How to Accept Payments: Breaking Down Payment Processors

Today we're gonna talk about payment processors and how you should be accepting payments from your clients and customers. We're going to be talking about the ones that I've seen the most as a bookkeeper (I've been in a lot of different payment processors). I've seen how they work with your banks and different accounting softwares. I have been on the client side of things to where whenever I go to pay for a service or a product, I get to experience what it's like.  And then obviously as a business owner in the online space, I want things to be pretty simple and easy for me, for my bookkeeping and accounting, reporting, and everything like that.

The Goal when choosing a Payment Processor

So to start out, our goal whenever choosing a payment processor is to make it simple for you, to make it simple for your client, and to make it simple for bookkeeping.  Because we wanna be able to pull accurate reports. We want to get insight and data there. We want your client to be able to go through a good client journey. And of course, we want you to be able to quickly and easily send out invoices, workflows, things like that. 

Quick note I want to touch on before we get into the different ways of accepting payments, is the mindset of avoiding processing fees. So a lot of times when people are just starting out their business, they are skeptical of, and do not want to have, processing fees. And while I see that and understand that, that mindset is not one of an established business. Processing fees are there for a reason. They make your life easier. It's why we use software. We use those softwares and services to make your life easier and that's what you’re paying for. You’re paying for clients to have a good client journey. For the ability to pull data, reports and analytics, and without having that, you're not gonna have what you need to make informed decisions.

Don't let processing fees hinder you from getting a CRM or going through a legitimate way of accepting payment. For me, not having a payment processor or something official set up, lowers your professionality or credibility as a business. So let's reshape, reframe our mindset around the processing fee situation. And if it's something that really is stumping you, just raise your rates 3% because that's normally what processing fees are (if not exactly 3%, around that).

Different Ways to Accept Payments

Okay, so let's talk about the different ways to accept payment. Now, sometimes this can be integrated with your CRM, and that's what I want to talk about first. So CRMs like Dubsado and HoneyBook are your client management software. They take you through the inquiry process, your workflows, automations, things like that. Dubsado is my favorite over HoneyBook. There's been a few things that my clients have experienced with HoneyBook and their services, like their customer service, that I just am not a fan of. But they both work really well for you to manage your inquiries, leads, clients and all of your contacts and things like that. 

Dubsado is actually backed by either PayPal or Stripe. So Dubsado is your CRM, and then PayPal or Stripe actually runs the invoice and runs the credit card charge or the bank transfer charge. HoneyBook, on the other hand, has their own processor, so they run their own things. I would say from a bookkeeping standpoint, for me inside of Xero, it is easier for us to have a client in Dubsado than HoneyBook.  But like I said, they both do pretty much the same thing (I like the reporting inside of Dubsado better). For me, Dubsado wins on the business owner side of things, but I think HoneyBook can be a little bit easier to use and set up. 

Now. One thing that’s important to mention is you don't wanna have multiple different ways that people can pay you. For example, you don't want to have HoneyBook, Dubsado, Square, and PayPal all accepting payments for your business. If you accept Venmo, cash, or checks that makes things very complicated and hard for your bookkeeping and reports and for you to be able to get accurate financials. So we want to pick one way, and that way can be with or without a CRM.

For my business I’ve combined a lot of things together. Instead of using Dubsado or HoneyBook, I built my own client management, inquiry management-type situation instead of ClickUp. So I have a workspace for that. And then I linked all of that together with Kajabi. Once they get a proposal and everything, I’ll send a checkout link through Kajabi, and their payment processor runs with either Stripe or PayPal. I personally have only Stripe set up for my higher ticket services. For my digital products, I do have both because I think smaller ticket items, people are quicker to buy if they have a PayPal option. And so I recommend that to my clients and then I do that for myself.

The only thing is to make sure that you have a business only PayPal. You want to make sure that the only accounts connected to it are your checking account or your credit card, and you do not want any personal accounts connected. It makes things a little bit complicated on the bookkeeping side because PayPal is actually supposed to be treated as an extra bank account. They hold money and then you move it from PayPal to your actual checking account, which is a bank transfer. Anyway. Just make sure if you have a PayPal account and you accept payments through it, it’s only connected to your business checking account. It'll make your life easier, I promise.

Stripe vs PayPal

Again, Dubsado and Kajabi are both backed by Stripe and PayPal. HoneyBook has its own processor. Now, you can also invoice directly inside of Stripe or PayPal. So if you do not want a  CRM or use something like Kajabi, you can invoice directly there. I don't really recommend invoicing directly inside PayPal. They just don't back you up as a service provider, as a small business owner, as well as Stripe does. Stripe has a better reputation for backing up business owners whenever something might arise. So I would recommend invoicing directly inside of Stripe if you need to. Stripe then will link up with Xero. It does not link up with QuickBooks online, but it will link up with Xero and you can make things easier there on your bookkeeping side of things.  

The other option is you could accept payment directly instead of QuickBooks Online or Xero, and invoice directly there. I don't love QuickBooks online invoicing and the way that they have things set up, so I’d be careful with that if you do use it. Xero on the other hand, is actually backed by Stripe. Like I said, they just have a better reputation whenever you're running credit cards and things like that. So hopefully that helps and it wasn't too confusing. 

Those are the most common payment processors I see. I do not recommend Venmo at all. Square is one that I recommend for in-person sales. A few of my clients are salon owners, so if you own a Salon or other in-person business, Square is really great. If you are an online business or a service-based business, I wouldn’t recommend Square. Stripe is definitely the way to go. Whether you use Stripe individually on its own, or if you use a software that is run by Stripe. 

If you guys have questions about any of these, let me know. Again, a lot of these will have connections with QuickBooks or Xero which makes the bookkeeper side of things easier if you have a bookkeeper. If you don't have a bookkeeper, just pay attention really closely to the connections. I have seen multiple times where HoneyBook (and particularly if you have HoneyBook and QuickBooks online) will do a double entry and then it will show that you've made twice what you actually have. So just be very careful if you are gonna do any type of integration with your accounting software. But it is nice when they are working, so you just have to double check the connections. Let me know if you guys have any questions, and hopefully this helps!