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1. Review the different payment methods

No one type of payment is best – it will depend on the needs of your business. Make sure you understand how the different methods work.

  • EFTPOS payments – this lets your customers pay directly into your bank account via a bankcard, credit card or debit card.
  • Credit card and debit card payments – a credit card lets customers pay for goods and services by creating a debt with a credit card provider. Debit cards deduct the sale amount from a customer’s bank account.
  • Direct debit payments – to become a direct debit user you’ll need an established business. Direct payments are fast. The Australian Payments Network coordinates direct debit payments in Australia. Be aware of fees to process direct debit payments.
  • Online payments (such as Paypal) – online payments let your customers pay for your goods and services through your website. Payments can be automatic and convenient. Make sure you use encryption for sending payment information to protect your customers from cyber criminals.
  • Cash – cash payments are useful for low value items or if other payment methods are unreliable. You will need a method of tracking your sales such as a cash register. You will also need to regularly bank your cash. Avoid storing large amounts of cash to reduce the risk of theft.
  • Cheque – paying by cheque is becoming less common now that we have electronic payment methods. Cheques require more handling to process and can attract fees. They also take about 3 business days to clear.
  • Money order payments – a money order tells a bank, credit union, building society or post office to pay you money. Unlike cheques, money orders are prepaid. Because of this, they can’t bounce due to insufficient funds. But they can bounce due to other problems, such as suspected fraud.
  • Gift cards and vouchers – these can increase sales around special occasions. They can also help promote your brand and bring in new customers. In some states gift cards and vouchers are valid for longer periods so businesses need to honour the purchase if it’s within that period. If your business sells gift cards you’ll need to comply with the gift card laws.
  • Bitcoin and digital currencies – digital currencies are similar to money. Use them to buy and sell goods and services in exchange markets. Businesses don’t have to accept digital currency as payment because it isn’t legal tender. The value of digital currency can change more quickly than traditional currency.

2. Consider your customers

When choosing payment methods, you need to think about the affect your customers:

  • Customer preferences – choosing a payment method that your customers prefer will make them more likely to pay on time. The most common payment method is through electronic credit and debit cards. Use of Paywave and other tap-and-go accounts has grown quickly. Most MasterCard in-store transactions are now contactless.
  • Privacy of payments – different methods are more private. For example, credit cards automatically record transactions. Some customers might prefer to pay cash for certain goods and services, such as medication, for privacy reasons.

3. Make sure it’s reliable

Depending on where your business is, reliance on electricity or telecommunications can be an important factor to consider.

For example, EFTPOS uses electricity and needs access to a phone network. This payment method will be unavailable if these systems go down.

4. Check the costs

Some of the costs to consider when you’re choosing your payment methods include:

  • Service fees – for example, EFTPOS and credit card providers often charge service fees.
  • Transaction costs – the bank may charge a cost for each transaction.

5. Evaluate the risks

Think about the risks of different payment methods. For example, cash has a higher risk of theft because it doesn’t go directly into your bank account. There's also more risk of mistakes with payments.

Consider the risks associated with digital currencies on the Australian Securities & Investments Commission (ASIC) website.

Read all about electronic payment systems on the Australian Taxation Office (ATO) website.

Learn more about managing risks.

Read next

Find out how to process electronic card payments securely.

Learn more about invoicing and payments.

Find out how your business can take online payments.