What are payment methods?

What do animal skins, tea bricks, and salt all have in common? They were all once used as currencies in a barter system. In trade, barter is a system set up to have transactions where goods or services are exchanged for other goods or services without using money.

Although we now use money as currency, the invention of the internet means a wide range of ways to spend it. Discover more about online and electronic payment methods, including the safest ways to pay for goods and services with your debit or credit card.

What are the different payment methods?

Payment methods are simply the different ways in which merchants can collect payments from their customers.

Among the most popular payment methods include:

While the methods above are still in use, there might come a time when they become obsolete and replaced by methods like:

• Prepaid cards – they can be used in a similar way to debit cards and credit cards, but you don’t need an account to have one. Instead, they’re loaded up with cash like a pay-as-you-go mobile phone or gift voucher online. You can then use the card to spend some or all of the amount you wish.
• Mobile payments – is an umbrella term used to refer to several payment methods that use your phone. Examples of mobile payments include mobile wallets with either Google or Apple Pay. Due to smartphone biometrics, mobile wallets are an incredibly secure and convenient way to pay for goods. Alternatively, mobile payments can include contactless card payments, QR codes, and online payment links.
• QR codes – quick response code payments are a great way to speed up transactions. Your customers scan a QR code, a notification pops up that takes them to a separate online payment page where they fill in their card details and then complete the payment.
• By link – you can create unique payment links and send them to your customers as a payment method. From there, your customers can click on it, and they’ll be redirected to a secure online payment page where they can complete the transaction.
• Contactless – also known as tap to pay, contactless card payments are popular because of how quick and easy they are to complete. Using near-field technology, customers simply tap their card or device on the card machine, and that’s it.
• Online banking – internet banking can be used to make all sorts of payments, including the so-called “Buy Now, Pay Later” method. The user will need to sign up with their bank before they can get started, but once they’re up and running, it can be used to transfer money to anyone they want. With online banking, direct debits, standing orders, or one-off payments to friends, family, or businesses can be set up.

How to add a payment method

When you’re running an online business, your customers need multiple payment options. That way, they get the flexibility of paying how they want, and in turn, you can attract worldwide trade. But how do you add payment methods? The easiest way is via a marketplace, a payment gateway, or a custom domain with the help of a website developer.

But first, you’ll need certain documents to allow payment integration on your company’s website. They include:

• Certificates of company registration or incorporation from Companies House
• Articles of Association and Memorandum of Association
• Partnership deeds for Limited Liability Partnerships (LLPs)
• A Permanent Account Number (PAN)
• Bank account details

Apart from the documents listed above, certain payment gateway service providers may ask for other relevant documents and certificates.

How to integrate a payment method into your business

As mentioned previously, you can integrate different payments generally on marketplaces, payment gateways, or on custom domains.

How to add a payment method to a marketplace

On a marketplace like Etsy, it’s as simple as clicking a button on the payment methods you want. When you start selling on Etsy, your shop is enrolled in Etsy Payments, where your buyers can choose from payment options such as:

How to integrate a payment method into a custom domain

Whereas if your business has a custom domain on a web host platform, you can add payment methods via code or no-code integrations. You can usually find this information in the panel of the web host’s control panel.

With coded integrations, you’ll need the services of a developer, either in-house or a contractor. While you can add as many payment methods as you want, coded integrations can take up precious resources like time and finances. With no-code integrations, you can add payment methods such as online payment links, invoices, and subscriptions.

Many hosting providers offer payment services integration as a part of their service pack, charge you separately for it, or help with custom integration. The top web hosts for payment services are GoDaddy, Wix, and Squarespace.

How to add an online payment method via a payment gateway

Alternatively, you can integrate a payment gateway to your website with the support of the web host provider. This integration option will be available in the control panel.

There are two types of payment gateways. There are hosted and non-hosted payment gateways. A hosted gateway redirects your customer to another secure site to complete the bank payment and then sends the user back to your website.

A non-hosted payment gateway, on the other hand, has payment technology that can be added to your website, allowing the transaction to take place in one place.

These payment methods generally redirect your customers to a payment page hosted by a payment gateway. From there, they can check out smoothly and securely.

What is the most common method of payment?

According to UK Finance, debit card payments account for around 40% of all online and in-person payments in the UK. This is followed by a mixture of cash, direct debit, and credit card payments. That said, US bank JP Morgan reports that mobile payments are growing at the highest rate among all payment methods.

What is the safest method of payment?

Debit and credit cards are thought to be the most secure payment methods. That’s because each card payment must go through a card network like Visa or Mastercard to ensure that the payment is from a valid bank account. Additionally, both the merchant and the customer can contact the card network to resolve disputes.

What is the ideal payment method?

That’s a great question, but the answer depends on your business model. You might think, as long as buyers come through the proverbial door, does it matter how they pay? After all, money is money. Well, not really.

Ever wondered why some businesses don’t take American Express bank cards? The answer is simple, businesses want more revenue. Some payment methods like American Express credit cards charge merchants higher fees than other credit card networks like Mastercard and Visa. As a merchant, always do your research into which bank card networks work best for you in terms of charges, speed, and flexibility.

Although businesses like to offer multiple payment methods to their customers, there are some that they (secretly) prefer over others. These methods provide a mixture of cost-effectiveness and practicality with ease of use. These tend to be:

• Direct Debit
• Bank card payments
• Digital wallets
• Cash and cheques
• Payment gateways
• Email invoices