The types of payments your business can accept

Types of payments your business should accept

The types of payments that people use has continually been evolving. The first form of money came about around 5000 B.C., but modern payments have evolved significantly over the past 20 years. The increase in credit card adoption is one of the biggest trends in the past couple of decades. People have been trending to use credit cards in favour over cash and cheques.

The declining use of cash

The amount that people use cash to make payments is dropping drastically. In 2009, cash was used in around 55% of transactions. In 2019, 10 years later, around 25% of transactions use cash. Cheques are declining even faster. 

There are many reasons why cash is dropping. The primary reason is convenience. It is not easy for consumers to use cash.

  • People need to physically go to a bank or ATM to get cash,
  • Cash can be easily misplaced,
  • It’s difficult to use large sums of cash for high-value transactions,
  • It can be dangerous to transport or store large sums of cash,
  • Counting your cash can be time-consuming, and
  • Budgeting and tracking your purchases is cumbersome.
 
Although cash has been used for thousands of years, its time has come. In today’s digital age, people are using electronic forms of payments.

Growing use of electronic payments

Most transactions in North America are now done by credit card or debit card. The overall trend is that payments are going digital. People like the convenience of carrying a card, or simply using your mobile phone with tap-to-pay. The fact that 80% of people carry a mobile phone and most phones support payments is a key driver to using electronic payments.

The rewards programs that credit cards offer is another attraction. People convince themselves that as long as they pay their credit card on time, it’s free money to use a credit card.

The list of benefits for using credit cards is growing strong:

  • There’s an opportunity for consumers to build credit,
  • Earn rewards such as cash back or miles points,
  • Protection against credit card fraud,
  • Increased purchasing power because consumers are borrowing money,
  •  eCommerce shopping capability,
  • Ability to book hotel rooms, rent a car, etc.
  • Safety of not holding sums of cash,
  • Convenience of automatic recurring payments, and
  • The list goes on.
 
Debit cards do not have all the conveniences above but they do have make payments much more attractive compared to using cash.

The most important payments for a business to accept

When it comes down to it, consumers will drive which payments a business should accept. If a consumer will spend more at your business using a certain type of payment, businesses will shift in that direction.

The most important forms of payments for businesses are credit cards and debit cards. That will cover more than 70% of your customers. When you dig into the types of credit cards, Visa and MasterCard cover 80% of the market. 

Depending on the type of business, cash could be important. For example, quick-serve businesses with high volume, but low value transactions will have a higher need for cash. However, we can’t hide from the numbers. People are still favouring credit cards and debit cards and their popularity is only growing stronger.

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