Payment security has been a major concern for business owners and buyers over the last decade. With hackers and scammers on the rise, businesses seek ways to protect their transactions and ensure they receive payments securely. Some companies go further by employing robust security systems to collect accounts receivable (AR), but hackers are also becoming more sophisticated with new technology. Identity theft, forged invoices, and deceptive payment links are common issues in the B2B payments landscape, impacting profitability and business reputation. However, the benefits of digital payment methods cannot be ignored, as avoiding those would put businesses at a disadvantage. It’s essential to accept online payments to stay competitive while also ensuring payment protection. In this blog, we will discuss the significance of electronic payment methods and explore the safest and riskiest options, helping you determine which methods to choose for your transactions.
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The Importance of Online Payment Methods
With technology taking over different business processes, financial management is one of those arenas that have experienced significant transformation over the last few years. Relying on Excel spreadsheets and data silos is not efficient when it comes to data transfer, tracking, invoicing, and recordkeeping. Creating invoices manually, and posting collections to match the invoices consumes a significant portion of the finance teams. These manual processes are also prone to human error, causing inefficiencies and data inconsistencies.
Employing payment portals or integrating payment gateways can help businesses enjoy faster payment transfers, unlock their cash flow, streamline reconciliation, and save their finance teams from manual data entry. Businesses can implement an accounts receivable automation system or employ an intelligent invoicing solution to experience faster payment processing, ensuring efficiency. These systems also have robust security protocols to ensure the safety of financial transactions. Even the communication and financial transactions are encrypted so this reduces the risk of hacking. Merchant and customer payment portals offered by AR systems also restrict unauthorized access.
A Guide to the Safest and Riskiest Payment Methods
1. E-Wallets and Digital Apps
Risk Level: Medium
Security Level: Medium
Apple Pay, Google Pay, PayPal, Venmo, and many other apps and digital wallets can be used for international payments and faster processing. However, the security and reliability of those payment methods are dependent on the user. These e-wallets may be vulnerable as cyber criminals may target users with spoofing by impersonating legitimate organizations to get paid for the service.
Even if you choose to use any of the digital wallets. Keep in mind that you must confirm the information before proceeding with transfers. Secondly, you need to check whether you received this mail in your spam folder or your inbox. If you received it in the spam folder, you must ensure whether it was false-flagged before making a transaction.
2. ACH Payments
Risk Level: Low
Security Level: High
Referred to as Automated Clearing House (ACH), this payment method is among the safest, offering high-level security. Electronic transactions processed through ACH are governed by the National Automated Clearing House Association (NACHA) in the U.S., making them a secure option. This is why many businesses in the U.S. accept ACH payments from local customers—because it is quick, safe, and reliable.
Apart from reliability, ACH payments allow businesses to initiate recurring payment methods, saving them from invoicing customers each time for payment. Rather receipt is sent after payment is collected from the customer’s account. Another benefit of this payment method is that in the event of a transaction error or fraud, there is a higher chance of payment recovery compared to other payment forms. However, ACH is not entirely exempt from fraud, as the process involves handling sensitive information, which in some cases, may lead to fraudulent transactions for malicious purposes.
3. Payment Cards
Risk Level: Low
Security Level: Medium
While payment cards can be considered as secure payment methods, especially when used on point of sales (POS) to make a transaction; the risk increases when used for contactless payments. Using a credit or debit card online needs specialized payment terminals to handle their security process. Another drawback of credit cards is that transactions are processed with higher fees than direct debit which is referred to interchange fees paid to the card issuing company.
4. Wire Transfers
Risk Level: Medium
Security Level: Medium
Wire transfers are a common payment method for business transactions because it has a faster processing speed. The transaction volume capacity of wire transfers is also higher than many other payment methods which also makes it an attractive target for cyber criminals. Considering the fast transfers and immediate payment settlement, cancellations and refunds cannot be processed with wire transfers. Since wire transfers cannot be reversed, it would be very difficult to acquire the funds for payers if they have transferred to the fraudster’s bank account.
Key Takeaways
International payment collections are crucial in today’s B2B business landscape because it would limit their profitability to expand into the untapped business market. While it is crucial to get paid online, it also comes with its risks. This blog featured the safest and riskiest payment methods that businesses can consider to get paid. The discussion revealed that the ACH payment method is the fastest and most secure method where card payments can also be used for payment while ensuring security.
