It’s hard to believe how fast things advance in the IT world. Some businesses have accepted online payments for over 20 years. But two decades ago, not nearly as many businesses sold online, much less used a global payment gateway to accept online payments worldwide.
Some businesses are still stuck in that position, relying on in-store sales alone to create an impressive bottom line. This doesn’t mean the businesses are set to fail, but it almost certainly means they could generate more revenue if they started selling online.
If your business is considering accepting payments online, the good news is that processing online payments is faster and more secure — and the benefits of accepting them are better understood — than ever before. Here are four benefits small businesses reap from accepting payments online.
1. Quickly Expands the Sales Territory
Expanding a sales territory by building more locations is time-consuming and expensive. Even global brick-and-mortar retail giants such as Walmart and Costco are still trying to cover all the bases in emerging markets.
When a business offers products and services online, it makes them available to anyone who can access the e-commerce website (e.g., you probably couldn’t even sell portraits of Kim Jong Il to North Korea). With a few exceptions, the internet can make the world your permanent sales territory.
2. Affordable Payment Processing Fees
You can reach worldwide consumers with a retail website, but the site needs a payment gateway to process online sales, which means you’ll pay processing fees to the merchant service provider (MSP) that supplies the gateway. However, you can set the fees in your favor based on how you sell.
For instance, volume of sales across a certain period of time, average revenue per sale, and gross revenue from sales across a certain period of time may be factors you consider when choosing a payment gateway, depending on the provider’s processing protocols.
Considering that you should earn more from online sales than you pay an MSP to process the transactions, processing fees shouldn’t stand in the way of your online sales goals. If you use a global payment gateway, you can accept all 164 official currencies currently in circulation, as well as various international payment cards.
3. Opportunity to Operate Solely Online
One of the initial barriers to running a profitable business are startup costs. The chain of events often goes as follows: A startup takes out a business loan to get things started, hopes to pay the debt within three years, and achieve profitability by the end of year three. Many small businesses don’t make it that far. Paying on the loan while covering business expenses during an initial period of unprofitability is a major reason why.
Operating solely online won’t eliminate all your initial costs. You’ll at least need to create a business website and implement a payment gateway. But these moderate expenses aren’t even in the same universe as buying or leasing double-net or triple-net retail property and paying the overhead.
If you sell products that are easy to ship without damage, and you simply aren’t interested in having a brick-and-mortar presence, transitioning to a web-based business will offer two major benefits: the opportunity to grow a global customer base and low long-term operating costs.
4. Promotes Brick-and Mortar Purchases
It may seem as if online purchases and in-store purchases are mutually exclusive, but research suggests otherwise. Consumers often shop for products online, then search for the products in store, so they can “kick the tires”, examining the goods firsthand. This activity is called omnichanneling because it involves more than one sales channel in making a sale.
According to Forbes, “Retailers indicate that customers like to browse the Internet to research major products, but when it comes to making an actual purchase, they prefer to do it in person, in the store, according to almost half of retailers (46%). More than a third say that customers research and buy online. Just 18% say customers do both in the store.”
In addition to opening up a new revenue stream in the form of online purchases, accepting online payments can also boost a business’ in-store sales through establishing an omnichannel presence.