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There are a number of ways customers could pay for goods in your retail business. They include:

• Cash - cash is the most basic payment and usually used for very low-value transactions.
• Debit or credit card - offering card payments is convenient for customers and they will expect to be able to pay this way. You will need to have equipment and systems in place to take card payments.
• Mobile payments - mobile and smartphone payments have greatly increased over the last few years and include Google Pay, PayPal and Apple Pay.
• Cheques - Cheques are being used much less frequently in retail due to card payment technology.
• Bank transfer - direct bank transfers (also known as electronic funds transfers) such as Bacs, Faster Payments and CHAPS can be used for retail transactions over the phone or online. They are less secure than card payments and are used much less frequently.

Other potential forms of payment include gift cards, pre-paid cards, traveller cheques (not as common as they used to be), loyalty points and vouchers.

Offering credit

Some retail businesses choose to offer credit to their customers. This allows customers to purchase goods and pay for them at a later date. This may take the form of:

• store credit cards
• hire purchase and other kinds of leasing
• shopping accounts (buy now, pay off later in instalments)

If you do decide to offer consumer credit, there are a number of rules you must follow. You must provide certain information about credit agreements and carry out credit checks.

Choose the right payment options

When deciding which types of payment your business will accept, you should strike a balance between:

• what is convenient for your customers
• what is cost effective and manageable for your business

For example, if you run a market stall, you may choose to accept cash only. If you sell high-value items such as white goods or computer equipment, you might choose to offer some form of credit.

Cash isn't as popular as it used to be and is most frequently used for low-value purchases. Accepting cash payments is relatively simple and cheap to set up.

It is important to have cash handling procedures in place for security, record-keeping and cashflow management.

Basics of cash handling

To accept cash in your business, you will need to have a till with a 'float'. This is a certain amount of cash that you begin with so you can give customers change. Most businesses also have an electronic system for recording sales throughout the day. You should be able to issue receipts to customers.

At the end of the day or shift, the till should be 'cashed up'. This involves counting the cash from the till and recording it. The amount of money taken should be compared to the sales recorded. Human error can lead to discrepancies (eg wrong change given). 

It's important that your staff are trained in secure, accurate cash handling.

Managing cash securely

There are certain steps you can take to reduce the risk of cash related crime in your business. Consider these best practice steps:

• keep cash in a secure till or cash box
• avoid keeping excess cash (particularly high value notes) in the till, move it to a safe
• check for stained or counterfeit notes
• avoid counting cash in front of customers
• remove cash from tills overnight
• make regular bank deposits and ensure the cash is secure in transit

See business security: cash.

Recording cash sales

It's important to keep a record of cash sales for tax reasons and in order to manage your cashflow.

You are required by law to keep certain financial records, including a cash sales book. This a central record of your business cashflow. For more information, including templates and examples, see cash sales and purchases/expenses books.

It's advisable to keep petty cash separate from money in the till. You should pay staff directly into their bank account rather than from the till.

You should consider using a point-of-sale system to help you record your cash sales. 

Accepting card payments offers your customers a convenient way to pay you for goods. Cards are one of the most common forms of payment in retail, particularly for higher value purchases.

Customers increasingly expect to be able to pay with card. You will need certain equipment and systems in place to accept card payments. See advantages and disadvantages of accepting payment cards for sales.

How to accept card payment

To start accepting card payments, you will need:

• a merchant account with an acquiring bank, see setting up a merchant account for your business
• a connected terminal, usually a chip & PIN/contactless card machine â€“ includes countertop card machines, mobile card machines, portable card machines and virtual payment systems for online or over the phone purchases

See accepting card payments for goods or services and how payment card processing works.

The process will be different depending on whether the card is present for the transaction, ie in-store transactions vs online or phone orders. 

There are certain costs and charges relating to accepting card payments. See the costs of accepting card payments.

Card types

There are various types of cards that can be used for payments. The two main kinds are:

• Credit card: this allows customers to purchase goods on credit from their issuer. You will be charged for processing these as a percentage of the transaction.
• Debit card: this allows the customer to take money directly from their bank account. The processing fee you incur will usually be a flat rate per transaction.

You should consider whether you will be able to accept foreign issued cards, which may not use chip & PIN. Other less common payment card types include:

• corporate cards
• gift cards
• prepaid cards
• purchasing cards
• store cards

See types of payment cards available.

Point-of-sale (PoS) systems is the hardware and software used by retail businesses to automate transactions and record sales. They will typically include the following:

• computer
• PoS software
• barcode scanner
• touch screen display
• customer display
• receipt printer
• card reader/terminal

Benefits of using a PoS system

Some of the advantages of using a PoS system include:

• security
• easily adjust your prices at source rather than updating individual price tags
• record sales information - this is important for tax reasons, cashflow management and sales analysis
• automatically update your stock information - helpful for inventory tracking and management
• calculate total transaction costs and change
• speed up transactions by scanning barcodes instead of inputting information manually
• customer relationship management - you can highlight offers to customers based on a record of their buying preferences

Many PoS software packages include reporting features that can help you analyse and improve your business.

Choose the right PoS for your business

Individual PoS systems will offer varied features, so you should consider your business needs. There are off-the-shelf solutions available for different business types and industries. Weigh up the costs of the system versus the benefits it will bring.

Some things to consider are:

• What features does your business need? For example, a restaurant might require a mobile order and payment processing system, so that they can manage orders and financial transactions at tables. Other PoS features could include; card processing, barcode scanning, sales analysis reports, enhanced security, mobile payment processing.
• Will your business needs change in the future? Consider if the system will continue to meet your requirements as your business grows.
• How much will the system cost? Think about both the upfront costs and what you pay on an ongoing basis for software licences, 91Ï㽶»ÆÉ«ÊÓƵ and maintenance.
• Is it easy to use? Will your staff require training?
• Will the system integrate with existing technology and software in your business?

If your business sells products online, you will need to consider how to take payments. There are a number of options for this including:

• Internet merchant account - when your business already accepts card payments, you can arrange to take payments online with your acquiring bank. See set up an internet merchant account.
• Payment processing company - this is a more expensive option, however you don't need to have a merchant account and anyone can use it. See advantages and disadvantages of using a payment-processing company.
• Online marketplace - if you don't have your own website, you could sell through an online marketplace, such as Etsy, eBay or Amazon. See selling through online marketplaces.

For more information, see accepting online payments.

Choose the right online payment option

When you are deciding how to accept online payments, consider the following:

• Security: Does the solution offer security features such as encryption? Consumers will look out for the Secure Socket Layer padlock symbol for peace of mind when shopping online.
• Ease of use: Is the process quick and simple? Can your customers save their details for future orders?
• Integration: Can the payment software integrate with your other business systems?
• Cost: What will it cost for initial set up and ongoing transaction fees, 91Ï㽶»ÆÉ«ÊÓƵ and maintenance?
• Time: How long will it take for your business to receive the payment?