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20 Digital Payment Options for Small Business Transactions

Now more than ever, it’s vital for businesses to accept digital payments. The question is which method of doing so best fits your company’s needs.

Some small businesses end up paying far too much for a processing arrangement because they don’t have enough information about the process, the players, and what’s involved.

We’re here to help you avoid that by providing all the up-to-date knowledge you need to make an informed, profitable decision about this central detail of your business finances.

What Are Digital Payments?

Digital payments are anything that’s not a paper check or cash in the till. They represent moving funds from a customer’s account into your own. Once upon a time, credit card transactions weren’t digital payments. Then point-of-sale machines were invented, and credit and debit cards became digital.

When you sign up with a digital payment processor, they collect your banking information and streamline transfers to and from your bank. When a customer makes a purchase, the processor collects the customer’s banking information, then communicates with your bank and theirs to authorize a transfer of funds.

From your point of view, the transactions, encryption, and permissions are automatic and invisible. You just see changes to your bank balance as each transaction goes through.

Accepting digital payments has several key advantages:

  • Payments hit your bank accounts faster than with a check, and faster even than accepting cash.
  • Digital payments are more convenient for most modern customers.
  • Nobody can rob your store and run away with a bag full of digital payments.
  • Many digital payment processors offer robust, real-time financial tracking to give you more and better control over your finances.
  • If you structure payments properly, digital payments can create more predictable cash flow over the life of your business.

Further, research shows that cash-only businesses miss out on sales if they don’t accept digital payments. A 2018 Pew study found that 29% of U.S. adults and 41% of high-earning adults make no cash purchases during a typical week, and the number of Americans who don’t carry cash is rising each year.


Kinds of Digital Payment

Although there are multiple ways to accept digital payments, and each has many vendors willing to help you do so via slightly different methods, there are only two payment methods by which funds move in digital payments.

Cards

Debit and credit cards have been the standard option for making online purchases and digital payments since before the turn of the century, and need no introduction.

Accepting them in your business requires signing up with some kind of credit card processing portal that allows for secure, instantaneous communication between your bank and the issuing bank.

The benefits of accepting cards for digital payments for your customers center around convenience. The payor almost certainly has multiple options in both debit and credit cards available at any time. For your business, the speed with which the transaction increases your bank balance is the main draw. Funds will usually clear in just 24 to 48 hours.

Cost and risk are the major disadvantages of accepting cards for digital transactions. Fees can be high, sometimes hidden, or even predatory. Further, the fallout for chargebacks and fraud tends to land on you, the vendor, rather than on the bank or the customer in the event of a disputed charge.

eChecks (ACH)

You might have heard eChecks called ACH Processing. ACH stands for Automated Clearing House, which is an electronic network between U.S. financial institutions. International eChecks instead use the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network, but they work the same way.

With both networks, the buyer signs a contract authorizing a one-time or recurring transfer of funds, then the network makes that transfer as instructed in the contract.

An eCheck is slower and less convenient to set up than a card transaction, but the funds become available nearly instantaneously. Fees tend to be cheaper than card transactions. Because the customer has to sign a contract, the fallout for fraud lands on them or their bank, not on you.

The disadvantage of eCheck processing is that it’s far less convenient for you and the customer than using a card. The contracts can be long, and they require the customer to have or know offhand their banking information.


4 Categories of Online Payment Platforms

To accept digital payments via card or eCheck, you need a way to communicate with the customer’s bank for authorization, and with your own bank for acceptance. This happens in one of four ways.

1. Mobile Apps/Digital Wallets

In the beginning, there was PayPal, an online-only payment processor that let people make Internet purchases before a fully realized infrastructure was complete. It wasn’t a bank or a communication and verification service like Visa or Mastercard. It was something new, even though at its beginning Paypal was for desktop devices only.

Fast-forward a quarter century, and PayPal is available as an app on your phone, as are other contenders like Zelle, Cash, and Apple Pay. These options are fast, convenient, and available to customers any time they’re near their phones. If you both have an account with the same app, you can process a payment.

2. Pay-Enabled Invoicing

A pay-enabled invoice adds code to the file when you bill a client. That code creates either a form for filling out payment information or a button that leads to your payment processing provider.

Beyond saving time and money compared to paper billing, pay-enabled invoices also speed up payment and simplify tracking who has paid and who hasn’t. These make it extremely easy for a customer to pay what they owe you, automating the process for you both and even automating reminders, the addition of late fees, and similar bookkeeping tasks.

3. Manual Card Entry

Think back to the last time you placed an order over the phone and gave a customer service agent your credit card number or banking information. The representative was completing manual card entry. You perform manual card entry when you make an online purchase through a website that has its own payment portal on the site.

This method has the advantage of flexibility, requiring the customer to have nothing more than a valid credit or debit card. It is the most open to fraud, however, so it’s smart to establish a strong paper trail, double-check billing and shipping information, ask for ID when possible, and to do business with a payment processor that offers fraud protection.

4. Card Readers

In the old days, a card “reader” was a physical machine that took a carbon impression of a credit card. Those impressions, along with the transaction information, were submitted to the bank in a manner similar to checks. Next came point-of-sale machines, connected to the burgeoning Internet and stationed next to the cash register.

These days, any phone or tablet can use a plug-in or Bluetooth reader that lets cards swipe, chip, or tap in and take the payment. This added convenience lets you take your processing to trade shows and on-site calls, as well as making in-house sales easier for servers and other personnel on the floor.


Key Digital Payment Options

Some platforms for accepting payments use only one of the methods described above. Others use all four. Some offer wide suites of features, while others focus on delivering scaled-down models at a discounted rate. Below are the 20 best platforms today, at least one of which should work for your company’s needs.

1. Authorize.net

  • Categories Offered: Pay-enabled invoicing, manual entry, card reader
  • Price: 10 cents per transaction plus a 10-cent daily batch fee and $25 per month (if you have your own merchant account), or 2.9% plus 30 cents per transaction and $25 per month (if you use Authorize.net merchant services)
  • Pros: Very flexible, can be customized to almost any e-commerce site, strong anti-fraud features
  • Cons: No web store help, requires some technology savvy to operate
  • Best For: Businesses with an existing web store
  • Worst For: Businesses with existing merchant services, as the extra transaction fees aren’t worth the convenience

Authorize.net is a simplified option that provides payment gateways for your existing e-commerce platform.

You set up an account, and they give you code to insert into the pages of your web store or into your invoices. The code allows simple, customizable checkout that links to credit cards, debit cards, and most payment apps. Their mobile payments card reader allows point-of-sale transactions as well

Unlike many other options on this list, Authorize.net provides a merchant services account or works with you if you already have one through another vendor.


2. Chase Merchant Services

  • Categories Offered: App payment, manual entry, card reader
  • Price: 2.6% plus 10 cents per transaction, with possible volume discounts
  • Pros: Can negotiate high volume discounts, gives preferential access to Chase and JP Morgan Chase financial services, including loans
  • Cons: Navigating customer service at a bank this size requires “a particular set of skills”
  • Best For: Large and enterprise-level businesses with multiple locations and those requiring stable, reliable transaction handling
  • Worst For: Low-volume companies, especially those with no other ties to Chase or JP Morgan Chase

Digital payment processing started with the big banks, as they moved to point-of-sales machines. Many of those banks lagged behind, resting on the laurels of their near-monopoly.

Chase was one of the first and remains the leading major bank to compete with the app- and web-driven digital payment processors with its Chase Merchant Services. It offers all the standard services, with few if any surprises.


3. Amazon Pay (Checkout By Amazon/Amazon Payments)

  • Categories Offered: Manual entry
  • Price: 2.9% plus 30 cents per transaction, with discounted rates beginning at $3,000 in sales per month
  • Pros: Immediately makes your digital payment acceptance as flexible as Amazon.com, including allowing your customers to use their Amazon credit card
  • Cons: Does not work with other merchant services, and the code is somewhat inflexible
  • Best For: Companies that want the power of Amazon but have their own website
  • Worst For: Companies with existing merchant services through another provider

Checkout By Amazon/Amazon Payments is one of two options Amazon offers for businesses to accept digital payments. You sign up for an Amazon account, and Amazon provides a copy-and-paste code for you to insert a buy button on your own website.

When the customer clicks on that button, it takes them to Amazon.com to complete the transaction. Amazon pays you along with any other money Amazon owes you from sales, affiliate commissions, and other business you do with them.


4. Amazon Pay (Log In and Pay)

  • Categories Offered: Manual entry
  • Price: 2.9% plus 30 cents per transaction, with discounted rates beginning at $3,000 in sales per month
  • Pros: Combines the flexibility of Amazon with keeping customers on your own website
  • Cons: Adds extra steps and hassle as compared to hosting your own payment options
  • Best For: Companies unable or unwilling to set up their own merchant services, companies who already make the bulk of their sales via an Amazon platform
  • Worst For: Companies with existing merchant services, as this simply creates a redundant expense

Amazon’s second option for digital payments also provides copy-and-paste HTML code for insertion into your e-commerce store.

In this case, the payee stays on your site throughout the entire transaction, and Amazon collects and sends you their name, email address, and postal code. This not only lets you collect payments but also sets you up to market directly to those customers later.


5. Dharma

  • Categories Offered: App payment, card reader
  • Price: 0.15% plus 7 cents per transaction, plus a $20 monthly fee
  • Pros: By far one of the least expensive options on this list, nice suite of business financial services
  • Cons: Limited scope of services compared to many other providers
  • Best For: Small-to-medium sized businesses looking to keep costs as low as possible
  • Worst For: Businesses with complex operations, businesses with high enough volume to qualify for bulk rates with a larger service

Dharma is an all-inclusive merchant services and digital processing outfit focusing on small-to-medium businesses.

Dharma can handle most transaction types and offers low-to-medium cost lines of credit with payments taken directly from sales receipts. It offers a wide array of ways to access its services, with equally easy systems and equipment for retail, e-commerce, restaurant, and business-to-business (B2B) clients.


6. Dwolla

  • Categories Offered: App Payment, with an email function that works similarly to pay-enabled Invoicing
  • Price: Free below $10, and 25 cents per transaction for higher amounts
  • Pros: Very low fees, ability to pay via email
  • Cons: Only offers one way to pay
  • Best For: Businesses with recurring invoices, for whom simple email payment is convenient
  • Worst For: Businesses who do most of their sales via credit or debit cards

In most developed countries outside the U.S., sending money via email is simple and cheap. Dwolla attempts to duplicate that within the United States and succeeds reasonably well. It works like an app payment provider, similar to Cash or PayPal, and uses email as its engine.


7. Fattmerchant

  • Categories Offered: App payment, manual entry
  • Price: Varies by membership tier, with monthly fees from $99 and transaction fees 8 cents or lower
  • Pros: Low fees, transparent costs
  • Cons: Minimal support outside of payment processing
  • Best For: Small businesses
  • Worst For: Businesses large enough to qualify for large volume discounts without paying an extra monthly fee

With everything from productivity software to cupcake delivery moving to a subscription model, it was only a matter of time before somebody thought to do it with payment systems. Fattmerchant is that somebody.

They offer in-person and e-commerce payment portals, including mobile-optimized options, and charges no markup on the merchant services. This is likely to reduce your per-transaction costs by as much as 40% compared to other options.


8. Google Pay

  • Categories Offered: App payment, pay-enabled invoicing, integrates with some card readers
  • Price: Varies widely, up to 4%
  • Pros: Simple interface, integrates well with other Google properties
  • Cons: Usually problematic if not using Android devices, primarily intended for personal use
  • Best For: Micropreneurs who use Google services for other business operations
  • Worst For: Apple lovers, businesses needing strong integration between transaction processing and bookkeeping or inventory management

If another company succeeds with it, at some point Google is going to try to do it too. Google Pay is Google’s entry into the digital payment market.

Like Apple Wallet, it connects to accounts and cards you log into the app on your phone, then uses the one you choose to make a payment to someone who accepts Google Pay.

When it goes smoothly, it allows you to pay using your phone, often without making physical contact, though as mentioned above, it doesn’t always go smoothly if anybody’s using an iPhone.


9. Intuit Quickbooks Payments

  • Categories Offered: App payment, pay-enabled invoicing, manual entry, card reader
  • Price: 2.9% plus 25 cents per transaction for online invoices or card reader, 1% for ACH, and 3.4% plus 25 cents per transaction for a keyed credit card; they also offer a monthly flat rate that discounts those fees
  • Pros: Simplifies bookkeeping significantly by automatically syncing with your Quickbooks software
  • Cons: Synching only works if you use Quickbooks; otherwise, it doesn’t help your bookkeeping
  • Best For: Companies already using Quickbooks for other aspects of their operations or considering making the jump
  • Worst For: Companies that don’t use Quickbooks

Intuit Quickbooks Payments is an option offered by the bookkeeping giant that lets you accept credit card payments either via an e-commerce portal or using a credit card reader you can attach to your smartphone.

It only works with web store providers on their approved partners list, but it’s a long list so most businesses can connect using their phone-based and web-based payment service. Automatic syncing with your other Quickbooks apps makes this competitive and convenient.


10. Payline Data

  • Categories Offered: Manual entry, card reader
  • Price: 2.05% to 2.25% per transaction, plus a monthly fee from $0 to $19.99, depending on tier.
  • Pros: Easy integration into existing point-of-sale systems
  • Cons: Monthly minimum volume means you pay a certain amount whether or not your sales justify it; requires equipment; charges extra for American Express transactions, enough so that they price themselves out
  • Best For: Retail companies who want more transparency and flexibility in ringing up sales
  • Worst For: E-commerce

Payline Data is a scaled-down credit card processing platform that offers just the basics and promises transparent pricing so businesses know what to expect. It focuses on in-house retail sales, offering web-based transaction terminals that allow you to use a tablet or laptop to ring up transactions in person.


11. Payment Cloud

  • Categories Offered: Manual entry, card reader
  • Price: 3% to 6% per transaction, plus a 10 cent daily batch fee, plus a 30 cent transaction fee for virtual sales, plus a varying monthly membership fee
  • Pros: Works with vendors other processors might not
  • Cons: Better options exist for those who can qualify elsewhere
  • Best For: High-risk vendors in industries known for high rates of returns and chargebacks
  • Worst For: Everybody else

What sets Payment Cloud apart from other digital payment solutions is that they serve high-risk merchants other processors don’t want to do business with.

Industries like digital downloads, firearms, credit repair, adult businesses, CBD products, and sports betting all have higher-than-average return and chargeback frequency, leading many processors to charge a premium for doing business or refusing to serve them altogether.

If you are a high-risk merchant, this may be your best option.


12. Payment Depot

  • Categories Offered: App payment, pay-enabled invoicing, card reader
  • Price: Ranging from $79 per month plus 15 cents per transaction to $199 per month plus 7 cents per transaction; all tiers also add their costs for the transaction, usually 1-2% of the transfer
  • Pros: Strong discounts for high volume businesses, flexible ways to get paid you can tailor to most business models
  • Cons: Small businesses will not get value with the monthly fee
  • Best For: Businesses with six figures or more of monthly digital sales volume
  • Worst For: Businesses with under $50,000 of monthly digital sales volume

Payment Depot gives each customer a dedicated account manager and assistance integrating with web-based and retail payments.

They offer a tiered pricing plan offering more services and discounted per-transaction pricing the higher you go, and they publish basic guidelines as to which tier is most appropriate for any given business.


13. PayPal

  • Categories Offered: App payment, pay-enabled invoicing, card reader
  • Price: 2.9% plus 30 cents per transaction; discounts are available for volume or using their proprietary card reader
  • Pros: Most recognizable processor in the business, simplified and flexible setup, business accounts receive rapid customer service
  • Cons: They make it difficult for people without a PayPal account to pay you
  • Best For: Small businesses starting out, due to the simplicity of setup
  • Worst For: Mid-to-large businesses, which can benefit from a more streamlined and less expensive option

PayPal is arguably the industry standard for accepting digital payments.

It has grown since its inception to include person-to-person billing and payments, online commerce, and PayPal Checkout buttons you can put on your invoices and embed in your website. They offer business debit cards and lines of credit tied to your account for extra spending flexibility on your end.


14. Paystand

  • Categories Offered: App payment, pay-enabled invoicing, manual entry, card reader
  • Price: Starts at $499 per month, with higher-tier plans available for larger businesses
  • Pros: Flat-rate pricing means predictable, controlled expenses
  • Cons: B2B focus makes it inappropriate for many business models
  • Best For: Companies with a high volume of transactions each month, looking to reduce their per-transaction cost of getting paid
  • Worst For: Any company paying less than $500 per month in digital payment processing fees

Paystand is another flat-rate merchant services provider.

They offer comparable services for credit cards, debit cards, eChecks, and cryptocurrencies. Instead of charging a per-transaction fee, they charge a flat rate. They focus their efforts on B2B transactions at present but could be used by consumer businesses with the right kinds of sales.


15. Shopify

  1. Categories Offered: App payment, manual entry, card reader
  2. Price: The entry-level plan starts at 2.9% plus 30 cents per transaction, with a $29 monthly service fee; higher tiers that include additional services carry a larger monthly fee and charge a slightly lower percentage of each transaction
  3. Pros: Integration with marketing and inventory management services
  4. Cons: The monthly service fee makes the overall cost higher
  5. Best For: Small businesses who want simplified sales and marketing
  6. Worst For: Businesses with the budget to hire in-house or freelance marketing services

Shopify is less of a payment processing service and more of a business support enterprise that includes digital payments among its services.

It allows your business to set up a web store and supports it with email marketing, mobile device access and optimization, inventory management, SEO help, and similar tools that serve your business all from one interface.


16. Shopkeep by Lightspeed

  1. Categories Offered: App payment, card reader
  2. Price: 0.2% plus 10 cents per transaction, plus what you pay for merchant services
  3. Pros: Easy interface, has an offline transaction mode so you can still do business if the Internet is down
  4. Cons: Does what it does very well, but doesn’t do much else
  5. Best For: Small businesses, especially with owners new to commercial banking
  6. Worst For: Medium and larger businesses, which may find they outgrow it quickly

Lightspeed is a smaller, hands-on company focusing on its iPad-driven point-of-sale app for small businesses.

They don’t offer the streamlined integrations or marketing support of other options, but they have a reputation for some of the best customer service in what is often a cold and lonely industry.


17. Square

  • Categories Offered: Pay-enabled invoicing, manual entry, card reader; Square’s subsidiary (Cash) offers an app payment option
  • Price: 2.75% fee on each transaction
  • Pros: A large company that provides strong support and wide availability; interacts seamlessly with banks, cards, and payment apps; highly customizable
  • Cons: Syncs poorly with in-house sales — although they have a premium service that includes an on-site cash register
  • Best For: Online businesses with a sizeable inventory
  • Worst For: Businesses with minimal e-commerce sales

Often viewed as the Pepsi to PayPal’s Coke, Square offers a free online storefront where you can list and sell items, services, and events. This can exist either independently on Square’s assets, or be embedded onto your business’s website.


18. Stripe

  • Categories Offered: Pay-enabled invoicing, manual entry, card reader
  • Price: 2.9% plus 30 cents per transaction
  • Pros: Seamless integration with your online assets, simplified checkout for customers
  • Cons: Not always intuitive if you’re not tech-savvy
  • Best For: Businesses with an existing web store and strong branding
  • Worst For: Any business without an existing web commerce presence

Stripe provides checkout and processing services for businesses with an existing e-commerce store.

Their stated design goal is to be invisible to the customer, allowing all payments to be made within your digital storefront, instead of redirecting to one of their own assets. Stripe provides you with embeddable payment forms, which you insert where you want and which operate solely within your own online assets.


19. SumUp

  • Categories Offered: Card reader
  • Price: 2.75% fee on each transaction
  • Pros: Easy interface, pay only for what you need, syncs well with most point-of-sale and cash register software
  • Cons: Only does one thing, no option for online payment
  • Best For: Microbusinesses, businesses with lots of in-person sales
  • Worst For: E-commerce, brick-and-mortar businesses with complex offerings or on-site cash registers already in place

Sometimes you don’t need anything complex or involved. If you have merchant processing all squared away, but you need to be able to take payments off-site, SumUp offers you a card reader that connects to your phone and charges you only when you use it to process purchases. That’s all they do, and they do it well.


20. WePay

  • Categories Offered: App payments, manual entry
  • Price: Variable and negotiable
  • Pros: Manages compliance and payment details for a complex, highly specialized type of business
  • Cons: Does not support PayPal, inappropriate for most business models
  • Best For: Event management, accounting, and fundraising companies
  • Worst For: Most other businesses

WePay is another niche service, billing itself as a “platform partner” and payment processor for companies that themselves facilitate multiple payments to and from multiple people.

Crowdfunding giant GoFundMe is an example of the kind of business that can do well with WePay. They don’t work with simple small businesses but rather with merchants working to build a payment-processing platform of their own.


Final Word

Every business is different, with different needs. The same is true of every small-business owner. That means there’s no one-size-fits-all answer to any question you might have about accepting digital payments, except for one: you need to accept digital payments if you want to compete in the post-COVID marketplace.

What kind of digital payment platform is best for you varies, but not to worry. There are enough options out there that one will fit your needs just fine.

Jason Brick
Jason Brick became a freelance writer after years of small business ownership and life coaching experience. He now works full-time as a freelance writer and speaker. He lives in Oregon.

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