To successfully run any business, you need to get paid. With the right retail payment system in place, you can make money while creating a customer experience that stands out from the rest.
As consumers continue to take advantage of modern technology, shopping conveniently on mobile phones and laptops, businesses face unique problems to solve. E-commerce brands face cart abandonment rates of nearly 70%, while physical stores are experiencing significant declines in foot traffic. Offering a convenient way to pay for your goods and services can help you keep more leads committed to shopping and checking out.
In this guide, you’ll learn about retail payment systems and how they can help your business thrive.
What is a retail payment system?
A retail payment system manages transactions between a company and its buyers. This system enables your customers to transfer funds to you when goods or services are purchased, and vice versa with returns and refunds.
There are a few characteristics that distinguish retail payment systems from wholesale payment systems:
- Your buyers can be both businesses and consumers, as long as they’re the end-users for whatever you’re selling.
- Higher transaction volumes tend to occur on retail payment systems, which serve more users.
- The value of each transaction tends to be lower.
However, retail payment systems still serve the much-needed role of helping you collect the money you’re owed, so your company can continue to profit and grow.
Types of retail payment systems
Retail payment systems can take many forms, including some that have been around for years and others that are emerging. Here are a few types of payment systems that brands commonly use:
1. Cash payments
Nearly everyone has bought something with cash, but what you may not know is that cash exchanges can be considered a type of retail payment system. This no-frills medium of transferring funds is still a go-to, particularly for low-value transactions.
While a cash payment system is cost-effective for businesses (you won’t have to pay any extra fees and you profit in real-time), it’s impossible for online retailers. Plus, the majority of consumers today don’t regularly pay with cash or carry more than $50.
2. ACH payments
With paper-based payments like checks and money orders proving to be obsolescent, ACH payments are taking their place. ACH, which stands for automated clearing house, is a payment processing system in the United States that facilitates funds transfers from customers’ checking accounts to the retailer or service provider. Users provide their bank account and routing numbers and agree to the transfer.
You may already use ACH payments to pay for your rent or electricity bill, as they’re a safe digital option for large-value and recurring transactions.
3. Card payments
Debit card and credit card payments are widely accepted across the United States, especially those from major financial service institutions like Visa and Mastercard. Whether your customer is using an in-store point-of-sale system or providing their card information on a website, a credit card processing system can efficiently send funds to your company as long as the customer has the money in their account.
Though card transactions can take a few days to complete, the majority of Americans are cardholders, making it worth the wait. The growth of credit card accounts is rising, as they’re efficient for both online and in-store payments.
4. Mobile payments
In the digital age, electronic payment systems are naturally increasing. With millions of people using mobile devices, payment systems with smartphone-initiated financial transactions are growing fast.
Mobile payment systems can take a few different forms, but what makes them unique is that they generally expand the number of payment methods you can offer to your customers. They make it possible to accept various cards as well as mobile wallet payments, electronic funds transfers via PayPal, and more.
SMS-based retail payment services like Podium Payments are a growing trend in this category, empowering merchants to send bills and invoices simply by sending a text message. Your customers can then choose exactly how they want to pay on a highly convenient device.
How payment systems enable success
Choosing the right retail payment system can make a big difference in how many customers pay you, how much you earn, and how quickly you receive your funds.
Imagine you put up a “Cash Only” sign in a high-end restaurant. While you would end up making more money per customer without payment transaction fees, you would also end up turning away many customers who don’t carry a large amount of cash.
By using a credit card payment system instead, you make payments more convenient for customers. This can lead to more consistent income from significantly more customers, which would outweigh the downfalls (fees and processing time) of card payments.
Choosing or transitioning to a retail payment system that creates an easier and more approachable user experience can increase engagement with your target audience. Your system can also encourage your customers to pay quickly and on time. Your retail business can then profit and meet financial goals faster, and spend less effort tracking down late payees.
Using retail payment solutions
Unless you end up choosing a cash-only strategy for your business, or you develop your own retail payment system, there’s a good chance you can benefit from implementing an online payment service into your checkout process. Using a third-party retail payment processing solution can be incredibly useful when:
- You want to save time. Moving to a more modern, internet-based service allows you to automate many of your processes—no more ATM deposits necessary. They can also help your customers move through the sales funnel faster.
- You want an easy way to review transactions. Online service providers track sales for you and make them searchable, so you can efficiently serve your customers when they have questions or need refunds.
- You want more security. Many online retail payment solutions don’t just help your buyers keep their payment information secure. They can also help you get more seller protection against reversals, chargebacks, claims, and general scams, thus assisting you with risk management. Podium Payments even protects you against customers using stolen payment cards.
- You want to take the lead. Many of your competitors are likely already taking advantage of online retail payment systems like Square and Stripe. By implementing these systems—and particularly, SMS payment systems—you’re better equipped to stay a step ahead.
Create a standout shopping experience
Your retail payment system is an integral part of how your business profits. When the right one is selected, it can cater to your buyers’ shopping experience and keep them highly satisfied with the customer experience your brand provides.
Text message payments are becoming one of the most efficient payment options for customers, encouraging shoppers to check out via SMS before their interest wanes. Podium Payments is a convenient retail payment solution that you can use to improve customer satisfaction—and you can do so without any monthly fees. Learn more about how payment processes have evolved or watch the demo to see how this service can fit into your business strategy.