Do you accept Bitcoin? Probably not. 

Few plumbers and drain cleaners take groundbreaking forms of currency, and that’s OK. However, customers do expect various payment options. If your company is still cash and check only, you are probably missing out on business.

Technology is disrupting the way people make purchases. Few consumers carry cash anymore, and some people don’t even have a checkbook. Credit cards? They are popular but becoming increasingly unnecessary. You can often skip the plastic entirely these days. Venmo, PayPal, Apple Pay, and more are offering one-click payment options. It’s the ultimate in convenience.

Hold on to your groans, because there are pros and cons to all payment options:

Cash

You know and love cash. Paper and coin currency has been around for ages and is stable in the United States. Historically, cash is a safe bet.  

Pros: Well understood by all and easy to spend elsewhere. 

Cons: It’s dirty. So much so that a variety of chain brick-and-mortar places (think restaurants) are considering going cashless. Most airlines are already cashless, and the trend is growing in popularity during the pandemic.

Cash also spends — and steals — easily. It can be nerve-wracking to have a lot of cash floating around. Employees can skim way too easily, especially with big tickets. With cash there is no getting around manual bookkeeping and banking tasks.

Checks

Paper checks are widely used to pay home services businesses. Most homeowners have a checkbook sitting around somewhere when they don’t have cash and you don’t take cards.  

Pros: No processing fees (unless, sometimes, when using remote deposit). Harder to steal because the customer endorses the check to your company directly.  

Cons: Checks create more paperwork. They, themselves, are paperwork. You have similar banking and bookkeeping records as with cash. Unlike cash, the business is taking on some risk. Bad checks are expensive and inconvenient. 

Remote deposit mitigates some of those cons, though. The trip to the bank becomes unnecessary and speeds up the transaction, making it less likely a check will bounce. Once you do high volumes of remote deposit, you can bet that the bank is going to charge fees. 

Plastic cards (debit and credit)

Credit card processing is a scary step for some small businesses. For large average tickets, like we have in plumbing and drain cleaning, it's risky to not take cards. Data shows customers expect the convenience of a card on purchases greater than $10 — well below the threshold of any plumber’s invoice.

Pros: Widely used (and even expected) by consumers because of the convenience. Credit cards help some customers manage their household income for large, unexpected purchases. There is less risk for the business, because the money gets deposited directly, typically after a waiting period of one to three days.

Cons: Fees. It is possible to charge customers “convenience fees” for using a card. This pushes the charge back on them and helps mitigate that cost. The price to run a card depends on the type of card and the company used to manage your transactions. While there is some room to negotiate fees, this is burdensome for small business. 

The waiting period for small businesses to get their money is a bit of a con, and sometimes credit card processors hold money for extended periods. This is rare and usually caused by a sizeable amount of chargebacks. A chargeback is when a customer reports a transaction as fraudulent or incorrect and credits (or “charges back”) the cardholder. 

Chargebacks are probably the biggest risk a business takes with credit card payments, because they are very hard (almost impossible) to fight. For this reason, limit the amount of “card not present” transactions completed, such as taking a card over the phone. Card swipes or chip readings are harder for consumers to chargeback. 

Companies like Square have made credit card processing very easy, even for the smallest business. Many field management softwares have built in payment processing and you can run cards through Quickbooks as well.

Financing companies (GreenSky, PowerPay, etc.)

For customers who don’t have funds available, your business can offer help from a finance company. For customers who need a repair or equipment replacement and have no other way to pay, offering financing (or not) may make or break the sale.

Your business will have to qualify to offer financing. Usually, once a customer gets approved, and the work completed, the funds are electronically transferred to your business. 

Pros: Some customers are more comfortable with these single-purpose loans than credit cards. The rates are often better than credit card rates as well. Depending on the company, payment to the business can be as quick as the next day.  

Cons: There is paperwork involved and you have to be comfortable managing the process for the customers. Since there is no cost to the business owner to offer these programs, there are few downsides for the business. Keep in mind though, there are usually qualifications based on time in business or volume of business on the side of the provider, before you can offer the service.

Electronic fund transfers

Wires, money orders, and ACH (Automated Clearing House) payments have been around for a while in the business-to-business environment. Until recently, it was basically unheard of for a person to pay a business (or another person) with an electronic transfer of funds. 

New technology is making that possible and popular. Venmo, Cash App, Zelle, and PayPal are making “digital wallets” a reality. These apps were designed for peer-to-peer transactions (think splitting the bill at a restaurant or paying someone back for your half of a gift) but are growing in popularity for small and micro businesses. 

Incredibly, since many of these apps are new and trying to gain popularity, there are often no transaction fees or holds on funds. That will change over time, so enjoy it while you can.

Pros: Great low-cost alternative to credit cards for newer businesses. Very popular with younger consumers. Secure and convenient for you and the customer.

Cons: Older customers will not even know what you are talking about, much less feel comfortable using it. Regulations and use for more established or larger business is unclear. Keep in mind that most of the businesses using these services right now are people like hair dressers and farmer’s market stands. Because of this, some consumers might see this option as unprofessional. 

I predict that electronic fund transfers are likely going to gain in popularity. In-app purchasing is skyrocketing and consumers are getting more and more comfortable “paying with their phones.” As the popularity of cash declines, and credit cards fall out of favor with younger debt-conscious consumers, my prediction is that electronic fund transfers will pick up the slack.

Adopting modern payment processing solutions is smart business. There are options that decrease paperwork and risk, while also improving the customer service experience. It’s unnecessary to offer every payment type, but it is important to listen to your customers’ preferences and be willing to embrace new technology. 

About the Author

Anja Smith is managing partner for All Clear Plumbing in Greenville, South Carolina. She can be reached at anja@acpupstate.com.