Payment receipt methods for a small business

[Osem]

In the 'good old days' folks used to just write out cheques and send them in payment for goods/services. Given that this is becoming less common, is there an cheap/easy method by which a small business (sole trader) can accept card and/or other payments, especially from distant customers? I believe the charges and other rules associated with accepting credit card payments for example make that option impractical and/or expensive for businesses with small turnovers or dealing with small transactions. What'd be the best alternative?

Cheers as always.

[Taf]

Paypal?

[Rob]

We tend to allow bank transfer - the internet banking BACS type of thing. That way the money goes straight into the account. Provided the sender quotes the correct payment reference / invoice when making the transfer it works OK.

Paypal is probably the easiest method for plastic, but they do charge fees per transaction, and unless you have an online shop it might be viewed with suspicion by some clients?

[Osem]

Cheers guys.

I've heard some bad things about Paypal when it comes to businesses using it to accept payments and initially, at least, there'd be no online presence so that might be a problem by the sound of it anyway.

Bank transfer sounds interesting but how does that work in practice and what costs, benefits and safeguards (if any) are there? For example, how long before payment is cleared, can the system be abused etc.

[Rob]

Bank transfer is initiated by the person sending the money. It's not like a direct debit where the person wanting the money simply takes it out of an account. You'd see the money arrive and appear on your statement. It doesn't have to clear like a cheque does so once it's on your statement the funds should be yours. Some bank systems in the UK at least now operate "fast payments" where the transfer should take place and complete the same day. Some BACS stuff does take a couple of days to work it's way through the bank system.

I suppose there would be costs if you are re3ceiveing funds overseas that are not in Sterling for conversion. Most business bank systems do charge for transactions, but I'd speak to your bank on that. As a small business you no doubt have access to a business advisor?

[Osem]

Cheers Rob, both my eldest son and wife are hoping to start small businesses in the next couple of years (all being well) and it's for them I'm asking and mainly as a means of receiving payments when cheques or cash either aren't suitable or possible for whatever reason. So basically they'd just give their bank account details to the third party who'd then make the payment direct from their bank? Is there no risk to giving a third party such bank details however? I may be wrong but have a vague recollection that basic account details like account name, sort code and account number could be used to access accounts illegally.

[heero_yuy]

You could take a look at www.nochex.com

It's a payment system based originally on bank debit cards but seems to have been expanded to include credit cards. A customer uploads cash into his account. He can then use this to buy goods and services from traders. The system is specifically intended for small transactions under £100.

I only used it occasionally some while ago with a small trader. Seemed to work OK.

[Dai]

Originally Posted by Osem

basic account details like account name, sort code and account number could be used to access accounts illegally.

You basically only give data that is already present on any cheque so the risk is no higher.

Cheapest card processing account I've found to date is Elavon @ around £20/month for a small trader.

[Osem]

@ heero yuy Thanks for that. They seem to be restricted to web based businesses and that won't be the case. My eldest is hoping to set up his own karate school and the wife is training to be a massage therapist so hopes to start her own 'practice' based at home at some point. The option to receive payments cheaply by methods other than cheque and cash would therefore be nice but probably wouldn't be used all that often.

@ Dai - Yes one reason I don't like using cheques and tend to reserve them for paying bills etc.
Will have a look at the Elavon but I think they'd like to avoid a monthly fee especially if the facility isn't often used.

[Dai]

It may be worth having a browse here:

http://www.acceptcards.co.uk/

[Tim Deegan]

Personally I hate Paypal with a passion. It is slow, expensive, and their security is terrible. However it is probably the cheapest merchant type system to set up. And if you sell via ebay, then you have to offer Paypal.

Bank transfers as Rob says are good, because it is almost instant now with most banks. Depending on the bank you may get small fees, but these will be cheaper than a merchant card service.

It is safe giving out your bank account details, as long as you don't give out any other details. Remember each time you send a cheque you give someone your bank account name, sort code, and account number.

If you are taking regular card payments either on line, over the phone, or both, then it is worth using a merchant service, and a secure gateway. Most banks offer a merchant service, and setup prices cost around the £200 to £250 mark, and then they take a percentage of each transaction. Then the secure gateway for your website can be provided by one of many companies. I use http://www.sagepay.co.uk This gives me a secure online checkout, as well as a virtual terminal so that I can take payments over the phone. Sagepay just charge £25 per month.

[Osem]

Originally Posted by Tim Deegan

Personally I hate Paypal with a passion. It is slow, expensive, and their security is terrible. However it is probably the cheapest merchant type system to set up. And if you sell via ebay, then you have to offer Paypal.

Bank transfers as Rob says are good, because it is almost instant now with most banks. Depending on the bank you may get small fees, but these will be cheaper than a merchant card service.

It is safe giving out your bank account details, as long as you don't give out any other details. Remember each time you send a cheque you give someone your bank account name, sort code, and account number.

If you are taking regular card payments either on line, over the phone, or both, then it is worth using a merchant service, and a secure gateway. Most banks offer a merchant service, and setup prices cost around the £200 to £250 mark, and then they take a percentage of each transaction. Then the secure gateway for your website can be provided by one of many companies. I use http://www.sagepay.co.uk This gives me a secure online checkout, as well as a virtual terminal so that I can take payments over the phone. Sagepay just charge £25 per month.

Yes I realise that which is why I only use cheques to pay the bills or people I know and trust. I wouldn't send a cheque to a complete stranger for that reason.

Bank transfers seem to be the way forward at first anyway not having web based businesses. If their businesses grow then they can accept other forms of payment if and when that becomes necessary.

Cheers all.

[Tim Deegan]

Originally Posted by Osem

Yes I realise that which is why I only use cheques to pay the bills or people I know and trust. I wouldn't send a cheque to a complete stranger for that reason.

I was saying that it is safe to give out your bank details, as they would need more details to be able to access your account.

If you do start to use a gateway in the future, then make sure you security settings are right. Otherwise you could get stung like I did

[gazzae]

Originally Posted by Osem

@ heero yuy Thanks for that. They seem to be restricted to web based businesses and that won't be the case. My eldest is hoping to set up his own karate school and the wife is training to be a massage therapist so hopes to start her own 'practice' based at home at some point. The option to receive payments cheaply by methods other than cheque and cash would therefore be nice but probably wouldn't be used all that often.

@ Dai - Yes one reason I don't like using cheques and tend to reserve them for paying bills etc.
Will have a look at the Elavon but I think they'd like to avoid a monthly fee especially if the facility isn't often used.

You could use something like Sage Pay which lets you take payments over the phone. No getting away from the monthly fee though.
http://www.sagepay.com/telephone-payments

[Tim Deegan]

Originally Posted by gazzae

You could use something like Sage Pay which lets you take payments over the phone. No getting away from the monthly fee though.
http://www.sagepay.com/telephone-payments

That's who I use. But you still have to use a merchant service, which also costs.