Accept payments online easily: Fast, flexible payment options

Published Friday 16 January 2026

Table of contents

• Online payment methods for small businesses
• Benefits of accepting payments online
• How online payments work
• Costs of accepting payments online
• How do I account for the transaction fee?
• Managing online payments with accounting software
• Start accepting payments online with Xero
• FAQs on accepting payments online

Key takeaways

• Choose a payment processor that integrates with your accounting software to streamline setup and automatically record transactions, reducing manual data entry and improving cash flow visibility.
• Implement multiple payment options including credit cards (2.4-3.5% fees), ACH transfers ($0.50-$2.00 flat fees), and digital wallets to maximize customer convenience and reduce payment delays by up to 50%.
• Add "pay now" buttons to your invoices through your payment processor integration, enabling customers to complete payments in under two minutes and accelerating your cash flow from weeks to days or minutes.
• Account for transaction fees as business expenses by recording the full invoice amount as income and entering processing fees separately, ensuring accurate profit calculations for tax purposes.

Online payment methods for small businesses

Online payment methods are digital ways customers can pay for products and services without cash or checks. Here are the most common options.

• Credit cards: instant payments using borrowed funds
• Debit cards: instant payments directly from bank accounts
• ACH transfers: bank-to-bank transfers like PayPal, which, according to the SEC, generally take 1-3 business days to process
• Direct debit: automated recurring payments from customer accounts

While these methods process payments very quickly, they are not always instant; for example, the SEC notes that some card payments can take up to 24 hours to be fully reflected. However, they don't require customers to visit bank websites.

In the case of direct debit, the customer can authorize ongoing payments. This allows you to take money direct from their bank account whenever a bill is due.

Benefits of accepting payments online

Online payments accelerate cash flow by reducing payment time from weeks to days or even minutes. Here are the key benefits.

For your business:

• Faster payment: get paid up to 50% faster than traditional methods
• Instant processing: some payments arrive immediately
• Improved cash flow: predictable payment timing helps budget planning

For your customers:

• Convenience: pay anytime without visiting banks or mailing checks
• Flexibility: choose from multiple payment options including credit cards
• Speed: complete payments in under two minutes

How online payments work

Online payment processing works through merchant service providers that handle transactions between your customers and your bank account. Setup is typically free, but you'll pay transaction fees.

How to set up online payments

Getting started with online payments is straightforward. You can set it up in a few simple steps to begin offering customers more convenient ways to pay.

1. Choose your payment provider. Select a payment service that fits your business needs and integrates with your accounting software. Xero connects with leading providers like Stripe and GoCardless.
2. Connect the service. Follow the setup instructions within your accounting software to link your chosen payment provider. This usually only takes a few minutes.
3. Add a payment button to invoices. Once connected, you can automatically add a 'Pay now' button to the online invoices you send to customers.
4. Get paid faster. Customers can click the button on the invoice and pay you instantly using their preferred method. The payment is automatically recorded in your accounts.

Costs of accepting payments online

Online payment fees vary by payment method but setup is typically free. Here's what you can expect to pay:

Credit and debit cards:

• Processing fee: 2.4% to 3.5% per transaction
• Example: $100 invoice = $2.40 to $3.50 in fees

ACH and direct debit:

• Flat fee: $0.50 to $2.00 per transaction
• Example: $100 invoice = $0.50 to $2.00 in fees

Bank transfers:

• Lower rates: often under 1% for high-value transactions
• Best for: invoices over $500

How do I account for the transaction fee?

Transaction fees are business expenses that reduce your net payment amount. Here's how to handle them in your accounting:

1. Record the full invoice amount as income
2. Enter transaction fees as payment processing expenses
3. Match fees to payments to track profit accurately

This ensures accurate profit calculations and proper expense tracking for tax purposes.

Managing online payments with accounting software

Integrating online payments with your accounting software simplifies your bookkeeping and gives you a clearer view of your finances. When you connect a payment service to a platform like Xero, payments flow straight into your books with less manual work.

Your accounting software automatically records and reconciles payments and their associated fees, which saves you time on manual data entry. This gives you a real-time picture of your cash flow, helping you make smarter business decisions without the administrative headache.

Start accepting payments online with Xero

Start accepting online payments today if you already use invoicing software. The setup process takes minutes and delivers immediate benefits:

Immediate impact:

• Faster payments: reduce collection time by 40-60%
• Better cash flow: more predictable payment timing
• Customer satisfaction: convenient payment options

Next steps:

1. Check your current software for built-in payment features
2. Compare payment processors for the best rates
3. Enable payment buttons on your next invoice batch

Online payments solve cash flow challenges that affect many small businesses, with a GAO report noting that many of the more than 30 million small businesses in the U.S. have experienced significant revenue challenges.

Ready to get paid faster? Explore how Xero makes online payments easy and get one month free.

FAQs on accepting payments online

Here are answers to some common questions about accepting online payments.

What is the best way to accept online payments?

The best way depends on your business. Credit and debit cards offer convenience for customers, while ACH transfers are cost-effective for large or recurring payments. Offering a mix of options is often the most effective approach.

What is the safest way to accept payment from strangers?

Using a reputable third-party payment processor like Stripe or PayPal through your accounting software is one of the safest methods. These services handle the payment securely, encrypting data and protecting both you and your customer from fraud.

How can I accept payments online for free?

While most online payment methods involve transaction fees, some platforms offer fee-free bank transfers (ACH); for example, the IRS offers a service where Direct Pay is free and secure for taxpayers paying from a bank account. However, 'free' usually means the provider doesn't charge a monthly fee, but transaction costs from the card networks or banks will still apply.