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Choosing the Right Payment Methods for Your Small Business

  • By Fiverr Workspace Team
  • April 7, 2022

Understanding how to effectively take payments is an issue that most small business owners and freelancers struggle to comprehend. However, since it controls your income, a payment function is the backbone of every successful business. Evaluating different payment methods; how to choose the right one; the benefits of utilizing a payment software, and top tips to keep in mind, are all important aspects, when it comes to your small business.

Evaluating the Different Payment Methods

Running a small business gives you the opportunity to select which methods of payment you want to offer your customers. Having multiple channels through which you can receive payments enables your customers to have flexibility in paying the bill. Most platforms designed around a payment function are capable of processing all types of payment methods. But thoroughly evaluating the different payment methods available will help you choose the right ones for your small business.


Cash payments were once one of the most popular payment options. Payments in cash offer businesses immediate payments, with no clearing times, ensuring that transactions can be fully completed at the time of sale. There are minimal to no fees associated with receiving cash payments because there are no transaction processing costs. 

Despite these benefits, freelancers and small businesses with no physical brick-and-mortar store have difficulty receiving cash payments. Small businesses that primarily operate online are unable to accept cash payments safely, since sending currency through the mail is not advisable. Furthermore, consistently depositing large amounts of cash into the bank may raise red flags for fraudulent activity, creating a risk of your account being shut down or subject to an audit.


Another common payment method that small businesses should consider is ACH. Automated Clearing House payments, frequently referred to as ACH, are electronic payments. Businesses can initiate an ACH payment and send money directly to your bank or whichever account you have set up to receive payments. ACH payments have a higher popularity with small businesses and freelancers, as compared to cash. 

Despite the quick transfer times, ACH payments also tack on processing fees with each transaction. These fees can add up and eat into your business’ profit. Moreover, risks of overpayment and overdraft fees are possible, deterring many customers from utilizing this method.

Wire Transfers

Like ACH payments, wire transfers are a form of electronic transfer. The money from customers is directly deposited into your account. International small businesses frequently lean towards employing this payment method because of the quick payment, clear time frame and general reliability. 

However, just like ACH payments, wire transfers have heightened processing fees. Additionally, although wire transfers are generally reliable, there is always the risk of funds being lost during the transaction, with the possibility of the funds being irrecoverable. Moreover, when bank to bank transactions take place, fraud is a threat because the other party obtains your account information.

Credit Cards

Recently, many businesses have been favoring paying with credit cards because of the ability to receive cash back and points towards purchases. Statistics have shown that 46% of small businesses use credit cards. Offering this payment method should be standard for many small businesses because of its popularity with customers. Credit cards provide a steady paper trail and are a protected method of payment for the customer. 

Nevertheless, each credit card transaction is subject to a fee by the transaction processor, with some credit card companies charging more than others. Deciding which credit card carriers to accept will be important in minimizing fees. Furthermore, customers can easily file chargebacks with credit card companies, giving you few options when this happens. Many small businesses are forced to accept the chargeback and loss on sale, even if the customer refuses to return the item.


Checks are another payment method that is becoming increasingly unpopular as technology ramps up the use of electronic payments. Recent studies have shown that checking accounts for only 15% of non-cash transactions with a majority of users being over 55 years of age. Checks come with advanced security features, only allowing authorized users to cash them. This can be beneficial for small businesses as a way of mitigating electronic fraud. 

On the downside, however, checks have a significant lead time, when they are sent in the mail, causing uncertainty as to when they will be received. Additionally, the post office can be unreliable and frequently loses checks. But the most significant downside is the amount of time it takes for checks to clear, which can impact your business’ cash flow.

Third-Party Payment Processor

Third-party payment processors are an up-and-coming payment method for many small businesses. Tech startups, like Venmo, Zelle, and PayPal, work in a similar manner as bank-to-bank transfers. The only difference is that a third-party payment processing site is used as a middleman. You can select instant transfers to your bank, but these often come with a small fee of around 1%.

The disadvantage of third-party payment processors is that your customers may credit the wrong account because there are not usually any verification checks. Moreover, the small fee paid to instantly transfer the funds can add up if you are processing a high volume of payments through third-party payment processors.

Mobile Payments

Similar to third-party payment processors, mobile payments are becoming more widespread, with two billion users worldwide. Mobile payment apps, such as Apple Pay, give users a mobile wallet similar to a credit card. The convenience of paying bills through a smartphone or tablet leads to quicker payments from customers. Furthermore, the payments are secure and transferred to your bank account automatically or with minimal clearing times. 

Like other methods, mobile payments do come with fees. However, these fees are small compared to expenses from other methods. Moreover, many mobile payment apps give businesses the ability to have no fees taken out, if they are willing to accept a 1-3 day clearing time.

Selecting the Right Payment Method Based on Your Business

Every business owner needs to understand their different payment opinions, in order to select the right one for their customers. Small businesses and freelancers should offer multiple payment methods, so customers have a choice. Among these should be some form of electronic payment, since many businesses are shifting towards the use of these. Yet, customers may still want to pay with checks, making that an option you should also offer. 

If your business doesn’t have a physical location, you will need electronic payments as an option and should refrain from cash payments. Collecting cash in the mail is unsafe and unreliable, leading to electronic methods being more advantageous. Still, if you do have a physical shop, you can offer cash as a payment option at the point of sale, meaning if someone comes in to buy a good or service, they can use cash. However, all online sales should be kept in electronic form. The best payment methods will have low transaction costs, remain convenient and clear, and have minimal clearing times.

Understanding the Importance of Payment Software

Payment software gives businesses the tools needed to invoice, process and receive payments. There are many different payment software programs on the market. Fiverr Workspace payments allows automated, real-time alerts, when payments come in, while being equipped with the tools to invoice customers and accept payments. Payment software is important because of the time it can save you. As a busy freelancer or small business owner, you don’t always have the time to spend hours on invoicing and sending payments to your customers. With payment software, you are able to invoice customers quickly, which speeds up the payment collection process, providing you with a steady cash flow.

Payment Selection Tips to Keep in Mind

Despite selecting the best payment methods and utilizing  payment software, there are still top tips to keep in mind as you run the payment function of your small business. If you prefer to receive a certain payment method, such as ACH, consider offering a slight payment discount for utilizing that method. Oftentimes this slight discount will offset the fees charged by payment companies, generating benefits both for you and your customers. It is also advisable to frequently review the payment methods you are offering to your customers. If you notice high fees from one payment method, consider offering alternatives, so as to increase your profits.

Final Thoughts

At the end of the day, the payment methods you choose to employ will depend on you and your customers’ preferences. Don’t be afraid to experiment with different methods to find the right fit. The right option for your small business will combine affordability, processing speeds, and integration capabilities.

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