There are several ways to collect payments from your customers. As a business owner, one must decide which is best suitable according to its speed, transparency and security.
The offline mode of payment works without the internet; hence it is termed “offline”. They are easy to trace as it is directly received by the business and is thus considered more transparent. Some of the examples of offline modes of payment are cash and cheques.
An online mode of payment requires an internet connection. In this payment method, customers’ money is transferred to your account as soon as the customer makes the payment. Some examples of online modes of payment are credit cards, debit cards, and Google Pay.
|Particulars||Online mode||Offline mode|
|Exchange of money||Money is exchanged electronically. It is an internet-based method involving computer networks and digitally stored data.||Money is paid directly to the vendor. It does not involve using any payment gateways, but it may involve banks in cheque or demand drafts.|
|Risk||The customers have to enter their details, and thus, the risk of identity theft is relatively high.||It is a direct payment method that does not involve exchanging personal data. Thus, it is more transparent and risk-free.|
|Service charges||It involves service charges when payments are made through credit cards or debit cards.||There are minimal charges in case of demand draft and cheques.|
|Payment||It is a contactless payment method. The funds get directly deposited into your account.||In this method, someone needs to be physically present to receive the payment.|
|Preferred by||It is a preferred method usually opted by the younger population.||It is a preferred method for the older population.|
Below is the impact of offline payment on business:
Thus, we can say that offline payments increase liquidity and positively impact business cash flows.
Use of credit cards/debit cards, mobile wallets, e-transfers, etc., facilitate real-time payment. Real-time payments reduce the risk of business uncertainties such as late payments. Immediate transfer of money boosts the working capital of a business. Improved cash flow helps a business meet all its business obligations on time and win customer trust.