Why Small Businesses Need Online Payment Apps

What are online payment apps?

Online payment apps are digital wallets that securely store a user’s credit card or debit card information. To use one, a customer can open the mobile app on their phone or select the app option at checkout on a merchant’s website.

“Digital payments have become far more accepted,” David Axler, chief executive officer at Occupier, told us. “It’s become a part of our daily routine.” 

What are the pros and cons of payment apps?

Online payment apps are easy to use and convenient, but they aren’t risk free. Here’s a look at the pros and cons of accepting online payment apps in transactions with your customers.

Pros of online payment apps

• They’re a familiar payment method. Consumer comfort with digital payments has grown steadily, and the numbers reflect it. Precedence Research values the overall digital payments market in the United States at approximately $170.24 billion in 2025, a figure projected to surpass $790.59 billion by 2035. “It speaks to the comfort level of consumers in paying online,” Axler said. “It used to be not well understood, not routine.”
• They’re convenient for customers. Many customers like the convenience digital wallets offer, allowing them to cycle through various payment methods at will. When a business accepts online payment apps, customers know they can choose to pay however they like, which helps improve customer satisfaction and build loyalty.
• They speed up checkout. Accepting online payment apps streamlines the checkout process in both e-commerce and brick-and-mortar stores. The quicker and easier it is to purchase something, the less likely a customer is to abandon their shopping cart.
• They improve security. Digital wallets tokenize card details, replacing credit card numbers with unique and random codes called “tokens.” Tokenization improves security and reduces the likelihood that data breaches expose customers’ financial information. This creates peace of mind for customers and reduces potential liability on the part of the business by reducing the amount of sensitive data they keep on hand.

Cons of online payment apps

• Scammers target digital wallets often. Scammers often target consumers and businesses using online payment apps. For instance, dummy apps that appear in the online app stores collect personal information about the user and use it to commit fraud. Encourage your customers to use well-known payment apps available from legitimate vendors.
• They can get pricey to accept. You’ll be charged a transaction fee when customers use payment apps linked to their credit cards. Card-not-present payments, which is the category online payments often fall under, typically cost more for the merchant. “It tends to be the most expensive way to go,” said Andi Gray, president of Strategy Leaders. “Business owners really need to know what they need the payment app for.”
• They’re harder to manage. Getting all the transactions from disparate payment apps into one accounting system can be cumbersome and time-consuming. “When you start to accept payments electronically, you don’t have them tied to a particular invoice or particular receipt,” Axler said. Business owners can address this challenge with cloud-based accounting software that consolidates all transactions under a single dashboard. [Read related article: The Best Accounting and Invoice-Generating Software]

The best online payment apps

These are the best online payment apps that small businesses should consider accepting:

• Apple Pay: Apple Pay is among the best-known mobile payment apps. Users input their credit or debit card information into the mobile wallet on their iPhone and then they can use Apple Pay in stores and online. Apple Pay uses near-field communication (NFC) technology to enable contactless payments. There is no fee to accept Apple Pay, but you do pay the transaction fees on credit card and debit card sales. [Read related article: How to Accept Payments With an iPhone]
• PayPal: PayPal is a popular online payment app for consumers in America and abroad. It’s free to use and accept, but you’ll pay rates of about 3.49 percent + $0.49 per transaction. You can also send invoices to clients through PayPal’s online platform. [Find out more about credit card processing with PayPal]
• Venmo: This popular peer-to-peer payment app is owned by PayPal and has more than 90 million active accounts. There are no fees to use or accept Venmo, although it generally charges transaction rates of 1.9 percent plus $0.10 for payments via credit or debit card. You get paid instantly when a customer uses Venmo. [Find out how Venmo Business works and how to get it for your company]
• Zelle: This online payment app lets you accept payments directly from customers’ bank accounts, including Bank of America, JPMorgan Chase, Wells Fargo, Capital One and U.S. Bank. Generally, there is no fee to send or receive money with Zelle as either a business or consumer. However, users’ banks may set transaction limits and fees. Your business account needs to be registered with Zelle before you can accept payments.
• Google Pay: Google Pay remains a widely used digital wallet option for Android and iPhone users alike, making it a versatile choice for small businesses looking to broaden their payment acceptance. You won’t be charged any fee for taking payment by Google Pay, but expect to be charged as usual by your payment processor. [Related article: Android credit card payment app] [Related article: SMB Payment Processing: What to Know]

Mark Fairlie and Jennifer Dublino contributed to the writing and reporting in this article. Source interviews were conducted for a previous version of this article.