is strategically planning for and investing in the site, its infrastructure, and its payment processing abilities.
The Benefits of Payment Service Providers for Small Business
If you’re one of the millions of Americans who decided to turn your hobby or side hustle into a legitimate small business during the pandemic, figuring out how to process online payments should be one of the first things you do. And knowing the challenges ahead can help you do this strategically.
Using a personal account for an internet payment service provider like PayPal or Venmo just won’t cut it. Fortunately, there are plenty of payment service providers for small businesses that can lift the burden from your shoulders and allow you to expand the number of payment methods you accept — without forcing you to do it all yourself.
One of the benefits of e-commerce for small businesses is the ability to reach customers wherever they are and maintain independence while focusing on your business. Use these three tips to maximize the long-term advantages of PSPs:
1. Operating as a business has its advantages.
It’s fairly common to see people casually launch their own business from their personal PayPal account. While this works for sellers with relatively few customers, it’s not ideal for a small business that wants to establish itself and grow. Personal accounts are largely intended for sending money to or receiving money from others, and they can be used as long as you have an email address and a bank account.
Business accounts created through an e-commerce payment service provider, on the other hand, allow you to accept many types of payments, extend administrator access to other employees, and keep track of your business expenses without mixing them with your personal spending. This allows professional ventures to be as successful as possible while keeping them separate from your personal finances.
2. Turn a survival tactic into a long-term strategy.
Most physical stores added an e-commerce element to their business model to survive the pandemic lockdowns. As the pandemic continues to impact small businesses everywhere, consumers’ buying habits will increasingly shift online.
Using a PSP may seem like a short-term fix until the pandemic is over, but investing in online selling will be key for any business that hopes to be successful moving forward. E-commerce sales in the U.S. reached an all-time high in 2020, and consumers aren’t changing their shopping habits anytime soon. Getting your small business up to speed on digital payment systems only makes sense as you plan for the future.
3. Relieve the burden from your business.
One of the advantages of using PSPs is that your small business doesn’t have to put in an overwhelming amount of effort to get things up and running. The PSP handles credit and debit card transactions on your behalf, relays information to the necessary parties, and ultimately validates or denies the transaction. Furthermore, most PSPs don’t require you to sign a long-term agreement; many operate on a month-to-month basis and allow you to cancel without massive penalties.
The most effective payment processors for your business should enable you to accept a variety of payments, offer reliable customer service to your customers, and integrate with your website without requiring you to handle website development.
Payment service providers hold plenty of promise for small businesses, especially in a difficult and uncertain operating environment (like a pandemic). To ensure that your business meets customers where they are and sets itself up for long-term success, look into solidifying your e-commerce strategy to take advantage of everything payment processing technology has to offer.