Introduction

Payment processing is a crucial operation for all kinds and sizes of businesses including small businesses and freelancers alike. While talking about payment processing, a variety of factors need to be considered, challenges and risks which come alongside setting up small businesses and how to rightly deal with them. This article covers these aspects to make your life easier as a small business owner when it comes to breaking down, managing and processing your finances. 

How are payments processed for small businesses?

The payment processing cycle for a small business looks somewhat like the following;

1. Initiating the transaction

The customer takes action on the website or platform to make a payment using their credit or debit card or other available methods. The customer’s card/payment details are recorded by the payment gateway platform. 

2. Authorization

The card or the payment details are sent to the payment processing unit which forwards the details to the related bank whose card is being used. The details like card's validity, funds sufficiency etc. are authorised. Once everything is found in order, the payment processor is prompted by the bank to carry out the payment, hence the transaction can proceed.

3. Settlement 

The authorized transaction is clubbed with other payments to be processed or processed as is in some cases, usually by the end of a business day or sometimes even immediately. The payment processor carries out the transfer of funds from the cardholder’s bank to the business account. The business account is credited with the paid funds by its customer minus any transaction fee if applicable.

These transactions are secured and encrypted as the payment processors must comply with certain legal standards of the payment industry. 

For quick, easy and secured payment processing with flexible currencies and instant settlements, hit up Transfi and give it a shot today!

Key components of small business payment processing

The key components of payment processing are - Payment gateway, merchant account and payment processor. These work together to facilitate digital transactions. Here’s what you should know as someone dealing with small business finances: 

1. Payment gateway

A payment gateway is a medium providing service which authorises and processes payments in online transactions acting as a bridge between the business website and the payment processor. When a customer makes a purchase and wants to pay, the gateway securely transmits the payment information to the processor which would further authorize and complete the payment. A payment gateway also covers the transaction process with protection, encryption and tokenization of the operations.

2. Merchant account

It is a kind of bank account that helps accept and process electronic payments for businesses dealing with day to day transactions. After the transaction is authorized through the gateway, the funds are held in a merchant account before they are finally transferred to the business’s bank account. Merchant accounts are a crucial part of business payments to accept credit card and electronic payments. 

3. Payment processor

Payment processor the pillar mediator between business, business’s bank and the bank of the payment issuer. Payment processors play an important role by handling the technical aspect of bringing the constituents together, this includes sending the right data to the appropriate card networks and banks.

How does effective payment processing benefit small businesses and how Transfi helps achieve it?

There are many reasons why small businesses should develop a system of effective payment processing;

1. Speed of transactions

Small businesses operate with limited resources and there is a continuous cycle of funds which helps the businesses operate and grow which means the payment processing should be faster to facilitate fund requirements. 

2. Customer experience 

When we think of businesses from the root level, every client and customer is important in building the business and when the services and products are to be catered to them, it's important to enhance the experience and keep it in check, particularly for a small business. It’s also important that the payment processor is providing customers with a wide variety of options for their payment methods.

3. Accuracy and record keeping

Automated payment processing records every transaction and maintains the database which is important for decision making, managing inventory and recording for finance and taxation purposes. Manual recording and managing is time consuming and prone to errors.

4. Security 

Digital payment methods are a secure form of payments and transactions and they reduce the risk of fraud and theft. This keeps the finances of the business and the customer safe and trustworthy.

5. Global reach

Electronic payment systems work all across the globe allowing businesses to grow borderless. The more flexibility in the payment methods, higher the reach across the globe.

6. Reduced paperwork

Electronic payment methods are devoid of paper based invoicing and recording reducing the manual cost and time.

7. Cost effectiveness

Electronic payment processing is relatively cheaper in all aspects, cutting down the steps of the process of longer bank transfers; these payments are quick and hence cost effective. 

Transfi provides the perfect tailored solution for small businesses keeping in check with the best of electronic payment benefits, it gives your small business a boost with time, labour and cost savings. 

Factors to consider while choosing a payment processor for your small business

Choosing a payment processing provider for your small business involves several checkpoints to be considered. One should evaluate the businesses specific needs before making such decisions; following are the factors to consider-

1. Analyze transaction volumes and patterns: one should evaluate if the transaction activity is regular without much fluctuations or comprises high and lows across time. The processor must be able to handle specific needs.

2. Identify the types of payments coming in: it’s important to evaluate the different types of payment methods the parties on the other side are using and if your business payment processor is compatible and scalable for accommodating that.

3. Consider your business model and industry specific requirements: different industries have different volume and nature of transaction requirements, one must find out what fits well with their industry and business model.

4. Future planning: if your small business is growing constantly and its proceeded towards expansion, your payment processing should cater to the coming needs as smoothly as your present needs.

Payment platforms for your business needs

Here are some of the widely used payment solutions for businesses and freelancers;

1. Transfi

TransFi is a Lithuania-based fintech solution simplifying cross-border payments. It  offers checkout, payment links, and escrow solutions to reduce the complexities and risks of international transactions. With a global network covering over 85 markets and card support in 173+ markets, it enables fast, cost-effective payments via a single API, using open banking and real-time payment networks.

Transfi is one of the best payment methods for freelancers and small businesses, making automating payables faster, safer, and more efficient. The end-to-end solution modernizes operations while providing an effective means to process payments internationally. Users can quickly and easily send payouts to suppliers, freelancers, and other recipients. The system also offers a variety of payment methods. From automation to virtual payment services and digital marketplaces, Transfi is a robust platform that delivers a worldwide quality experience. 

What does Transfi provide?

• Quick cross border transfers with instant processing
• Multi currency accessibility, provides 40+ currency options
• Multiple payment options 
• Effortless API integration
• Competitive and transparent pricing 
• 24/7 customer support

2. Airwallex 

Airwallex is a global solution that helps your business grow without borders. It offers no-code to fully-customisable payment integrations, including Checkout solutions, Payment Links, and Payment Plugins that work with eCommerce platforms like Shopify, Magento, and WooCommerce. Not only does it offer simplified payment processing for small businesses, it also provides a suite of services that make handling transactions easier.

3. Shopify

Shopify is a payment system that lets businesses accept different types of payments, like credit cards and digital wallets. Businesses that use the Shopify platform automatically get Shopify Payments. This seamless integration creates a streamlined checkout process, which can lead to a better customer experience. By using Shopify Payments, it’s easy to manage your sales, payments, and payouts all within one simple dashboard.

4. Stripe

Stripe is a global payment system that's well known for its wide usage across payments acceptance, managing subscriptions, and handling online transactions. It offers support for payments in more than 135 currencies and has regulatory licences worldwide for compliance in most countries.

5. Square

Square is a payment processing system that allows businesses to accept both online and in-person payments. In addition to handling transactions, it handles payment disputes on your behalf, and like many others, has active fraud prevention measures to protect your business.

The best payment gateway for your small business

Transfi is the ultimate payment gateway for freelancers, businesses and developers. You can use Transfi to get paid from anywhere in the world and securely send money everywhere. Small businesses can use it to receive payment securely without any hassle. Compared to other international payment methods, Transfi only takes a few minutes to process your money in the most secure form. Benefits of using Transfi are as follows;

1. Quicker transactions – Receiving payments directly in your desired currency speeds up processing and avoids unnecessary banking delays.

2. Low costs – Currency conversion via banks can incur high fees. Transfi helps with these transactions with minimal fees and no hidden costs unlike other platforms.

3. More work opportunities – Many clients prefer working with freelancers who are up and running with their payment methods, making them more attractive hires.

4. Seamless international payments – Transfi can be integrated in the freelancers website or any other websites to carry out seamless less effort transfers. 

Transfi’s payment gateway provides a one stop solution for all your international payment needs, it is easily accessible and does not require a multi step - difficult process to make payments.

Why is TransFi the best solution for your freelance payment journey

Transfi is the ultimate payment gateway for freelancers, businesses and developers. You can use Transfi to get paid from anywhere in the world and securely send money everywhere. In Africa, despite having many options, freelancers still face problems when it comes to receiving their freelance payments.

Transfi can help you if you’re a business. The payment API that IntaSend follows allows businesses and e-commerce shops to integrate the best payment gateway to their website or platform. This way, customers receive the best payment options for them to choose from.

Freelancers in Africa can use it to receive payment securely without any hassle. Compared to other international payment methods, Transfi only takes a few minutes to process your money in the most secure form. Benefits of using Transfi are as follows;

5. Quicker transactions – Receiving payments directly in your desired currency speeds up processing and avoids unnecessary banking delays.

6. Low costs – Currency conversion via banks can incur high fees. Transfi helps with these transactions with minimal fees and no hidden costs unlike other platforms.

7. More work opportunities – Many clients prefer working with freelancers who are up and running with their payment methods, making them more attractive hires.

8. Seamless international payments – Transfi can be integrated in the freelancers website or any other websites to carry out seamless less effort transfers. 

Transfi’s Bizpay provides a one stop solution for all your international payment needs, it is easily accessible and does not require a multi step- difficult process to make payments.

Conclusion

TransFi’s  innovative approach to payouts simplifies, accelerates, and reduces the cost of accessing payments worldwide. Are you sick of poor exchange rates and payment delays? If done right, receiving money from people all across the world in local currency is simple, hassle-free, and stress-free. Make TransFi your choice for payment processing and get rid of any hassle. Set it up once and stop worrying about withdrawing or receiving your payments on time. 

Frequently asked questions (FAQs)

1. What is the best payment system for a small business?

The best payment system for your small business will depend on your unique needs. We encourage you to do your research to find the system that fits your goals and requirements. Our platform, Transfi, offers small businesses the most comprehensive, end-to-end financial operations system with global reach. We offer multi-currency accounts that make it quicker and more cost-efficient to help you accept, hold, and make payments internationally.

2. How can small businesses take card payments?

Small businesses need a merchant account and payment processing service to process digital payments, like card payments. You’ll also need a payment gateway to initiate and verify ‌transactions.

3. How do you set up an online payment system for a small business?

To set up an online payment system for your small business, partner with a payment system provider for end-to-end support. Make sure the provider you choose includes a merchant account, payment gateway, and payment processor. If you plan on accepting payments online on your website, build a payment form or payment page, and ensure that your provider meets compliance regulations.

4. What is the best way to accept payments for small businesses?

Offering flexibility is key. Most customers expect to pay using cards, bank transfers, or digital wallets. Transfi makes this simple with hosted checkouts, payment links, and plugins. You can accept local and international payments without needing multiple systems or complicated setups.

5. What is one possible benefit to a small business of using electronic payment systems?

Electronic payments cut down manual work and reduce errors. They also let you track what’s coming in and going out more clearly, helping you stay in control of your cash flow.