A Comprehensive Guide to Payment Methods 

Key takeaways:

• Prioritize your customers. The best payment methods are the ones your customers prefer and are comfortable using.
• Look beyond transaction fees. Consider all the costs, including hidden fees, administrative work, and potential security risks.
• It’s best to accept widely used payment methods like cash, credit, and debit cards. However, staying open to new options like digital wallets, QR codes, and BNPL can help you attract and retain new customers.

The way we pay for things has changed. What was once a simple choice between cash and a card has evolved, thanks to the rise of eCommerce and mobile technology.

Today, we’re surrounded by new options like digital wallets, QR codes, and cryptocurrency, and payments can be processed in seconds with a quick tap of a phone or card.

For business owners, this raises a crucial question: which payment methods are the right fit for your business and, more importantly, for your customers?

In this guide, we’ll cover the most common payment methods to date, their pros, cons, and everything else you need to know so you can choose the right payment methods for your business.

What are payment methods?

A payment method is how a consumer pays a business for products or services. This includes traditional options like cash and checks, as well as modern electronic payments such as digital wallets and bank transfers. For customers, choosing a payment method is the final step in a transaction. 

While there is no single right or wrong payment method, some can be more costly or create more operational challenges than others. That’s why it’s so important to be aware of all the fees and potential hidden costs associated with each option, all while giving your customers the flexibility to choose one that works best for them.

Major payment methods

While businesses can offer multiple payment options, each requires specific equipment or software. The choice of which payment methods to accept, therefore, rests with you, the business owner.

With that in mind, let’s take a close look at each of the major payment methods.

• Cash
• Checks
• Debit cards
• Credit cards
• Bank transfers
• Digital wallets
• Cryptocurrency
• Cash-based vouchers
• Buy now, pay later (BNPL)
• Quick response (QR) codes

Below, you’ll find a detailed breakdown of each major payment method. 

Cash

Cash is physical currency. It’s the oldest and one of the most trusted payment methods. Though we’re slowly becoming a cashless society, with 51.6% of U.S. consumers doing no-cash shopping, its relevance remains strong, especially with threats like the digital blackout of 2025.

It’s especially great for small transactions, tips, and in-store purchases. While many bigger corporations may prefer digital payments, some eCommerce sites still accept cash through cash-on-delivery options.

Pros

• No transaction fees. There are no fees for using or accepting cash at the point of sale.
• Universally accepted. No technology or third-party service is required for in-person transactions.
• Anonymity. Establishments don’t question where buyers’ cash comes from so long as payment can be made.

Cons

• Security risks. Handling cash makes a business vulnerable to robbery, theft, and counterfeiting.
• Time-consuming and prone to error. Cash needs to be managed manually before it can be deposited in a bank. Even with machine assistance, it’s possible for cash to get lost or for change to be miscounted.
• Loss of data. Cash payments don’t have a digital trail. This makes it hard to track customer behavior, sales trends, and other valuable business data.
• Inconvenience to customers. Most people carry little to no cash in today’s tech-driven environment. A business that relies solely on cash may lose a sale if a customer isn’t prepared to pay that way.
• Incomplete purchases. Unlike digital payments, cash-on-delivery transactions don’t have a pre-authorized payment. This means you risk losing the sale and shipping costs if a customer refuses to pay or accept their item. To negate this, it’s important to clearly set your payment terms and delivery policies.

Checks

A check is a signed paper that directs a bank to pay a specific amount of money to a recipient. It’s like a manual bank transfer. While they are very inconvenient, checks are still often used for large business-to-business (B2B) payments like government disbursements, rent, and large job orders.

The check is directly linked to the payer’s bank account. When a recipient deposits it, the banks use the numbers on the check to transfer the funds between the two accounts.

Pros

• Record-keeping. Checks provide a clear paper trail of transactions. This makes it great for budgeting.
• Low cost. They typically have low or no direct transaction fees, aside from the cost of the check and postage.
• Security. Checks require a signature and are traceable. The delay in clearing also gives you time to double-check amounts before finalizing payments.
• Credit extension. A check allows for a delayed payment as the funds aren’t transferred until the check is deposited.

Cons

• Time-consuming. The process of waiting for a check to arrive, depositing it, and waiting for the funds to clear can create significant delays in finalizing a transaction.
• Costly. Checks aren’t a practical payment method for small personal transactions. They come with added costs for checkbooks and postage. And while there are no processing fees, banks may charge a fee for depositing checks or for a bounced check.
• Fraud risk. They are susceptible to fraud, including forgery and other forms of theft.

Debit cards

A debit card is a payment card designed to deduct money directly from a customer’s account in real-time. To accept these payments, businesses need a point-of-sale (POS) terminal for in-store transactions and a secure payment gateway for online transactions.

All businesses must also comply with Payment Card Industry Data Security Standards (PCI DSS) to protect cardholder data.

Pros

• Expanded customer base. Debit cards are a very common form of payment method, which means you can serve a wider range of customers.
• Lower transaction fees. Debit card transactions often have lower processing fees than credit card transactions. This helps keep your business costs down.
• Easy to keep track of. All debit transactions have a digital record. This data can also be integrated with accounting or analytics software, so you get real-time insights on consumer behavior.
• Guaranteed funds. Funds are pulled directly from the customer’s bank account so once approved, payment is guaranteed.

Cons

• Limited purchasing power. A customer’s spending is limited to their account balance. You may lose a sale if their card is declined at the point of purchase.
• Less fraud protection. Debit card providers offer less fraud protection than credit cards. This means a business could face more risk with a fraudulent transaction.
• Transaction Limits. Some debit cards have daily transaction limits. This could be an issue for businesses selling high-value items.

Credit cards

A credit card is a payment method that lets consumers make purchases using a credit line instead of their own funds. While this creates a form of debt, credit cards offer attractive perks and rewards. For consumers, responsible use of a credit card is also one of the fastest ways to build a good credit score.

This is a key reason why consumers are making more credit card transactions than ever before, with the average U.S. cardholder making hundreds of transactions per year.

Pros

• Gives consumers higher spending power. Credit cards are not limited by a customer’s bank balance, which is great for businesses with high-value items and those that encourage bulk purchases.
• Guaranteed funds. Once a credit card transaction is authorized, you’re guaranteed to receive funds from the card issuer. 
• Security & fraud protection. Credit card issuers take fraud very seriously. Many put systems in place to protect both consumers and business from such charges and the financial losses that come with them.  

Cons 

• Higher processing fees. Credit card transactions have higher processing fees than debit cards. This is because card issuers charge more to cover rewards programs and the cost of consumer fraud protection.
• Chargeback risk. A customer can dispute charges on their credit card, and the money will be instantly taken out of your business’s account. This means a loss of revenue for you. And even if you successfully contest the charge and get your money back, you’ll still be hit with a chargeback fee.
• Complex PCI compliance. The regulations for handling credit card data are complex and strict. Maintaining compliance can be difficult and costly for a small business.

Bank transfers

Bank transfers are a form of electronic payment used to send funds directly from one bank account to another. Depending on the bank and transfer system, it may take a few days or mere seconds to complete.

Some customers prefer to use this payment method because it offers a greater sense of security by not requiring them to share card details with the merchant.

To accept payment by bank transfer, businesses need a merchant bank account and a payment processor that can handle these types of transactions. This is done through an automated clearing house (ACH) for common transfers or wire transfers for larger, time-sensitive payments.

Pros

• Cost-effective. ACH transfers, the most common type of bank transfer, has low processing fees.
• Guaranteed payment. Funds from bank transfer come from a customer’s bank account, so any completed transaction is guaranteed.
• No need for special equipment. Bank transfers can be completed through a business’s online banking portal or a payment app, so there is no need for a POS terminal or other in-store hardware.
• Ideal for large transactions. Bank transfers have higher limits making them perfect for B2B and recurring payments.

Cons

• Slower processing time. Although consumers see payments made automatically, for businesses, it takes days for a single transfer to clear.
• Refunds are tricky. Since data input is done manually, if consumers make mistakes when processing a transaction, it takes time for banks to verify the information and reverse the transaction.
• Payment verification can be challenging. If not automated, a business must manually match incoming bank transfers to customer invoices.

Digital/mobile wallets (PayPal, Apple Pay, Google Pay)

Digital wallets (like Apple Pay, Google Pay, and PayPal) represent a new payment method that securely stores a customer’s card or bank information on a mobile device.

These payments are considered one of the fastest and most secure options available. They’re protected by features like two-factor authentication (2FA), SMS/email, and biometrics verification.

With the rise of subscription platforms, digital wallets have become one of the most chosen payment methods. In fact, there were over 4.3 billion global digital wallet users recorded in 2024.

Pros

• Faster checkout. With near-field communication (NFC) technology, digital wallets make it possible to make payments at the tap of a button or swipe of a phone.
• Enhanced security. Digital wallets make use of both mobile security features and tokenization to keep payment info away from prying eyes. So long as consumers use a strong password and 2FA, they’ll have a secure checkout experience.
• Wider customer base. Accepting this payment method allows you to cater to a large and growing segment of tech-savvy consumers.
• Simplified accounting. Transactions are automatically recorded and can be easily integrated with accounting software.

Cons

• Hardware requirements. To accept in-store payments, businesses need a POS terminal with NFC technology.
• Customer trust. Not all customers are familiar with or trust digital wallets, which can lead to confusion and potential lost sales.
• Technological dependence. A dead phone battery, a technical glitch, or a network outage can interrupt a transaction.
• Integration challenges. Setting up and integrating a new system can be complex and may require technical support.

Cryptocurrency (Bitcoin, Ethereum, etc.)

Cryptocurrency is a digital currency that operates within its own decentralized ecosystem. No authority controls it, and as such, it has no direct equivalent to physical currency.

While it resides in a secure digital ledger and is becoming more accepted by banks and governments, many establishments still do not accept it as a form of payment due to its volatile and complex nature.

Pros

• Autonomy. With cryptocurrency, consumers have full control of their assets.
• Security. Transactions are secured with cryptography which creates a tamper-proof digital record and prevents counterfeiting.
• Accessibility. Cryptocurrency provides an alternative to traditional banking. It offers accessibility to anyone with an internet connection, regardless of their financial history or official documents.

Cons

• Volatility. The value of cryptocurrency can fluctuate dramatically. This makes it a high-risk investment and an unstable payment method.
• Lack of regulation. The decentralized nature means there are no legal protections for users. If your funds are lost or stolen, there may be no recourse.
• Limited acceptance. Despite it being considered a valid payment method and its rising popularity, cryptocurrency is still not a widely accepted form of payment for most everyday purchases.

Cash-based vouchers

These are your gift certificates, discounts, and vouchers. They can be purchased online or in-store as a form of payment for specific items. This is not a full mode of payment, however, this is a good alternative for those who prefer to purchase subscription services online via cash.

Pros

• Boosts cash flow. Businesses receive immediate revenue when a gift certificate is purchased, but the product or service is redeemed later.
• Attracts new customers. Gift certificates and vouchers introduce new customers to the business and can be used as a marketing tool.
• Increases sales. Customers often spend more than the value of the certificate, leading to additional purchases.

Cons

• Tracking and accounting. Until a voucher is used, the transaction is considered incomplete. If it remains unclaimed, you may need to turn the equivalent amount in to the state.
• Risk of brand dilution. Overusing discounts can devalue a brand or its products in the long run.
• Potential for fraud and legal challenges. Businesses must have systems to prevent fraudulent use of vouchers and comply with state and federal regulations regarding expiration dates and fees.

Buy now, pay later (BNPL)

Buy now, pay later is a payment method that lets consumers purchase products and make payments in installments. While some BNPL plans are advertised as interest-free, others charge interest.

Merchants often partner with BNPL providers so they can receive the full payment upfront, without having to manage customer installment plans or worry about non-payment. However, BNPL providers do charge the merchant a transaction fee, which typically ranges from 1.5% to 7% of a customer’s total purchase, often with a small, fixed fee per transaction as well.

Pros

• Increases sales. Offering BNPL can lead to higher conversion rates and a larger average order value, as it makes larger purchases more affordable for customers.
• Attracts a new customer base. BNPL attracts consumers who may not have a credit card or who prefer not to use one.
• Reduced risk. The BNPL provider handles the credit risk and potential fraud, so you, as the business owner, receive your full payment upfront from the BNPL provider.

Cons

• Merchant fees. You have to pay a fee to the BNPL provider for each transaction. So, while it’s great for attracting new customers, you’ll have to factor this into your overall business costs.
• Complexity. Integrating with a BNPL service requires technical work and adds a layer of complexity to your checkout process. 
• Impact on customer perception. Offering BNPL option can change how customers see your brand. Some customers might not trust a payment method they feel encourages debt. Also, if something goes wrong, customers might get frustrated and blame your business, which could hurt their perception of your business.

Quick-response (QR) codes

QR codes are a payment method that allows customers to make purchases in both physical and digital spaces without directly interacting with a staff member.

To use them, a business generates a unique QR code linked to their payment page. A customer can then scan the code with their smartphone and be directed to a secure page to complete their transaction.

Pros

• Convenience. QR codes make for fast, contactless payments. Customers simply scan the code with their smartphone and complete the transaction.
• Reduced equipment costs. Businesses don’t need to invest in expensive card readers or POS terminals. A simple printed code is all that’s required.
• Data and tracking. Each QR code transaction creates a digital trail, which helps with sales tracking and gathering valuable business data.

Cons

• Lack of universal acceptance. Not all customers are familiar with or comfortable using QR codes for payment.
• Requires a smartphone. This payment method is not an option for customers who don’t have a smartphone or who have a poor internet connection.
• Security risks. Malicious actors can tamper with QR codes to redirect customers to fraudulent sites, a practice known as QR code phishing.
• Potential for user error. Customers may have trouble scanning the code, which can lead to delays or frustration at checkout.  

How to choose the right payment method for your business

Your payment methods are the last step customers go through to complete a transaction. For a smooth experience, the key is to choose methods that align with your business model, customer preferences, and financial goals.

Here are a few things to consider.

• Customer preferences. Convenience, security, and trustworthiness are common in preferred payment methods like bank transfers, digital wallets, debit and credit cards. This is why customers regularly look for and use these methods.
• Geographic considerations. While the goal is to offer the most used payment methods, it’s important to take regional payment methods into account when dealing with a global customer base. For example, in Germany, direct bank transfers are preferred, while in Asia-Pacific, digital wallets and QR codes are the top choice.
• Security and compliance. These should be top considerations when selecting payment methods. Compliance with regulations like the PCI DSS standards protect your business and customers’ sensitive information. Choose payment methods that offer strong customer authentication (SCA), encryption, and multi-factor authentication (MFA)
• Costs. Every payment method has a cost, which goes beyond just the transaction fee. You need to consider all the fees you’ll pay, including monthly/annual fees, transaction percentages, and any equipment costs. If you run an eCommerce site, you won’t have to worry about equipment costs, however, you’ll need to invest in added cybersecurity measures to protect customer’s payment info.
• Administrative effort. Consider how much work is required to manage each payment method. The right payment solution should save you time, not create more work.

Pro tip: While having multiple payment methods is important, it’s best to choose wisely. Too many options can confuse customers and make them lose trust in your business.  

Simplify your payment methods

You’ve now got the knowledge to choose the right payment methods. All that’s left is to select what works best for you and your business at this moment.

If you’re just getting started on your online site, stick with us. Network Solutions’ eCommerce web designs  come with payment method integration so you can focus on what’s most important—growing your business.

Frequently asked questions