Today’s businesses are increasingly focusing on finding ways to provide maximum choice and flexibility to their customers throughout the shopping experience, including how they make their payments.
Two of the most common methods are in-person (also known as point of sale or POS payments) and online processing. Understanding the characteristics of each can help you to make the right decisions for your own business’s payment infrastructure.
Convenience
In-person payments
Service-based businesses, restaurants, and retail stores traditionally focus on in-person payments. These happen when someone makes a purchase face-to-face. In these cases, customers can pay using any method accepted by the merchant. Moreover, they can benefit from personal contact with sales staff and can directly see and touch products before they buy.
Online payments
By contrast, online payment processing allows shoppers to buy goods and services online via various digital methods. These include smartphones, tablets, computers, and other devices. This remote option allows purchases to be made anytime, from anywhere. Transactions are processed through secure gateways using methods like digital wallets, credit or debit cards, and ACH bank transfers.
Security
In-person payments
Because in-person payments involve one-on-one contact between buyer and seller, there is a higher level of security. Fraud risk is reduced because merchants can instantly verify the authenticity of credit or debit cards. They also ensure that sensitive payment information is handled in compliance with payment card industry standards.
Online payments
With online payment processing, sellers do not enjoy this added security. Instead, they must rely on technology, including encryption procedures that mask data from hackers and payment gateways that feature robust anti-fraud tools. In spite of these efforts, there is a heightened risk of data breaches with this method. To minimize the threat, online payment processors use protocols such as two-factor authentication and tokenization to augment their built-in anti-fraud systems.
Speed and efficiency
In-person payments
In-person payments are conducted and resolved quickly. When you accept in-person payments, you can provide instant confirmation to your customer. As a result, they can leave your premises with their purchase in hand.
Online payments
Thanks to technological advances, online transactions can go through almost as quickly. However, there can be slight delays due to factors such as payment gateway processing times, internet connectivity issues, and the completion of additional verification processes. Digital receipts sent via text or email add convenience and support efficient record-keeping for both the shopper and the merchant. They also simplify the process in case of returns or exchanges.
Cost
In-person payments
On the customer side, costs for in-person payments remain consistent. Recently, however, merchants are increasingly offering a discount at the point of sale to customers who pay with cash. For example, North’s Edge Program assists merchants by offsetting the cost of processing while facilitating the making of consistent profits on all transactions.
The Edge Program incentivizes customers to steer clear of making in-person credit card payments in favor of doing so with cash.
Online payments
When you process payments online, expect fees from your payment company and/or gateway. What you will shell out varies according to transaction volume, whether you need to convert international currencies, and any other additional payment processing services that you have purchased. Although setting up online payment processing can cost you upfront, you will gain from the broadened sales reach that it brings to your business.
Online clients can also receive a discount incentive for paying via ACH bank transfer with the Edge Program. To accomplish this, the shopper simply provides their bank account information. They agree to have a set amount withdrawn on a particular date or on a predetermined time schedule. This dual pricing structure allows you to let those who still want to pay using a credit card have the privilege, while offering a slightly lower charge for a direct bank transfer.
As you examine your business and its unique needs, it is important to look at both in-person and online processing for the payments you receive. The first provides immediate transaction completion and a personalized product and sales experience. The second feature is accessibility and the ability to reach a broader customer base. Implement one or both into your infrastructure to furnish shoppers with the secure, personalized purchase transactions that will become hallmarks of your company’s success.
North is a leading financial technology company that builds innovative, frictionless end-to-end payment solutions designed to simplify and grow businesses of all sizes. From the front door, to the back office, the developer world, and partnerships that expand the payments landscape, North offers proactive, comprehensive merchant services, in-house processing, and more.
