Welcome to our second episode of “What the tech!?” A series of posts meant to demystify technology as it relates to your business.
Technology doesn’t have to be scary. When used right, it can totally support you and your business goals. And we’re here breaking it all down in a way that educates and empowers you to become friends with the tech that powers your business.
This week we are focusing on the tech behind taking payments online. Generally speaking, most businesses will have some sort of product or service that they will want to take payments for online. BUT I still run into so many entrepreneurs who are taking payments via check, cash, Venmo, PayPal which are all fine and dandy until your amazing business starts to scale and you no longer have the time to manually collect payments from each and every client you’re working with.
And this leads me to an important point. I find that a lot of entrepreneurs I talk to have this notion of “I’m just starting out. I’ll see how this goes and then maybe later on I’ll take online payments.” And I’m here to challenge you with this question: What if you started with offering online payments, would your business scale that much faster!? Probably! So I encourage you to dream big and implement systems now that support your dream business in the future.
Taking payments online applies whether you’re an e-commerce business selling your product online OR a service provider offering 1:1 coaching or online courses. Making it easy for your client or customer to pay you is a win-win situation. It provides a seamless client on-boarding experience and also saves you the hassle of managing different kinds of payments.
So why aren’t more people doing it?
It does require a bit of knowledge around how this all works, unfortunately it’s not as easy as just adding a payment button to your website. And that’s why I’m here today, to break it all down for you so that you can start managing your payments online.
When taking payments online there are always going to be 2 things involved:
- The front end store. This is what your client or customer sees when they are purchasing a product or service. This is where they add that product or service to a cart and are then prompted to put in their payment details.
- The back end payment gateway. When someone purchases anything from your site whether it be on WordPress, SquareSpace or Shopify, those platforms are not the ones that are actually processing the payment. Simply because that’s not their job.
Processing payments involves a lot of security to pass sensitive information over the internet. It also involves taking that information and making sure it’s not fraudulent. So there are companies who were created exactly for this reason and the most popular is called Stripe. In simple terms, Stripe takes the payment information from your website, runs it through a rigorous vetting process to make sure everything checks out and then sends the money to your bank account.
Things to know about taking payments online:
- Taking payments is (almost) never free. It doesn’t matter who you use for your payment processor whether it be PayPal, Stripe or Square. The way they make money is by taking a percentage from every payment you receive. The standard is 2.9% + $.30 or each payment processed.
- The money isn’t generally deposited in your account in real-time. Meaning there is usually a delay of a few business days before the money that your client or customer paid reaches your bank account.
- Your website platform might also be charging you (so be careful). I know specifically for SquareSpace unless you are on their e-commerce subscription they also take a percentage of each payment. So you could be losing up to approx. 6% of each transaction. I highly recommend if you are taking payments on SquareSpace that you upgrade to their e-commerce subscription.
- What if I need to take monthly recurring payments? This is where it gets a little more complicated. SquareSpace does offer recurring payments if you upgrade your subscription which could be worthwhile if you are going to be taking a lot of recurring payments. However there is another 3rd party software that I’ve seen work really really and it’s called Moonclerk. Moonclerk manages one-time payments as well as recurring payments via it’s payment portal. The important part to note about recurring payments is that the client or customer needs a way to update their payment information or cancel anytime and Moonclerk manages that all for you via their client portal. They also send notifications when payments aren’t processed saving you the headache of chasing client payments.
- What if I only take a few payments here and there, do I really need this complex setup? If you are only going to be taking a few payments here and there but you still want an online payment option then I would recommend signing up for a Paypal business account and generating a link to the payment page on your website. The one reason why I try and steer clients away from this is because PayPal takes clients or customers away from your site to pay so it’s just not the most seamless process but a good place to start nonetheless.
- I want to start taking payments online, so what are my next steps? Depending on what website platform you use you’re going to need to create a “store” page. If you’re on WordPress I recommend using the Woocommerce plugin to do this and if you’re on SquareSpace I recommend using their “products” page to do this. Then you’re going to need to sign up for Stripe and go through the account setup process where it will ask for your business information and bank account info. Once that is verified you’ll go back to your website platform and connect Stripe.
Have questions? Shoot us an email firstname.lastname@example.org and we’ll be happy to help!