While online transactions have surged in recent years, in-person payments still play a significant role. In 2024, for example, 77% of all nonbill payments made in the US were in-person. Businesses need to choose which in-person payment methods they will accept from their customers. Understanding how these payment methods work can help your business meet customer needs, improve the customer experience, increase revenue and customer retention, and successfully operate in the markets you want to reach.

Even if in-person transactions are not your only sales channel, improving your in-person payments experience will positively impact other sales channels, such as ecommerce. By implementing a unified payment infrastructure, you create a consistent trust signal across all touchpoints that can improve your brand’s reputation with customers.

Below, we'll review what in-person payments are, cover widely used types of in-person payments, and explain how to choose the best methods for your business.

What’s in this article?

• What are in-person payments?
  
• Payment options available today
  
• 5 types of in-person payments
  
• How to choose the best in-person payment methods for your business
  
• How Stripe supports in-person payments
  
• How Stripe Payments can help
  

What are in-person payments?

In-person payments are transactions that are completed with the customer physically present at the point of sale (POS). This form of payment occurs at brick-and-mortar retail stores, restaurants, event spaces, service providers, and other locations.

Payment options available today

The modern payment landscape is categorized into pillars like traditional payment methods, digital payments, and alternative payments. While credit and debit cards remain the backbone of commerce in many regions, the rise of other payment categories is rapidly shifting how businesses align with customer expectations. QR code payments and stablecoin cards, for example, cater to tech-savvy shoppers who want to pay digitally.

5 types of in-person payments

The number of in-person payment methods has expanded in recent decades, giving businesses and customers a wide range of payment options. Here’s an overview of five popular in-person payment methods, how they work, their pros and cons, and the types of businesses or payment environments they’re most suitable for.

1. Cash

Cash is one of the oldest forms of in-person payment, and has been a fundamental part of commerce for millennia. Its universality, simplicity, and independence from technological infrastructures have enabled cash to remain relevant, even in the digital age.

How it works

Cash transactions are fairly straightforward and consist of a direct, real-time exchange of physical money—banknotes or coins—between the customer and the business. The customer pays the amount owed for a product or service, and the business provides change as necessary.

Best suited for

Cash payments are typically preferred by small businesses, market stalls, pop-up events, local shops, and businesses operating in areas with poor internet connectivity. They are also valuable for businesses serving customers who don’t have access to banking services or prefer the anonymity of cash transactions.

Pros to accepting cash as a payment method:

• Universally accepted
  Cash is a universally recognized medium of exchange and is typically accepted in most places, although this has recently started to shift. In 2024, however, cash still accounted for 14% of all consumer payments in the US.

• No additional infrastructure
  Cash transactions require no additional hardware or software, making them accessible for businesses of all sizes.

• No transaction fees
  Unlike card or digital payments, cash transactions incur no processing fees, preserving profit margins.

• Immediate payment
  Cash payments are instant and eliminate any risk of delayed payments or defaults.

Cons to accepting cash as a payment method:

• Friction with evolving consumer preferences
  As cashless payments increase in popularity, a growing segment of the population no longer carries cash.

• Inconvenient for large transactions
  Handling large amounts of cash can be impractical and risky, which limits its use in high-value transactions.

• Risk of theft or loss
  Physical cash can be lost or stolen, posing security concerns that might necessitate additional protective measures.

• Time-consuming
  Counting cash, providing change, and reconciling registers can be a manual and time-intensive process.

Example of cash as an in-person payment method:

At a local bakery, customers walk in and choose their bread and pastries, pay in cash, receive any necessary change, and leave with their purchase—all within a matter of minutes. This process ensures hardware-independent stability, which is particularly important during hardware failures or internet outages.

While cash may seem out-of-date compared to emerging digital payment methods, it offers significant advantages. Its simplicity, lack of transaction fees, and broad accessibility make cash a viable and sometimes preferred payment method for some businesses and customers.

2. Paper checks

Paper checks are often overlooked in payments discussion, but they remain a viable method of in-person payment. Paper checks have been used for centuries, and they remain a trusted payment method—particularly among certain demographics and in specific business situations.

How it works

A paper check is a written order from a bank account holder instructing their bank to pay a specific amount of money from their account to another individual or entity. The recipient, or payee, can deposit or cash the check at their bank, which will then request the funds from the check writer's bank. The funds are then transferred from one account to the other, completing the transaction.

Best suited for

Paper checks are often used by businesses dealing with large transaction amounts, where immediate payment is not necessary and a record of payment is beneficial. They are also commonly used in B2B, rental, and real estate transactions.

Pros of accepting checks as a payment method:

• Transaction size
  Checks can be written for large amounts, making them suitable for transactions where carrying cash may not be viable or card limits might block the transaction.

• Lower processing costs
  Unlike many forms of digital payment, checks are typically processed for a flat, nominal fee (or even for free) by many business banking tiers.

• Enhanced record-keeping
  Checks provide both parties with a physical record of the transaction, which is useful for financial tracking and tax purposes.

Cons of using checks as a payment method:

• Time-consuming
  Writing, depositing, and processing checks can be a lengthy process. Checks also take time to clear.

• Risk of bouncing
  If the account holder doesn't have sufficient funds when the check is cashed, the check can bounce, leading to fees and potential legal trouble.

• Customer friction
  The time required to write, sign, and verify a physical check can create significant checkout delays.

Example of checks as an in-person payment method:

A classic example of check usage can be found in the real estate market. Tenants often pay their rent or deposit via check, providing a record of payment for both the tenant and the landlord. Likewise, businesses often pay vendors or receive payments from clients via checks, particularly for larger amounts.

Paper checks provide convenience, financial flexibility, and enhanced record-keeping that can make them a valuable payment method. Before dismissing them as old-fashioned, it’s important to understand their advantages and determine whether checks align with your business's requirements and your customers' preferences.

3. Credit and debit cards

In an increasingly cashless society, credit and debit cards have emerged as one of the most common forms of in-person payment. They offer security, convenience, and flexibility that caters to a wide array of customer preferences and business needs.

How it works

A customer presents their credit or debit card at the point of sale. The card can be swiped (magnetic stripe), inserted (chip), or tapped (contactless) on a POS terminal. Once the terminal has captured the card details, it communicates with the cardholder's bank to check for sufficient funds or credit. If approved, the transaction proceeds, and the amount is debited from the customer's account.

Best suited for

Card payments are ideal for retail stores, restaurants, supermarkets, and any business that deals with medium to high-value transactions. They also facilitate seamless transitions between online and offline sales channels for businesses that have physical outlets and an online presence.

Pros of accepting credit and debit cards as payment methods:

• Widespread usage
  Credit and debit cards are widely accepted globally, supporting $13.5 trillion in value in the US alone.

• Security
  Card payments offer protection against fraud through built-in security features such as EMV chip technology, PIN authentication, and zero-liability policies.

• Enhance customer spending
  Customers often spend more when using cards compared to using cash, since they aren’t limited by the amount of cash on hand.

• Trackable and reconcilable
  Card transactions are electronically recorded, making it easier for businesses to track and reconcile sales.

Cons of accepting credit and debit cards as payment methods:

• Requires hardware
  Historically, businesses have needed to invest in card-reading terminals or card readers to accept card payments. However, this is no longer true, because many cards are now equipped with NFC technology for contactless transactions, which can be done with a properly enabled smartphone and no other hardware.

• Transaction fees
  Each card transaction incurs a fee that the business must pay, potentially impacting profit margins.

• Dependency on network
  Card payments require an active network connection to process, creating a potential point of failure in case of network issues.

Example of credit and debit cards as a payment method:

At a clothing boutique, customers select their items, proceed to the checkout line, and pay using their credit or debit cards. The boutique can easily handle high-value transactions, offer returns or refunds if needed, and keep accurate records of all transactions for accounting and reconciliation purposes.

Credit and debit card payments offer convenience, safety, and wide acceptance. Their role in facilitating higher spending and bridging the online-offline gap makes them a valuable payment option for most businesses. Even as technology evolves and changes the way payments are conducted, credit and debit cards are evolving alongside these trends. For most businesses, credit and debit cards will remain a relevant payment method.

4. Digital wallets

Digital wallets have transformed in-person payments. Offering convenience, speed, and security, they cater to today’s on-the-go, tech-friendly customers and promise a streamlined shopping experience.

How it works

Digital wallets, or mobile wallets, store users' debit, credit, or prepaid card information securely on their mobile devices. At the point of sale, customers can make contactless payments by tapping their phones against the NFC-enabled payment terminal. The payment details transfer securely, and the transaction is processed almost instantly.

Best suited for

Given the explosive popularity of digital wallets like Apple Pay and Google Wallet in recent years, they are generally a good fit for most in-person businesses. They're ideal for retail outlets, cafes, restaurants, and any other business that aims to provide a swift, easy customer experience. Since digital wallets work both in-person and online, they are a good option for businesses that want to create a unified commerce experience across sales channels.

Pros of accepting digital wallets as a payment method:

• Speed and convenience
  Digital wallet payments are quick and contactless, creating a smooth checkout experience.

• Enhanced security
  Digital wallets use tokenization to keep card details secure, providing an additional layer of fraud protection.

• Contactless payments
  Digital wallets support contactless payments by default, which is important for customer expectations and for physical hygiene and health.

• Lower handling costs
  Digital wallets eliminate the need for handling physical cash, reducing associated costs and risks.

Cons of accepting digital wallets as a payment method:

• Requires NFC-enabled hardware
  To accept digital wallet payments, businesses need to have NFC-enabled POS terminals.

• Dependence on smartphones
  Digital wallet payments rely on customers having compatible smartphones or smart watches, and digital wallets, which may limit their use.

• Potential compatibility issues
  Not all digital wallets work with all payment systems and cards, which may lead to compatibility issues.

Example of digital wallets as a payment method:

At a busy coffee shop, customers place an order, tap their smartphones against the NFC terminal, and collect their coffee. This quick transaction process helps keep the line moving, ensuring customer satisfaction—particularly during peak hours.

Digital wallets are redefining in-person payments by combining the best elements of physical and digital payments. They offer businesses a chance to enhance customer experience, improve operational efficiency, and adopt a future-ready payment approach.

5. Peer-to-peer payments

Peer-to-peer (P2P) payment systems have transformed the way individuals exchange money, turning smartphones into virtual wallets. While primarily used for transfers between friends and family, their usage for in-person payments in a business context is steadily growing.

How it works

P2P payment apps allow users to link their bank account or card details to the app. When making a payment, the payer selects the recipient's account (often identified by a phone number or email address), enters the payment amount, and confirms the transaction. The money is then transferred directly from the payer's to the recipient's account.

Best suited for

P2P payments are excellent for small businesses, independent contractors, and service providers who want to accept digital payments without investing in expensive hardware. They're also beneficial for businesses that regularly engage with younger, tech-savvy customers.

Pros to accepting P2P payment methods:

• Easy to use
  P2P apps have a user-friendly interface, making it easy for anyone with a smartphone to make and receive payments.

• Immediate transfers
  Funds are typically transferred in real time or within one to two business days, offering faster access to funds compared to some other payment methods.

Cons to accepting P2P payment methods:

• Limited protections
  P2P payments lack the same level of protection as traditional banking systems, which may leave businesses exposed to fraud or disputes.

• Limited adoption among some customer groups
  Not all businesses accept P2P payments, and not all customers use P2P apps, limiting their reach.

• Potentially unprofessional
  Some may view P2P payments as less professional than traditional payment methods, which could impact a business's image.

Example of P2P payments for customer transactions:

An independent artist selling their artwork at a local fair can accept payments directly through a P2P app, allowing customers to purchase artwork easily without the need for cash or cards.

P2P payments are a convenient, cost-effective, and user-friendly method of accepting in-person payments. They allow businesses to take advantage of the growing trend of digital and mobile payments, providing an attractive payment option to modern customers. However, businesses must also consider the limitations of this payment method, particularly around protections and perceptions, when deciding whether to integrate P2P payments into their payment offerings.

How to choose the best in-person payment methods for your business

It’s important to choose the right in-person payment methods for your business. The method you choose will influence your operational efficiency and impact customer experience and satisfaction. Here is a step-by-step guide to help you make this decision:

1. Understand your customer base
   Analyze your specific demographic to see if they lean toward digital-first or traditional methods. Use your existing transaction data to identify which methods move the needle on satisfaction for your unique audience.

2. Evaluate your operational requirements
   Match your payment methods to your transaction volume and ticket size. Businesses with high turnover may choose to prioritize Tap to Pay and contactless methods, while high-value retailers may opt for secure card readers or even checks.

3. Compare total cost of ownership
   Every payment method has a price tag, whether it’s a visible fee or a hidden labor cost. Cards and digital wallet payments often incur transaction fees. Accepting cash is free, but that is often offset by the manual labor of counting, secure storage, and bank transit.

4. Prioritize security and compliance standards
   The security of your customers' data should be a top priority when choosing a payment method. Ensure that any digital payment methods you choose have robust security measures in place and are compliant with relevant financial and data protection regulations.

5. Assess compatibility with your existing systems
   Choose payment methods that can easily integrate with your existing business systems, such as your accounting software or inventory management system. This integration can help businesses streamline operations, track transactions more efficiently, and offer better customer service.

6. Look for flexibility and future payment technologies
   Choose payment methods that are flexible and can adapt to future changes in technology and customer behavior. The payment landscape is continually evolving with new options like cryptocurrencies and buy now, pay later (BNPL) platforms, and staying ahead of the curve can provide a competitive advantage.

How Stripe supports in-person payments

Stripe is a comprehensive payments platform that supports a wide variety of in-person payment methods. It offers dynamic, customizable solutions to streamline the payment process, bolster security, and enhance the customer experience. In particular, Stripe Terminal and Stripe Reader play important roles in facilitating in-person payments. Here’s what you should know about both:

Stripe Terminal

Stripe Terminal is a programmable POS solution that extends Stripe's infrastructure to in-person transactions. Businesses can integrate Stripe Terminal with their existing Stripe account and software stack to unify their online and offline channels.

Stripe Reader

Stripe Reader is an integral component of the Stripe Terminal ecosystem. It’s a card reader designed to accept a variety of in-person payments, including chip-and-PIN and contactless payments from cards and digital wallets. Stripe Reader can be used with just a smartphone or as part of a POS terminal, allowing for expansive application in a variety of in-person environments.

How Stripe Payments can help

Stripe Payments provides a unified, global payments solution that helps any business—from scaling startups to global enterprises—accept payments online, in person, and around the world.

Stripe Payments can help you:

• Optimize your checkout experience: Create a frictionless customer experience and save thousands of engineering hours with prebuilt payment UIs, access to 125+ payment methods, and Link, a wallet built by Stripe.
  
• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency management with cross-border payment options, available in 195 countries across 135+ currencies.
  
• Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalize interactions, reward loyalty, and grow revenue.
  
• Improve payments performance: Increase revenue with a range of customizable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorization rates.
  
• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% historical uptime and industry-leading reliability.
  

Learn more about how Stripe Payments can power your online and in-person payments, or get started today.