What are Integrated Payment Systems and How Can They Help Small Businesses?

What are Integrated Payment Systems and How Can They Help Small Businesses?

Every business needs a way to accept payments, especially as we move further and further from a cash-based society. Integrated payment systems are a great option for businesses seeking streamlined operations, improved data management, and accurate records. 

What are integrated payment systems?

Integrated payment systems are tightly connected to a business’s financial tech stack — including accounting, invoicing, bookkeeping, and possibly even your business bank accounts. When merchants use an integrated payment system, any processed payments are automatically synced and input into your other connected platforms. This eliminates the need to manually migrate the data over. 

Not sure if you use an integrated payment system for your business? If you have to manually copy payment and transaction data over to another platform, your payments are likely not integrated. On the flip side, if you can log in to your accounting software and see transactions in real-time, your payments system is probably integrated. 

Pros of having an integrated payment system

Integrated payment systems do more than managing your business’s cash flow easier. There are a number of benefits that extend beyond that, allowing you to streamline operations and run a more efficient business.

Improved accuracy

When data is automatically synced from payment processing to your other financial systems, you rely less on manual data entry. According to one survey, as many as 25% of businesses still record finances on paper. And nearly half don’t even employ a dedicated accountant, so maintaining accurate records easily becomes challenging. Another survey found that 41% of SMBs do it all themselves. 

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When you use an integrated payment system, a lot of this manual data entry is obsolete. And as a result, your records are less susceptible to human error. You can make better-informed business decisions and forecasts based on real numbers.

What’s more, these numbers account for more data inputs. So rather than looking at your financial information through a vacuum, you get a holistic look at your financial standing and other areas of the business — marketing, operations, inventory, etc. 

Greater efficiency

Piggybacking off the benefits of automated data syncing, integrated payment systems also make businesses more efficient. They enable streamlined operations and eliminate tedious tasks, which also frees up time to focus on more important tasks.

Save money

As businesses have better data and become more efficient, they also become more cost-effective. You and your team no longer need to dedicate hours to account reconciliations, data entry, and other accounting functions. Instead, integrated payment systems take a lot of that work off your plate and you can save those resources or invest them elsewhere. 

Stronger security

Many times, integrated payment systems also offer privacy and security advantages. Security concerns are overwhelmingly the top reason consumers are hesitant to adopt digital wallets. 

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When searching for integrated payment solutions, look for a provider that offers EMV, tokenization, PCI compliance, and end-to-end encryption. These security features keep your and your customers’ data safe from digital threats.

Easier tax prep

Both payroll taxes and income taxes rank as small business’ biggest financial burdens. One-third of SMBs spend more than 40 hours each year prepping and managing federal taxes. And more than half spend upwards of $1,000 on tax prep admin alone. When you use an integrated payment system, a lot of that tedious work is done for you. If you use an accountant, you can often just export the files or give them limited access to the system to get the information themselves. This eases a lot of the dread that comes with taxes. 

Improved customer experience

As your business operations improve, so does the customer experience — ideally. You make smarter decisions and run into fewer snags like out-of-stocks or missing payment information. Integrated payment systems can also connect to your customer relationship management (CRM) software to enrich customer profiles and build a more personalized and seamless experience. 

How do integrated payment systems work?

Integrated payment systems work by eliminating manual data entry and migration. Instead, it uses a system of connected platforms and tools that sync data and information in real-time. 

In a “traditional” payment system — one that’s not integrated — businesses typically run daily reconciliation reports. During this process, they manually bring over the payment and transaction data to the accounting platform of their choice. Essentially, purchases happen throughout the day, but that data isn’t recorded until close of business. 

In an integrated payment system, there is no manual account reconciliation. Instead, your payment processor and terminal are connected in the back end to your accounting and other business systems. So transactions are automatically recorded and synced over to your accounting platform in real time. This eliminates the need for manual data entry, and instead you can just quickly review for accuracy. 

How to set up an integrated payment system

Because the idea is integration, you’ll need to find tools that work well together — ideally ones that have built-in integrations. A good place to start is by making a list of the following platforms you use in your business: 

  1. Accounting and bookkeeping software
  2. Invoicing
  3. Payment processor
  4. Merchant account
  5. Card reader
  6. Online payment gateway

You’ll also want to consider other business functions if you want to integrate your payment system comprehensively: 

  1. CRM
  2. Inventory management
  3. Email marketing
  4. Ecommerce platform
  5. And others

From there, you can build a list of potential systems to use in your business. Once you find the best one for your needs, you can sign up for an account and go through onboarding and setup. 

Costs associated with integrated payment systems

While integrated payment systems help merchants run more efficient and cost-effective businesses, there are associates costs to plan for: 

  • Implementation: Every new system comes with implementation costs, and an integrated payment system is no different. While implementation might be simple or even provided at no cost, it still takes time and resources. 
  • Cancellation with current vendors: Though Payment Depot charges no cancellation fees, there are other vendors out there that do. Check your contracts and user agreements to see what cancellation or early termination fees you might face. 
  • Processing rates: Payment processing fees are typically charged on a per transaction basis. With Payment Depot, merchants pay a monthly subscription and then get access to discounted wholesale rates for each transaction. 
  • Add-on fees: Sometimes, platforms charge an extra monthly fee to use an integration or add-on. It’s best to check with your respective providers to see if such a fee will apply to you. 
  • Monthly fees: Some payment processors charge a monthly account or access fee. If this is the case, it’s a good idea to look for an alternative. At Payment Depot, there are no monthly fees. 

Moving forward with your integrated payment system

If an integrated payment system sounds right for you, Payment Depot can help you assess the best solutions to fit your business needs. Payment Depot offers affordable monthly plans and low wholesale rates, along with a friendly team ready to answer all your integrated payments questions.

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