Rashedul alam

Business

payment methods

Advantages and disadvantages of different payment methods

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There is a thin line between developing one of your passions as a career or doing it as a hobby. The difference lies in a single element: money. Or what is the same, whether or not you charge for the services you offer or the products you sell? Charging is one of the most important (if not most) components of any freelance career. And as I suppose you already know, you must do everything possible to facilitate the payment to your potential customers. In fact, it would be a big mistake not to consider (and use) different payment methods to collect your bills.

Different Types Component of Payment Methods

  • Cash
  • Credit Card
  • Checks
  • Mobile payments
  • Electronic Payments

But what is the best option?

Each payment method has its own advantages and disadvantages

Cash

payment methods

image source: google image

Direct and direct money in your pocket. No matter if they are bills or currency, cash is the most popular and popular form of payment, and probably the first one you use in your business.

Advantage

You have the money immediately. There are no waits. The client has or does not have the money. There are no bargains or excuses when you cash. There are no additional commissions. Almost all other forms of payment bear some kind of commission. If you cash, there is no intermediary that manages the collection and, therefore, 100% of what is agreed will go directly to your box.

Disadvantages

Most people do not carry much cash on top. Increasingly, people use credit or debit cards and do not carry many bills overhead. If you only cash, you may end up losing a lot of customers. You should be careful about fakes. Although it is not something that happens every day, you must be prepared in case a false ticket ends in your hands. Accounting is complicated. If you handle large amounts of cash, you will have to exercise greater control over your numbers. Cash is harder to control and you will not want to see it without a penny when it comes to paying taxes. And unless you’re one of those who keeps all your income under the mattress, you’ll be coming and going all day from the bank.

Credit Card

payment methods

image source: google image

In 2013 there were 43.26 million credit cards in Spain alone. Credit cards are the most common form of payment in the world today.

Advantage

Cards are the most common form of payment. It is rare to meet someone who does not have a credit card or at least debt. Card acceptance boosts sales. Credit cards are very easy to use, at least from the customer’s perspective. The cycle “I see it, I want it, I buy it” fits perfectly with the compulsive purchase on credit. Credit cards can be used to make purchases through PayPal and Payoneer. If you are already using PayPal in your business, as most freelancers do online, then you can accept payments with credit cards, without the need for your user to have a PayPal or Payoneer account.

Disadvantages

Comply with various safety laws and regulations. Before accepting credit cards, you must comply with a number of security regulations and data protection to ensure the data of your customers. Intermediation commissions. Obviously, you will have to contract the services of some payment gateway to be able to process credit and debit cards, and those services have a cost depending on the amounts you enter.

Checks

payment methods

image source: google image

Before the popularization of the cards, checks were extended to make payments of a certain amount without having to carry much cash on top. Nowadays they are not so frequent, but still, there are people and companies that use them. The value of the check is directly linked to your client’s current account.

Advantage

If you accept checks you can work with large accounts. There are large companies that make many of their payments only through bank checks. If you do not accept this form of payment, leave this type of clients. Checks can now be processed electronically. If you have the means to do so, you can process the checks electronically and charge more securely, although you will have to pay the corresponding commission.

Disadvantages

Checks can be returned. If your client does not have sufficient funds in your account, then you will not be able to collect your check and your bank will give you back (with your corresponding commission). Currently, it is a crime to pay with a check without funds, but it is better not to find that disgust, especially when you already had that income to make some kind of purchase or investment. Trips to the bank. To cash the check you will have to present yourself physically in your bank or your client’s bank. And that is a time you are not devoting to your work.

Mobile payments

 payment methods

image source: google image

This form of payment really consists of different variants. In this article, we will only refer to the payments you can send or receive through your mobile phone, whether by SMS, QR code, NFC, or any other system.

Advantage

Almost everyone has a cell phone. As with credit cards, it is difficult to find someone who does not carry a mobile phone with you. It does not matter if your customer pays through your phone or through yours. The advantage of instant payment is there. Payments are usually very fast. Do not think. Just take out the mobile and in a matter of seconds, you have the money in your bank account.

Disadvantages

Security breaches. Some forms of payment by mobile phone still have some cracks that do not make them 100% secure. Not all card readers work the same. If you have chosen a mobile payment system that involves using an application with your card readers, such as Square, PayPal Here or Inuit Go Payment, then it is quite likely that you may have some compatibility issues. Most card readers are compatible with the phone, but perhaps not with other devices. Investigate well before making a decision. Problems with updates. A simply failed update can break the entire system and prevent you from continuing to charge normally. So be very careful if you update the application you use to collect and make sure it is compatible with your phone before installing it.

Electronic Payments

It’s my favorite form of payment. Electronic payment methods like PayPal or Stripe are the most popular new methods among freelancers, entrepreneurs, and online marketers.

Advantage

They are very simple. Usually, they are the most simple and immediate payment method. They are international. You open the doors of the world market. It does not matter where your client lives or what currency they want to pay you. A freelancer from the United States can charge a client in Guatemala without any impediment. They are fast! Almost as much as the cash payment.

Disadvantages

Commissions are rather high. With few exceptions, commissions associated with electronic payment systems are often quite high. Sometimes, too much. It is likely that the commission you have to pay off all the advantages I listed above, but if you are charging a high bill, you might consider using an alternative form of payment. And these are some of the most popular payment methods nowadays. Of course, there are many other alternative methods, such as money orders or direct debits. You should find out which one is right for your business.

Finally, you decide how you want to collect your bills. Regardless of the payment method you choose, do not forget to always send professional bills, choose your rates well, and do not let bad players take advantage of you .­­­

 

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Author: Jack726

Freelancer

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