Payment Processing 101: Integrated vs. Non-Integrated Payments

Every business needs to accept payments, but not all payment setups work the same way. Integrated payments connect directly to your point of sale system, while non-integrated payments operate separately.

The difference affects your daily operations, from checkout speed to how you track sales and manage inventory.

In the following sections, we’ll break down what each option means, how they compare in practice, and which one makes more sense for your business. No jargon, just the facts you need to make an informed choice.

What is an integrated payment system?

Think of an integrated payment system as the “bridge” that connects the point of sale system directly to your credit card terminal.

How does it work?

Here are the steps for how an integrated payment system works in a small retail business:

You don’t need to be a tech genius to understand the flow. It’s essentially a three-way conversation that happens in seconds:

1. The Handshake: When you hit “Pay” on your Point of Sale (POS) software, it sends a digital signal to the payment terminal saying, “Hey, I need to collect $X.XX amount.”
2. The Approval: The customer dips or taps their card. The terminal sends that data to the bank. Once the bank says “Yes,” the terminal tells your POS, “Money is on the way!”
3. The Auto-Update: This is the best part. Because they are integrated, your POS automatically marks the items as “Sold,” subtracts them from your stock levels, and logs the tax—all without you touching a button.

What is non-integrated payment processing?

A non-integrated payment system is when your payment terminal (card machine) is not connected to your cash register or POS system.

How does it work?

Here’s a simple rundown of how it works. It’s similar to integrated processing but has one important distinction:

1. A customer purchases at a merchant’s checkout counter
2. The cashier scans the items and enters the total sale amount into the POS system
3. The cashier manually enters the customer’s payment information into the POS software
4. The POS system sends the payment information to the payment processor
5. The payment processor authorizes the payment and sends a message back to the POS system
6. The POS system prints out a receipt for the customer

What are the pros and cons of integrated payment processing?

Here is a breakdown of the benefits and the potential drawbacks.

Pros of Integrated Payment Processing

• Synchronized sales data: All transaction information from physical stores, websites, and pop-up events flows into one central hub. It keeps your records consistent and eliminates the headache of piecing together data from different sources.
• Faster, more flexible checkouts: A unified system handles everything from traditional credit cards to emerging payment methods like mobile wallets. It speeds up the line at the register and gives customers the freedom to pay however they prefer, whether they are standing in your shop or sitting at home.
• Stronger data security: These systems use tools like encryption and tokenization to scramble sensitive card information. By keeping data secure, you lower the risk of a breach and build better trust with your customers.
• Better business insights: Detailed sales reports help you see which products are actually moving and when your busiest hours occur. Having these facts on hand makes it much easier to plan your inventory and marketing strategies.
• Improved efficiency: Automating tasks like inventory updates and transaction balancing frees up your schedule. Instead of spending hours on manual admin work, you can focus on bigger goals, such as growing your product line.
• Fewer manual mistakes: Manually typing price amounts or customer details often leads to typos. Since the payment terminal and the software communicate directly, you significantly reduce the risk of costly data entry errors.

Cons of Integrated Payment Processing

• Higher upfront costs: Setting up an integrated system often requires a larger initial investment than a basic standalone terminal. You may need to pay for specific hardware, software licenses, or implementation fees to get everything working together.
• Technical dependencies: Because your systems are linked, a technical glitch or an internet outage can cause a ripple effect. If the integration fails, it might temporarily disrupt your ability to process sales or update your inventory until the connection is restored.
• Complex setup and learning curve: Switching to an integrated model isn’t always “plug and play.” It can take time to configure the software to match your specific business needs, and you or your staff may need training to get comfortable with the new interface.

What are the pros and cons of non-integrated payment processing?

In a non-integrated setup, your credit card terminal and your point-of-sale (POS) software operate as two separate islands. While this is a more traditional approach, it offers specific advantages for certain types of businesses.

Pros of Non-Integrated Payment Processing

• Lower upfront costs: Standalone payment terminals or basic card readers are often much cheaper to purchase or rent than full integrated systems, with no need for expensive software licenses or custom setup.
• Simpler setup and use: You can get started quickly without technical integration work. Basic hardware is plug-and-play. It’s easy for small businesses or those with limited tech experience to begin accepting payments right away.
• Greater flexibility: You can choose separate providers or tools for payments, inventory, and accounting without worrying about compatibility. You pick the best option for each part of the business.
• Easier to switch providers: If you’re unhappy with a payment processor, switching to another is usually straightforward because there are no deep integrations with other systems.

• Works well for single-channel or low-volume sales: For businesses that operate mainly in one location or have simple, low-volume transactions (like markets or small kiosks), separate systems avoid unnecessary complexity.

Cons of Non-Integrated Payment Processing

• Manual data handling and reconciliation: Transaction data does not automatically flow into inventory, accounting, or sales records. Staff must manually enter or export information, which takes extra time and effort every day.
• Higher risk of errors: Manual entry of sales, inventory updates, or reporting often leads to mistakes, such as mismatched stock levels, incorrect financial records, or missed transactions.
• Limited business insights: Reports are basic and fragmented, making it harder to see overall sales trends, customer patterns, or performance across different periods or products.
• Inconsistent experience across channels: Customers may face different payment options or processes when buying in-store versus online, and multi-channel retailers struggle to keep records aligned without extra work.

Integrated vs. non-integrated payment processing

Integrated and non-integrated payment processing differ in how closely they are connected to a point-of-sale system. Integrated payment processing connects directly to the POS. Non-integrated payment processing relies on a third-party processor that operates separately from the POS

Other differences between integrated and non-integrated payment processing

1. Transaction speed: With an integrated payment processor, payments go through immediately. On the other hand, non-integrated processors may need some time – sometimes a few days – to confirm and complete the transaction.

2. Payment options: Integrated processors enable merchants to accept credit cards and electronic wallets. However, non-integrated systems can force you to use only a few banks or credit unions, which may put off some customers.

3. Offline payments: Believe it or not, some folks still use checks and money orders. Integrated processors can handle these payments online. Unfortunately, non-integrated systems typically can’t do that.

4. Recurring payments: If you offer subscriptions or payment plans, integrated processors have a built-in system to handle those recurring bills. But if you’re using a non-integrated processor, you’ll have to work it out on your own.

5. Cost: Integrated systems come with more bells and whistles but are also pricier to set up. On the flip side, non-integrated systems are easier on the wallet and simpler to get started with.

6. Transaction Fees: Here’s some good news for non-integrated systems – they generally charge less for each transaction than integrated ones. Find the lowest rates available to you and calculate all processing fees.

7. Security: Integrated systems have a security advantage because they send customer data through a secure connection. If you’re using a non-integrated system, your website’s security protects your customers’ payment info.

What are some of the popular integrated payment processors?

Here are some of the most popular integrated payment processing solutions for retail stores:

Square

Square is a popular integrated payment processing solution that offers a variety of features, including the ability to accept payments in-store, online, and over the phone.

PayPal

PayPal is another popular integrated payment processing solution that offers a variety of features, including the ability to accept payments from customers worldwide.

Shopify Payments

Shopify Payments is an integrated payment processing solution designed for businesses using the Shopify eCommerce platform.

Stripe

Stripe is a popular integrated payment processing solution that offers a variety of features, including the ability to accept payments from customers worldwide.

QuickBooks Payments

QuickBooks Payments is an integrated payment processing solution designed for businesses using the QuickBooks accounting software.

Choose Your Payment Processor

Here are a few things to keep in mind when looking for the perfect fit.

Check the costs carefully

Pricing can be confusing, so it is important to understand exactly how much of each sale goes to your provider.

• Compare pricing models: Most retail payment system providers use interchange plus (the most transparent), flat rate (the most predictable), or tiered pricing (often the most complex).
• Watch for hidden fees: Look beyond the basic transaction rate for monthly minimums, statement fees, or withdrawal charges. Understanding the nitty-gritty of POS credit card processing is key.
• Get multiple quotes: Comparing real numbers from several companies helps you see how these costs will actually impact your monthly budget.

Safety and PCI compliance

Protecting your customers’ credit card info isn’t just a good idea; it’s a requirement.

• Hand off the hard work: Look for a provider that handles PCI compliance for you. This saves you from having to learn complex security regulations yourself.
• Look for active monitoring: A high-quality provider will proactively monitor your account for fraud and unusual activity.
• Prioritize data tools: Choose processors that use encryption and tokenization to scramble card data so it is never stored in a readable format.

Good customer service goes a long way

When a terminal goes down or a payment fails, you need a partner who answers the phone.

• Demand 24/7 support: Confirm that you can reach a human being at any time, especially if your business operates on weekends or late at night.
• Check the reviews: Look for feedback from other business owners regarding how the provider handles emergencies and technical glitches.
• Verify support channels: Check whether they offer help by phone, live chat, or email, and find out which is the fastest for urgent issues.

How do I choose the right payment provider?

The choice between integrated and non-integrated payment processing depends on your business’s specific needs and priorities. Consider the following factors:

Look Beyond the Payment Processor Alone

Choosing the right payment provider is important, but it should never be done in isolation. Your payment processor needs to work seamlessly with a robust retail POS system that supports daily operations like inventory management, sales reporting, customer relationships, and employee tracking.

Prioritize POS Compatibility and Business Fit

A strong POS system acts as the operational hub of your business, not just a checkout tool. When your POS and payment processor work well together, you gain efficiency, fewer errors, and a better experience for both staff and customers.

Choose a POS Partner That Guides You

The right POS provider doesn’t just offer software—it helps you make smarter decisions about payments. Some POS providers, like KORONA POS, focus on helping businesses select payment processors that align with their budget, goals, and operational needs rather than locking them into a single option.

Security and Fraud Prevention

Data security, fraud prevention should be a top priority for any growing business. Integrated solutions often provide advanced security features that offer better protection and peace of mind.

Focus on Long-Term Value, Not Just Fees

While processing rates matter, long-term value comes from reliability, flexibility, and operational efficiency. A POS provider that offers guidance, transparency, and cost comparisons can help ensure your payment solution supports growth rather than limits it.

Make an Informed, Holistic Decision

Ultimately, the best payment provider is one that fits into a well-chosen POS ecosystem. Evaluating both together ensures smoother operations, better insights, and a more scalable foundation for your business.

Keep More Money With Cheaper Payment Processing Integrated With KORONA POS

KORONA POS isn’t a payment processor itself but rather a flexible point of sale system built to integrate seamlessly with major payment processors.

Whether you run a liquor store, vape shop, tobacco retailer, convenience store, quick service restaurant, or specialty boutique, our team can help you select the processor that best matches your business needs.

Want to see how KORONA POS can work for your business? Schedule a demo with us today or call 833-200-0213 with any questions.

FAQs: Integrated Payments vs Non-Integrated

1. How does integrated payment processing enhance the user experience?

Integrated payment processing eliminates manual data entry, allowing customers to complete transactions quickly and effortlessly. It provides a seamless payment experience, reducing friction and potentially increasing conversion rates.

2. What factors should businesses consider when choosing a payment processing method?

Businesses should consider integration requirements, security measures, scalability needs, and cost considerations when choosing between integrated and non-integrated payment processing methods. It’s essential to align the chosen method with the business’s specific needs and goals.

3. What security measures are in place for integrated payment processing?

Integrated payment solutions often include advanced security features like encryption, tokenization, and fraud detection tools. These measures protect sensitive customer data, minimize the risk of data breaches, and help prevent fraudulent transactions.