As an owner of a small business it is always surprising to me to find out when speaking with other small business owners about how unaware they are of some of the free and cheap tools available out there to make their business better. In this post, I will list (in no particular order) some of the tools I have used in the past and currently use, all of which have made a big difference in my business. This part 1 covers financial tools.
Square for in-person credit card payments
Normally in order for a business to take credit card payments, a merchant account is required. Opening one is a tedious process and it usually comes saddled with all kinds of application, credit report, etc. fees. Even once the account is established, there are monthly gateway and processing fees, and sometimes a minimum transaction fee as well.
Square offers a great and cheap alternative for merchant accounts. There are no fees for signing up, no monthly fees, and no minimum activity required. When you apply for an account, they send you a free credit card reader which works on conjunction with an iPhone, iPad or an Android phone (yes, you need a cell phone), and hooks into the headphones jack. The only fee they charge is 2.75% for processing transactions. You can also enter credit card numbers manually for a higher processing fee of 3.5% + 15 cents. Receipts are automatically emailed or SMSed to the owner of the card.
While PayPal and Google Checkout are well known for their payment tools that are used on websites, not a lot of people know about their invoicing features. Both services have an option that allows you to request a payment via email, and optionally send an invoice to your customer (here is PayPal invoicing and Google Checkout's email feature). This is a great feature for online service businesses that do not charge a set price and it avoids the use of merchant accounts. The cost is the same as their regular payment services (about 2.9% + 30 cents) and there are no minimums or monthly fees. PayPal's invoicing feature is a more advanced than Google's.
American Express FX Payments for
free cheaper international wire transfers
Even for a business that always does business within the US, there always comes a time where a foreign client or supplier comes along, requiring ability to wire money internationally. One alternative is to use a payment service like PayPal above, but they tend to charge extra for international payments (as described here). Another alternative is to use a credit card without an international transaction fee but It gets even more complicated when trying to pay a foreign supplier which is not online savvy and expects wire transfers. Regular banks tend to charge a lot for international wires and they also hike up the conversion rates to their advantage just like credit card companies. The end result is that you end up paying through the nose and get a pretty bad conversion rate.
A great alternative that I stumbled on about six months ago is American Express's FX Payments service. While it is a bit of a pain to sign up for including an application, some phone calls, it is a great service that is worth it. For starters, there are no fees at all and no minimums. You link up your checking account and they withdraw the money via ACH from your checking account, and then transfer it via a conventional international wire transfer. It does take an extra day for processing. Their conversion rates are pretty close to the trading conversion rates for currencies and they have 24/7 toll-free support. I have been using them to pay royalties to oversea authors for several months and have been very impressed with their service.
UPDATE: Western Union FX Payments is worth a look, I find them to be priced better than AMEX.
PayPal for mobile check deposits