Electronic payments (e-payments) are the most convenient, low cost and green option for businesses and consumers. More and more people are turning to e-payment as an alternative to sending checks by mail. More businesses are selling their products and services online and accepting e-payment. The trend shows no sign of slowing or stopping as more banks offer electronic bill payment. Even the IRS has made it possible to pay taxes online. So, how can a small business make the most of e-payment?

E-payments can be made by credit card, debit card, direct deposit/debit and electronic checks (e-checks). While the number of payments options may seem daunting, there are only three main types of transaction:

One-time customer to vendor payment: Common online shopping transaction, e.g. Amazon shopping. Paid by credit or debit card or, occasionally e-checks with an account and routing number.

Recurring customer to vendor payment: Common bill payment transaction, e.g. telephone or loan bill payment. Paid by direct debit from a checking account or, occasionally, an automatic charge to credit card.

Automatic bank to vendor payment: Online bill pay transactions. Unlike a recurring customer to vendor payment, automatic bank to vendor payments require the customer to authorize the bank to pay the customer's bills with money from the customer's account as they come in.

E-payment is convenient for both business owner and consumer. On sites where the consumer's account information is stored in a database, and purchasing goods is as simple as clicking “confirm,” the consumer is likely to return. Being convenient for the customer improves customer retention. E-payments also cut business expenses on paper, postage and administrative time.

There are a couple of perceived drawbacks to e-payment that may turn potential customers away. Many people fear identity theft and feel e-payment invades their privacy, but virus protection software, firewalls and a secure server will effectively safeguard against this. Some customers may find e-payment too confusing to set up or won't want to create yet another logon and password to remember. These are most likely a dying breed as e-payment usage is steadily rising.

To set up e-payment for a small business, the pros and cons of outsourcing and in-house processing must be considered. Outsourcing to an all-in-one solution like PayPal or ProPay is quick and easy, but a percentage of every transaction will go toward the cost of running this service. Processing payments in-house requires more time and effort up front, but there are no regular service charges.

To process payments in-house:
-Set up a secure server with data encryption and apply for an SSL certificate
-Register the site with a digital authentication service. A digital certificate assures the customer that this business is legitimate and any information collected is encrypted for security
-Build or buy shopping software that takes customers through the process of choosing and buying products
-Set up a credit card payment processing service