Money Matters

What are the best payment methods for small businesses?

Learn about the best payment methods your small business can offer, so you can keep your cash flowing smoothly.

Paying for goods and services is a bit like getting off a packed plane after a long flight—you just want to get it over with as quickly as possible.

But speed aside, the process needs to be handled safely and securely.

The same can be said when accepting payments in your small business.

The best payment methods make it safe, quick and easy for your customers to pay you while being practical and cost-effective for your business to receive payments.

With the right combination of payment options, you can provide a streamlined sales process for your customers and improve your cash flow by collecting payments faster.

In this article, we look at the pros and cons of seven payment methods and the factors you should consider before accepting them.

Here’s what we cover:

Best payment methods for your small business: Pros and cons

1. Cash

Rumours of the death of cash have been greatly exaggerated, but it’s fair to say that the use of notes and coins is in decline.

The payment processing company, Worldpay, has predicted that the pandemic would cause in-store cash payments to fall from 13% in 2020 to just 7% by the end of 2024.

But cash is still king in terms of its liquidity and zero processing fees.

You can also offer potential customers a cash discount to incentivise a sale you may not have otherwise landed.

On the flip side, cash is susceptible to theft, fraud and mismanagement.

It isn’t exactly the most hygienic way to pay either, which is the main reason cash use has plummeted since the onset of Covid.

2. Cheque

A cheque is a signed document authorising the transfer of funds from your customers’ bank account to your company’s bank account.

Like cash, cheque usage is on the slide.

From 2007 through to 2022, cheque payments dropped 90%. In 2022, cheques constituted less than 0.5% of payments according to trade association UK Finance.

The main advantages of cheques are:

  • There are no upfront fees
  • They provide a payment record
  • They are easier to carry around than large wads of cash
  • They can be stopped in the event of being lost or stolen.

Nowadays, the biggest issue with cheques is the risk of receiving one of the fraudulent or bounced variety.

3. Direct debit

If your customers have to make a recurring payment to your business, such as a subscription, direct debit may be the way to go.

A direct debit instruction authorises the collection of a specific amount of money from your customers’ bank account on an agreed date.

On the positive side, direct debit processing fees are typically low at around 1%. But they vary according to providers, which offer different options such as flat rates, monthly or annual fees.

With direct debit, late and missed payments are a thing of the past.

Payment success rates are high because direct debit is connected to your customers’ bank account which, unlike a payment card, can’t get lost, stolen or expire.

And even though direct debit accommodates repeat payment cycles, it also facilitates irregular and one-off payments.

One negative to bear in mind is that your business may have to wait for its first payment.

This is because direct debit payments work in predetermined cycles.

4. Credit card

A credit card is a card issued by a bank or other financial institution, which enables your customers to borrow money from the issuer to make payments to your business.

Your customers then repay the borrowed sum – plus any interest and charges – by the billing date or over time.

Nearly six decades on, 14% of all in-store and online payments were made using a credit card in 2023.

Accepting credit cards offers three key advantages:

  • They can increase your cash flow by making payments that are usually received on the same day for in-store transactions and within two to four business days for online transactions.
  • Credit cards expand the customer base of your business, which can potentially increase its reach and revenue.
  • Studies show credit card holders are more susceptible to making knee-jerk purchases, which can only be good for your business.

But accepting credit cards isn’t all sunshine and rainbows.

One drawback is that they incur costs such as monthly fees, equipment rental fees and processing fees that typically range from 1.5% to 3.5%.

There are also chargeback fees to consider.

These occur when your customers dispute the charge to their credit card and reverse the transaction because, for example, they didn’t receive the product they ordered.

It’s important to note that one too many chargebacks can result in a suspension of your processing privileges.

Then, there’s the ever-present possibility of credit card fraud.

But you can shield your business from this risk by using a secure payment processing solution.

5. Debit card

A debit card is connected to your customers’ bank account, which is deducted each time your customers make a payment to your business.

If your customers don’t have sufficient funds to make the payment and they haven’t arranged an overdraft, the payment request will be declined.

The advantages and disadvantages of accepting debit cards are pretty much the same as credit cards.

But debit cards generally have the edge over credit cards in terms of processing times.

Payments are ordinarily received on the same day for in-store transactions and within two business days for online transactions.

Debit cards also have lower processing fees, which typically range from 0.25% to 0.35% per transaction plus a fixed rate of €0.04 to €0.05 for authorisation.

6. Online payment

Online payment involves your customers accessing the internet to transfer funds to your business.

Online payment uses a payment gateway, which equips both brick and mortar and online businesses to accept, process and manage various online payments. Consider the likes of GoCardless, Stripe and Square here.

Examples include:

  • Direct debit payments
  • Online credit card transactions
  • Online debit card transactions.

A Statista survey found that 59% of respondents used online payment services in 2023, making it the second most popular form of payment in that year.

Advantages of online payment include a streamlined customer payment experience, payments in real time, strict encryption protocols and cutting-edge fraud detection mechanisms.

Disadvantages of online payment include:

  • Fees for everything from network access to brand usage
  • Unexpected technical issues, such as payment system downtime, which temporarily prevents your customers from buying goods or services from your business.

7. Mobile payment

If its meteoric rise in popularity over the past 17 years is anything to go by, mobile payment is the crème de la crème of the payment industry.

According to Statista, almost 25% of all mobile phone users made mobile payments in 2023.

Simply put, mobile payments are any kind of digital payment made online or offline using a mobile phone or tablet.

In addition to in-app purchases, they offer a variety of payment options including:

  • Digital wallets, which are mobile apps that store your customers’ payment information. Using near-field communication (NFC) technology, your customers can make safe and secure purchases from your business with a simple tap of their phone. Examples of popular digital wallets are PayPal, Apple Pay and Google Pay.
  • Money transfer apps, such as XE Money Transfer, Remitly and Wise, enable your customers to send money to your business quickly and safely.

Mobile payments have significant benefits.

For instance, digital wallets are unmatched in terms of their speed.

When the sender and recipient of a payment are using digital wallets, payments often take seconds to process.

Equally, mobile contactless payments have unparalleled authentication protocols – ranging from fingerprint ID to GPS location – making them one of the most secure forms of payment on the market.

There are also some downsides to mobile payments.

The fees for NFC mobile payments, for example, aren’t for the faint-hearted.

These include set-up fees, a fixed monthly fee, a fixed fee for each transaction and a percentage of each transaction, which can be anything from 3% to 5%.

How to choose the best payment methods for your small business

There are a whole host of factors to consider when choosing the best payment methods for your small business. These include:


As a small business, fees should always be high on your list of priorities, but there are other factors to be considered. For example, a payment method may have low fees, but it may not be widely used.

On the flip side, a payment option may be wildly popular, but have exorbitant fees.

Neither situation is ideal, but you may be able to find a workaround by choosing a fee structure that suits your business or by negotiating a better deal with your provider.

Customer preference

The old adage, “what the customer wants, the customer gets”, has its limitations.

But it’s worthwhile taking onboard your customers’ payment preferences and offering a suite of options that accommodate them and increase the sales of your business at the same time.


Even the best payment method in the world is subject to one caveat: the ease with which it can be integrated into your business.

Choose payment methods that can be seamlessly implemented into your existing systems, platforms and software at minimal cost.


Different payment methods have different features.

Opt for features that can improve your payment system such as integration, customisation, data and reporting, security and reconciliation support.


Security risks vary according to the payment methods involved.

Assess the risks associated with each form of payment, such as theft and fraud, then select the options that afford the highest level of protection for your business.


When it comes to business, your operations may be small today but big tomorrow. So it’s important to choose payment methods that can accommodate your business as it grows.

For instance, card payments rate highly in the scalability department.

This is because they’re initiated by your customers, therefore your administrative burden doesn’t increase as you scale your business.

Final thoughts

To reach the masses and maximise your cash flow, it’s a good idea for your business to accept multiple forms of payment.

The best payment methods are safe, secure and seamlessly integrate with your accounting software. They depend on your customers’ preferences and the unique needs of your business model.

When it comes to accepting payments from your customers, variety is indeed the spice of life.