Small Business

How To Start A Digital Payment Company

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 17 minute read

It is more important than ever for companies to accept digital payments. It’s only a matter of figuring out which strategy is ideal for your business.

Due to a lack of knowledge about the process, the participants, and what is involved, several small businesses wind up spending much too much for a processing agreement. We’re here to make sure that doesn’t happen by giving you all you need to know to make a profitable choice regarding this crucial aspect of your company’s finances.

What Are Digital Payments?

Everything other than a physical check or cash in the register is considered a digital payment. They signify the transfer of money from the customer’s account to your own. 

Historically, purchases made with a credit card weren’t conducted digitally. Then EMV chip cards were introduced, and POS terminals enabled digital credit and debit cards.

Digital payment processors require your bank details in order to facilitate payments made to and from your account. The processor takes the customer’s banking details during a transaction and negotiates the transfer of funds with both your bank and theirs.

All of the dealings, encryption, and permissions are done automatically and undetectably to you. Your account balance simply adjusts when transactions are processed. Several significant benefits can be gained from accepting digital payments:

  • Payments are deposited into your account more quickly than with a cheque or cash.
  • Most 21st-century consumers prefer digital payment methods due to their greater convenience.
  • You may be certain that your customers’ digital payments are safe from any would-be shoplifters.
  • To help you better manage your money, several online payment gateways provide detailed, real-time reporting on your transactions.
  • If you set up your digital payment system correctly, it might lead to more stable cash flow for your organization.

In addition, studies have shown that cash-only stores lose revenue to competitors that do take digital payments. According to a 2018 Pew poll, 29% of all persons in the United States and 41% of high-earning adults do not carry cash and do not use it to make any transactions at all in a normal week.

Different Types of Digital Payment

There are numerous vendors that can assist you in accepting digital payments, and there are a variety of ways to do it. However, there are only two ways that money may really be sent when dealing with digital transactions.


Debit and credit cards don’t need an introduction because they have been the conventional method of making online purchases and digital payments since before the turn of the century.

To begin accepting credit cards, your company will need to enroll in a credit card processing portal that facilitates safe, real-time communication between your bank and the issuing bank.
Customers would appreciate the added ease of card payments if you accept them. The payer very definitely has access to a number of different debit and credit card alternatives at any one moment.

The most appealing aspect of this deal is how quickly it would boost your company’s cash flow. Clearing of funds often takes no more than two business days.

Accepting cards for digital transactions comes with a hefty price tag and an increased risk of fraud. Sometimes fees are not transparent and may be rather aggressive. You, the seller, are more likely to bear the consequences of a contested charge than the bank or the consumer.

eChecks (ACH)

Electronic checks, also known as ACH Transactions, may be familiar to you. Financial institutions in the United States can communicate with one another electronically using a system called the Automated Clearing House, or ACH. A similar system, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network, is used for international eChecks.

Both networks operate in the same way: the buyer signs a contract allowing a one-time or recurrent transfer of cash, and the network subsequently executes the transfer.

While it takes more time and effort to set up an eCheck than a card transaction would, the money is made accessible almost immediately. There is a general trend toward lower fees when paying with a credit card. Customer fraud liability is transferred to the client or the customer’s bank when a contract is required.

Compared to using a credit or debit card, eCheck processing is far more inconvenient for both you and the consumer. The contracts are often lengthy and require the consumer to have ready access to their banking information.

There are four types of online payment platforms.

Digital payments by card or eCheck need two-way communication between your business and the customer’s bank for permission and settlement. There are four potential outcomes.

  1. Apps for Mobile/Digital Wallets

At first, there existed PayPal, a payment processor available just online that allowed customers to buy things on the Web before the underlying infrastructure was developed. It was not a financial institution or a third-party verification and information exchange like Visa or Mastercard.

Even though Paypal’s initial release was only compatible with desktop computers, the service still represented something novel at the time.

Now, a quarter of a century later, mobile payment apps like PayPal, Zelle, Cash, and Apple Pay are all viable alternatives. These alternatives are quick, simple, and accessible whenever and wherever a client has access to a mobile device. In order to complete a transaction, both of you will need access to the same app.

  1. Pay-Enabled Invoicing

When you charge a client using a pay-enabled invoice, additional code is appended to the file. A payment form or a button that takes users to your payment processor can be generated using that code.

Not only can pay-enabled invoices save administrative costs and the environmental impact of paper invoicing, but they also provide faster payments and easier monitoring of who has paid and who hasn’t. These make it simple for your client to pay their bill, and they also streamline the process for you by handling things like reminders, late fines, and other administrative details.

  1. Manual Card Entry

Recall the last time you used the phone to make a purchase and provided your financial details to the service person. The agent was keying in card numbers manually. When you make an online purchase via a website’s built-in payment portal, you enter your credit card information manually.

Customers need just have access to a credit or debit card to use this method, which offers the benefit of convenience. However, as it’s the most vulnerable to fraud, it’s important to take precautions like leaving a thorough paper trail, checking billing and shipping details twice, requesting identification where appropriate, and working with a payment processor that provides fraud protection.

  1. Card Readers

There was a time when credit card transactions required a physical machine called a “card reader” to make a carbon copy of the card. Banks received these impressions and associated transaction details in a fashion analogous to that of check deposits. Then, at some time, a POS terminal tethered to the then-nascent Internet was installed next to the register.

The ability to accept payments through card swipe, chip, or tap is now built into nearly every modern smartphone and tablet via a plug-in or Bluetooth reader. With this extra portability, you may conduct transactions while traveling to and from a trade fair or client site, or while generating in-house sales via the help of servers and other floor staff.

Important Digital Payment Options

Some payment processing systems only support one of the aforementioned options. Some people utilize all four of them. Some provide extensive feature sets, while others specialize in providing stripped-down devices at a lower price. Here are the top 20 platforms now available, one of which is bound to suit your business’ requirements.

  • Payable invoicing, manual input, and card readers are among the services provided.
  • Price: 10 cents per transaction plus a 10-cent daily batch charge and $25 per month (if you have your own merchant account), or 2.9% + 30 cents per transaction and $25 per month (if you don’t have your own merchant account) (if you use merchant services)
  • Pros: Very adaptable, can be tailored to practically any e-commerce site, and has robust anti-fraud capabilities.
  • Cons: No web shop support; takes some technological know-how to operate.
  • Ideal for: Companies who already have an online store.
  • Worst For: Companies who already have merchant services, as the extra transaction fees aren’t worth the convenience.
  1. Chase Payment Solutions
  • App payment, manual entry, and card reader are the categories available.
  • Price: 2.6% + 10 cents each transaction, with volume reductions possible.
  • Advantages: Can negotiate large volume discounts; provides preferred access to Chase and JP Morgan Chase financial services, including loans
  • Cons: Navigating customer service at a bank of this scale takes “a specific set of abilities.”
  • Best For: Large and enterprise-level enterprises with several locations, as well as those who require consistent, dependable transaction handling.
  • Worst for: Low-volume businesses, particularly those with no prior connections to Chase or JP Morgan Chase.

The major banks were the first to use point-of-sale (POS) terminals for digital payment processing. As a result of their near monopoly, several of those banks fell behind.

In order to compete with app- and web-based digital payment processors, Chase has developed a service called Chase Payment Solutions (previously known as Chase Merchant Services and Chase Paymentech). It provides the expected services with little to no innovation.

  1. Amazon Pay (Checkout By Amazon/Amazon Payments)
  • Offered Types: Data Entry by Hand
  • For a monthly sales volume of $3,000 or more, you’ll pay 2.9% + 30 cents each transaction.
  • Benefits: Your digital payment acceptance will at once be as adaptable as’s, including the option for consumers to use their Amazon credit cards.
  • Negatives: It cannot be integrated with other e-commerce platforms, and the code is not very versatile.
  • Ideal For: Businesses That Want Amazon’s Reach With Their Own Website
  • Bad for: Businesses who already have merchant services with a different company

For companies looking to accept digital payments, Amazon has two options: Checkout By Amazon and Amazon Payments. After creating an account with Amazon, you can easily add a “Buy Now” button to your own website by simply pasting some code.

A consumer may finish their purchase on by clicking the button. In addition to any other sales, affiliate commissions, or other business proceeds that Amazon may owe you, they will pay you here.

  1. Amazon Pay (Login and Pay)
  • Offered Types: Data Entry by Hand
  • For a monthly sales volume of $3,000 or more, you’ll pay 2.9% + 30 cents each transaction.
  • Advantages: It’s adaptable like Amazon, but it keeps clients on your own site.
  • As opposed to hosting one’s own payment alternatives, this method adds extra procedures and inconvenience.
  • Best for: Businesses who don’t want to (or can’t) set up their own merchant services, or those that do most of their sales through
  • Companies who already use merchant services would suffer the most, as this will add yet another service at a higher cost.

The second method that Amazon offers for accepting digital payments has ready-made HTML code that can be pasted directly into your online shop.

The payee never leaves your site throughout this process, and Amazon provides you with contact information (name, email, and physical address). This allows you to not only accept payments, but also to set up future direct marketing efforts to these clients.

  1. Dharma
  • Card Readers and Mobile Payment Apps
  • The cost is 0.15% + 7 cents every purchase plus $20 per month.
  • With a wide selection of corporate financial services, and one of the lowest prices on this list, it’s a strong contender.
  • Limitations in service offerings in comparison to competing services.
  • Best for: Companies of all sizes that need to keep expenses as low as possible
  • Companies with complicated operations or high enough volume to receive discounted pricing from a larger service provider should look elsewhere.

Dharma is a one-stop-shop for merchant services and digital processing designed specifically for micro- and small-sized enterprises.

Dharma accepts a wide variety of transactions and provides low- to medium-interest lines of credit that are repaid by a percentage of daily sales. It caters to a wide variety of customers by providing them with a number of different entry points to its services, as well as user-friendly systems and tools for retail, e-commerce, dining, and business-to-business (B2B) settings.

  1. Dwolla
  • App Payment, having an email feature that functions similarly to pay-enabled, is one of the offered categories.
  • Free for transactions under $10; 25 cents per transaction for larger amounts.
  • Pros: minimal costs and the possibility to pay by email
  • Only provides a single payment method.
  • Best For: Businesses with recurring invoices and basic email payment needs
  • Worst For: Businesses whose primary sales method is credit or debit cards

Money transfers by email are easy and inexpensive in most other affluent nations. Dwolla aims to be similar in the US, and it does a decent job. Just like Cash or PayPal, it enables in-app purchases and transfers funds via email.

  1. Fattmerchant
  • Payment through app and manual input are also options.
  • Subscription prices start at $99 per month, with transaction fees as low as 8 cents.
  • Pros: Low prices and clear billing.
  • Downside: Limited assistance beyond basic financial transactions
  • Most useful for: Local companies
  • Worst for: Companies of a sufficient size to take advantage of bulk pricing reductions without incurring an additional monthly charge.

It was just a matter of time until someone thought to do the same with payment systems, given the widespread use of subscription models across industries, from productivity software to cupcake delivery. Someone like Fattmerchant fits that description.

They provide both in-person and online payment gateways, with mobile-friendly alternatives, and they don’t add any fees to the cost of merchant services. When compared to other possibilities, this one has the potential to save your transaction expenses by as much as 40 percent.

  1. Google Pay
  • App payments, pay-enabled invoices, and card reader compatibility are all on the menu.
  • Cost: Widely varying, maybe up to 4%
  • Pros: Easy-to-use design, solid compatibility with other Google services.
  • Cons: Generally buggy on non-Android devices; designed mostly for individual usage.
  • Most useful for: Small company owners that already make heavy use of Google products
  • Not Recommended For: Apple fans or companies who require tight connectivity between their POS and ERP systems.

Google will undoubtedly give it a shot if it sees similar success elsewhere. Google has entered the field of digital payment processing with Google Pay.

Similar to Apple Wallet, Google Pay allows you to pay using any of the accounts or cards you’ve linked to the app on your phone. It allows you to pay using your phone, usually without having to touch the other person, however as was indicated above, this doesn’t always work if somebody is using an iPhone.

  1. Intuit Quickbooks Payments
  • App payment, pay-enabled invoicing, manual input, and card reader are the available categories.
  • 2.9% + 25 cents per transaction for online invoicing or card reader, 1% for ACH, and 3.4% plus 25 cents per transaction for a keyed-in credit card; moreover, a monthly flat rate that lowers these costs is available.
  • Pros: Significantly simplifies bookkeeping by connecting instantly with your Quickbooks program.
  • Synchronization only works if you use Quickbooks; if you don’t, it doesn’t assist with your bookkeeping.
  • Best For: Businesses currently utilizing Quickbooks for other facets of their operations or exploring the switch.
  • Companies that do not utilize Quickbooks.

The accountancy juggernaut Intuit offers an add-on called Intuit Quickbooks Payments, which allows you to take credit card payments using either an e-commerce gateway or a credit card reader attached to your smartphone.

Using their phone and web-based payment service is only possible with online store providers on their approved partners list; nevertheless, this list is extensive, so most businesses may connect. This is competitive and handy because of how well it syncs with the rest of the Quickbooks suite.

  1. Payline Data
  • Available Options Include Both Manual Key Entry and Card Reader
  • The cost ranges from 2.05% to 2.25% each purchase, with a monthly charge that starts at $0 and goes up to $19.99.
  • Pros: Possibility of seamless interaction with current POS systems
  • Cons: You have to pay a specific amount every month regardless of whether or not your sales warrant it; you need to invest in equipment; and they overcharge for American Express transactions to the point where they effectively price themselves out of the market.
  • Who It’s Best For: Stores That Want More Accuracy And Versatility When Processing Transactions
  • Worst for: Online Shopping

Payline Data is an affordable, stripped-down credit card processing platform that guarantees price transparency. The system is optimized for in-store retail sales and provides web-based transaction terminals that can be accessed from any device with an internet connection, including smartphones, tablets, and laptops.

  1. Payment Cloud
  • Available Options Include Both Manual Key Entry and Card Reader
  • Prices range from 3% to 6% of the total sale, plus 10 cents per day for batch processing, 30 cents per transaction for online purchases, and a variable monthly membership fee.
  • The benefits include compatibility with suppliers that some other processors may not be able to handle.
  • Negative: Eligible applicants have access to better choices elsewhere.
  • High-risk sellers in sectors with a history of high chargeback and return rates
  • The worst case scenario: everyone

Payment Cloud is unique among digital payment providers in that it accepts business from high-risk businesses that other processors turn down.

Many payment processors either refuse to work with or charge a premium to firms dealing in industries with a higher-than-average return and chargeback frequency, such as those dealing in digital downloads, guns, credit repair, adult enterprises, CBD products, and sports betting. This may be your best bet if you run a high-risk business.

  1. Payment Depot
  • App payments, pay-enabled invoices, and card readers are all options.
  • Costs for each transfer are included in the price at all levels, which range from $79 per month plus 15 cents to $199 per month plus 7 cents. Typically, transaction fees account for 1% to 2% of the total amount being transferred.
  • Pros: Competitive pricing for bulk orders, adaptable payment options suitable for a wide range of enterprises.
  • The monthly cost is too much for most small firms.
  • Ideal for companies with a monthly digital sales volume of $60,000 or more
  • Worst Affected: Companies with Monthly Digital Sales Volume of Less Than $50,000

Each client is assigned a personal account manager at Payment Depot, who helps them set up payment processing for both online and in-store purchases.

They have a price structure with many tiers, with the higher tiers providing access to more services at lower per-transaction costs, and they publish general recommendations for how to determine which tier is best for a certain firm.

  1. PayPal
  • App payments, pay-enabled invoices, and card readers are all options.
  • Discounts are offered for high volume purchases and the use of their proprietary card reader, which brings the total to 2.9% + 30 cents per transaction.
  • Pros: Provides the quickest response times in the industry, is the most well-known processor, and has a user-friendly interface and setup for corporate accounts.
  • Drawback: It’s more difficult for customers who don’t have a PayPal account to make a payment to you.
  • Best suited for new, modestly sized companies because of how easily it can be implemented
  • Worst For: Large and medium-sized enterprises, which would be better off with a simpler, cheaper alternative.

When it comes to online payment processing, PayPal is practically mandatory.
Since its beginnings, it has expanded to include a variety of uses, such as invoicing and accepting payments from customers directly, as well as e-commerce and payment buttons for use on invoices and websites. You can get a business debit card and a line of credit attached to your account, giving you more options for how you spend money.

  1. Paystand
  • App payments, pay-enabled invoices, keyed in payments, and card readers are all available.
  • Pricing begins at $499/month and scales up to more expensive options for more extensive deployments or enterprises.
  • Flat-rate pricing offers stability and cost management.
  • Cons: Its B2B concentration precludes its use with some company models.
  • Best For: Businesses Who Process a Lot of Transactions Monthly and Want to Lower Their Payment Processing Fees Per Transaction
  • Companies with monthly digital payment processing expenses of less than $500

Paystand is yet another company offering merchant services for a set monthly fee. They provide the same functionality for all major credit cards, debit cards, eChecks, and digital currencies. They charge one flat cost regardless of the number of transactions you do. Currently, they are geared toward business-to-business sales, but with the correct approach, they might also be useful to retailers targeting consumers.

  1. Shopify
  • We Have the Following Options for Making a Purchase: (1) Through the App (2) Through Manual Entry (3) Through a Card Reader
  • Pricing: The base plan starts at 2.9% plus 30 cents per transaction and a $29 monthly service cost; higher levels that incorporate more services have a higher monthly price and a slightly lower percentage for each transaction.
  • Pros: Collaboration between sales and supply chain administration
  • As a result of the recurring monthly service charge, the price is increased.
  • Who It’s For: Startups and small enterprises who desire streamlined marketing and sales
  • Companies that can afford in-house or outside marketing help will suffer the most.

Shopify is more of a business assistance company that happens to accept digital payments than it is a payment processing provider.

It provides a centralized hub through which many resources, such as email marketing, mobile device access and optimization, inventory management, SEO assistance, and more, may be accessed and utilized by your company.

  1. Shopkeep by Lightspeed
  • Categories Provided: mobile payment and card reader
  • Price: 0.2% + 10 cents per transaction, plus merchant services fees
  • Pros: Has a simple UI and an offline transaction mode, allowing you to do business even when the Internet is unavailable.
  • Cons: Excellent at what it does, but not much else.
  • Small firms, especially those whose owners are new to commercial banking.
  • Worst For: Large and medium-sized enterprises, which may easily outgrow it.

Lightspeed is a more intimate startup that is only focused on its iPad-based point-of-sale program for local establishments.

Although they lack the easy connections and marketing support provided by competitors, they make up for it with some of the greatest customer care in a field notorious for its isolation.

  1. Square
  • Pay-enabled invoicing, manual input, card reader; Square’s subsidiary (Cash) provides an app payment alternative.
  • The cost is 2.75% on each transaction.
  • Pros: A huge corporation with great support and widespread availability; effortlessly works with banks, cards, and payment applications; extremely customisable
  • Cons: Poor integration with in-house sales, despite the fact that they provide a premium service that includes an on-site cash register.
  • Ideal for: Online enterprises with a large inventory.
  • Worst for: Companies with few e-commerce sales.

Compared to PayPal’s Coke, which is the standard for online payment processing, Square’s free online shop is like a refreshing Pepsi. This feature may stand on its own within Square’s infrastructure or be integrated into your company’s website.

  1. Stripe
  • Offered Categories: Payable Invoicing, Manual Entry, and Card Reader
  • Price: 2.9% + 30 cents per transaction
  • Pros: Seamless connection with your online assets and streamlined consumer checkout
  • Cons: Not always intuitive for non-technical users.
  • Best For: Businesses with an established online store and solid branding
  • Worst For: Any company that lacks a current web commerce presence

For companies who already have an online store setup, Stripe offers checkout and processing services.

There is no redirection to one of their own assets, and that is one of the declared design goals. Stripe gives you the ability to create payment forms that can be embedded anywhere on your website and used only by your customers.

  1. SumUp
  • Provides Card Reader Functionality
  • All transactions are subject to a 2.75 percent charge.
  • It’s compatible with the vast majority of POS and cash register programs and has a user-friendly interface to boot.
  • Cons: Doesn’t do anything else, and there’s no way to pay for it online.
  • Optimal for Small Businesses and Companies that rely heavily on Foot Traffic
  • Online stores, stores with complicated product lines, and those with permanent cash registers on the premises are the ones that would suffer the most.

There is no need for something fancy or laborious all the time. SumUp provides a card reader that syncs with your phone and costs you per transaction if you already have merchant processing set up but need to be able to accept payments in a more mobile setting. They specialize in that one thing and excel at it.

  1. WePay
  • Categories Available: App payments and manual entry
  • Variable and negotiated pricing
  • Manages compliance and payment information for a highly specialized, complicated company type.
  • Cons: Does not accept PayPal and is unsuitable for the majority of company concepts.
  • Most beneficial for: event management, accountancy, and fundraising firms
  • Worst for: the majority of enterprises

WePay is yet another specialized solution that markets itself to businesses that process payments to and from various customers.

WePay is a good fit for businesses like GoFundMe, the crowdfunding industry titan. Instead of dealing with regular mom-and-pop shops, they assist merchants in creating their own payment processing infrastructure.

Bottom Line

Different companies have various requirements. Everyone who runs a small company has the same challenges. You need to take digital payments if you want to participate in the post-COVID world, but there is no universally correct answer to any other issue you would have about doing so.

Not all digital payment platforms are created equal, so have no fear. There are many alternatives available, so you should be able to find one that works for you.

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