Beyond providing people with quality products and services, businesses are profit-making ventures. Payments are the lifeblood of business, allowing organizations to improve and expand their operations. Though businesses are almost always intent on collecting payments, many don’t realize that the way they collect payments has a profound impact on the rest of their operations.
Weave recently commissioned an independent market research firm to survey a random sample of 380 small business customers and 350 small business owners to understand their behaviors and perceptions regarding payment options. The results of this survey are incorporated into the content of this article.
The goal of this blog post is to show you some of the common payment mistakes made by businesses. We will also discuss some of the ways to correct these mistakes by adopting new and improved payment methods.
Let’s take a look at seven payment mistakes businesses make on a regular basis.
1. Not Providing Enough Payment Options
One of the cardinal sins committed by businesses is not providing enough payment options. Businesses with insufficient options are often those that accept conventional payments, like cash, check, and card, but don’t accept digital payments.
A lack of payment options is frustrating for business owners, employees, and customers. Customers may prefer the services of a business, but inconvenient payments options frequently drive them elsewhere. Employees want to make transactions easy, but when they don’t have the proper tools to collect payments, their hands are tied.
Our research shows that a lack of payment options costs businesses more revenue than commonplace issues like inconvenient store/office hours, bad service, negative reviews, long wait times, and inferior product. For this reason alone, it’s obvious that businesses should be doing their best to correct the mistake of not providing enough payment options.
When businesses increase the amount of payment options available to customers, the numbers indicate that revenue increases 29%. In fact, those small businesses providing four or more payment options make seven times more revenue than those offering less than four payment options. It’s critical that your business find ways to give its customers at least four payment possibilities.
2. Passing Credit Card Fees on to Customers
The statistics gathered in our survey show that 27% of businesses pass credit card fees along to their customers. If passing credit card fees to customers didn’t affect consumer preference or behavior, we wouldn’t mention it here. However, 71% of small business customers don’t shop at certain businesses because they charge credit card fees.
Consumers are already paying for a product or service. The last thing they want to worry about is an additional fee on top of what they’re already spending. Finding ways to eliminate this concern is crucial to your business’s approach to payments.
Employees don’t want to deal with the hassle of credit card fees either. When they have to explain credit card fees to customers, they end up getting a lot of eye rolling and genuine frustration. Nobody wants to be the bearer of bad news.
Business owners can keep customers and make things easy on their employees by minimizing the nuisance of credit card fees. Choosing the right small business credit card processing platform makes a difference. By switching to a complete payment platform with one flat rate for credit card processing, they save their customers, employees, and themselves unnecessary headaches.
3. Not Offering a Text Payment Option
Text payment options are a relatively new development. Basically, these payments allow customers to pay a business by text message once the business has their credit card information. This option lets customers pay from their phone if they’re in a hurry, if office staff aren’t at the front desk, or if your office is trying to follow social distancing guidelines.
At the time of our study, only 4% of businesses offered a text payment option. This is a staggering statistic considering how wildly popular smartphone use is in our society. Those businesses adopting text payment have a significant advantage over those sticking to the old ways of processing payments.
35% of customers in our survey expressed interest in paying by text. Millennials are especially interested in making text payments, probably owing to their comfort with relying on digital transactions. This demographic is the future of our economy, and meeting their needs now is an investment in this digital future.
Adding text payments helps your business meet the four option threshold mentioned previously. Text payments save your administrative team time, especially if payment requests are automated. It’s also a great option at a time when many offices are working remotely or are on site for a shorter period of time.
4. Thinking Customers Carry Cash
Our survey says that business owners believe their customers carry more cash than they actually do. While business owners think the average customer has $119 in cash on hand at a given time, customers say they carry over 30% less than that. The average customer purportedly has $80 on their person during office visits.
Most businesses offer more payment options than only cash, but the larger point here is that business owners are prone to overestimating their customers’ readiness to pay for service. If customers carry less cash than owners think they do, they likely are more limited in their ability to respond to specific payment options than owners think they are, too.
To return to a previous point, this shortage of cash suggests that customers need as many payment options as possible for your business to really make them feel comfortable. Payments are trending away from cash in many ways.
Cash is considered to be a carrier of dirt, germs, and even viruses. People trying to limit their exposure to foreign bacteria are less likely to rely on cash right now. Businesses should realize that some customers are more likely to have their smartphone than their wallet, and hoping for clients to carry large amounts of cash is, in short, naive.
5. Not Knowing Credit Card Processing Fees
We already discussed how almost 30% of businesses pass credit card fees on to their customers. Another mistake small businesses make is being ignorant of these fees altogether. In fact, nearly half of small businesses don’t know the specifics of the credit card fees they’re being charged.
There are a number of ways businesses get hit with credit card fees. These fees come in all shapes and sizes. Businesses end up paying upfront, monthly, and hidden fees all the time without really being aware of what’s going on.
It’s impossible to escape credit card fees, but it is possible to cut them down to size. Implementing payment processing that eliminates variable fees by charging a single, standard fee with each payment greatly simplifies credit card processing for small businesses.
6. Wasting Time on Invoice Processing
90% of invoices are processed manually. The amount of time it takes to process all these invoices is a waste of employee time, especially when you consider that it’s possible to automate this processing.
Invoice processing also wastes money and creates unnecessary errors. Paper invoices cost businesses money for printing, postage, and other variable processing fees. Relying on employees to go through the tedious task of processing invoices manually leads to mistakes that compound the already existing costs.
Those companies that switch over to automated invoice processing save their personnel time and allow them to focus on more essential tasks. Businesses can also eliminate unnecessary financial and clerical errors by automating invoice processing rather than doggedly sticking with manual processing.
7. Not Accepting Certain Cards and Brands
A mistake similar to not providing enough payment options is not accepting certain credit card types and brands. If your business expands its payment options to include cards but only accepts one specific brand, the gains from this expansion will be quite limited.
Your business should aim to accept all major credit card brands, including Visa, AmericanExpress, Discover, and MasterCard. It should also aspire to accept various card types, like credit, debit, HSA/FSA, and prepaid cards.
Increasingly, consumers are looking to use mobile wallets. Businesses that accept Apple Pay, Google Pay, Microsoft Pay, and Samsung Pay are set up to accommodate this new payment option, which helps promote social distancing with its reliance on scanning instead of swiping or tapping.
Weave Payments Is a Course Correction
As you can see, businesses make lots of mistakes in how they process payments. Weave has developed its Payments feature to eliminate these mistakes and bring small businesses up to date in their payment processing.
Weave Payments allows your business to provide more payment options, simplify credit card fees, and request payments by text. It’s a complete payment platform meant to significantly reduce outstanding accounts receivable balances by letting customers pay the way they want.
Watch a demo to see how Weave Payments can improve your business’s payment processing.