Payment Processing: Integrated Payments vs. Non-Integrated

The beating heart of your retail business isn’t just the products on your shelves. It’s the way customers can conveniently and seamlessly pay for their purchases through your payment processing system.

Payment processing is as crucial to the success of your business as hiring a friendly staff or creating a compelling shop window. But many small business owners find payment processing confusing and are unsure which option is the best for them. A common predicament many find themselves in is the debate between integrated and non-integrated payment systems.

By the end of this blog post, you’ll be able to understand a whole lot more about this seemingly complicated issue.

What is an integrated payment system?

An integrated payment system is a software solution that connects your point of sale (POS) system, accounting software, and inventory management system. This allows you to process payments, track inventory, and manage your finances all in one place. Here are the steps for how an integrated payment system works in a small retail business:

1. A customer purchases at your store
2. The cashier enters the customer’s payment information into the POS system
3. The POS system sends the payment information to the integrated payment system
4. The integrated payment processor authorizes the payment and sends the funds to your merchant account
5. Once the payment is approved, the integrated payment processor confirms the successful transaction
6. The POS system generates a receipt, either in digital or physical format, to provide to the customer as proof of purchase

What is non-integrated payment processing?

Non-integrated payment processing is a system where the payment terminal and the point of sale system are not connected. This means that all payment information must be entered manually into the POS system since the setup does not directly connect the credit card terminal to the retailer’s inventory, accounting, or other business management systems.

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 advantages of integrated payment processing for retailers? 

1. Synchronized data across multiple channels

Many small retailers grapple with managing sales across different channels like their brick-and-mortar stores, online store, and even pop-up stores or markets. An integrated payment system allows all transaction data to converge into a single platform, ensuring consistency and reducing the likelihood of errors due to manual data entry.

2. Streamlined payment processing

Integrated payment processing can improve customer satisfaction by providing a more seamless payment experience. Integrated payment systems expedite the checkout process by accepting multiple payment methods, including credit/debit cards and the newest payment trends like mobile wallets.

For example, customers can use their preferred payment method, regardless of whether they are shopping in-store or online. This can reduce customer frustration and improve the overall shopping experience.

3. Robust security

Retailers risk fraud and data breaches, which can cause significant financial and reputational damage. To secure sensitive data, integrated payment systems have robust security measures, including encryption and tokenization. This reduces the risk of data breaches and boosts consumer trust in the retailer’s ability to protect their information.

4. Insightful business analytics

Integrated payment systems provide detailed sales reports and analytics. These insights help small retailers understand their best-selling products, peak sales times, customer spending habits, and more. This valuable information can guide business decisions and strategies to boost profitability.

5. Time and cost efficiency

Time is a precious resource for small businesses. Integrated payment systems automate transaction reconciliation, inventory updates, and sales data analysis. This leaves business owners more time to focus on core tasks, such as expanding their product lines or improving customer service. In the long run, it also eliminates the need for additional resources to manage separate systems.

6. Reduced errors

Manually entering payment information is prone to errors. An integrated payment system can help you reduce these errors, saving you time and money.

Integrated vs. non-integrated payment processing

Integrated and non-integrated payment processing differ primarily in their ability to interact directly with your point of sale system to handle payments and finalize transactions.

Integrated payment processing lets businesses accept payments from customers through various means like in-store, online, or by phone, all in a coordinated manner.

Conversely, a non-integrated payment processor doesn’t automatically record transaction data when a sale is made. This means you must input the data manually. As a result, you won’t automatically have access to information related to reports, inventory, etc.

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 payment methods, including 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.

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.

When choosing an integrated payment processing solution, you must consider the specific needs of your business. Some factors to consider are the types of payments you want to accept, the features you need, and the fees the solution charges.

Choose Your Payment Processor

Choosing the right payment processor can make your business run smoothly, help you manage your money better, and keep your customers happy. Here are a few things to remember when looking for the perfect fit.

1. Check the costs carefully

Although the pricing structures seem complex, a little homework can clarify it. Dig deep into each provider’s pricing before agreeing to anything. Review all the details to understand the rates and hidden charges.

Typically, pricing models fall into one of these buckets: interchange plus, flat rate, or tiered pricing. Get quotes from several providers so you can see how the costs of processing payments will affect your monthly budget.

2. Safety and PCI compliance

Taking payments means following strict security rules known as PCI compliance standards. These rules help to keep your and your customer’s data safe.

A payment provider that takes care of PCI compliance for you will save you a lot of effort—you won’t need to personally keep up with the latest (usually very complicated!) security requirements. A provider that actively monitors fraud and other security issues is a good one to consider.

3. Good customer service goes a long way

What level of help do you expect from your payment processor? It’s an important question to ask yourself. You’ll probably want to be able to reach out to your provider whenever you need, mainly if there’s an emergency. Make sure to read what other people say about the provider’s customer service before you agree to anything, so you know it’ll be there when you need it.

There’s No Payment Processing Without a Good POS System

Selecting a payment processor alone is insufficient for overall business optimization. Equally important is your selection of the best retail POS system. A robust POS system does more than merely facilitate transactions—it acts as the center for your business’s operations, overseeing inventory management, sales reporting, customer relationship management, and even employee performance tracking.

While choosing the suitable payment processor is a significant step, it must go hand-in-hand with selecting a comprehensive, user-friend, and efficient POS system that matches your business’s unique needs. The right POS provider can also guide you through choosing your payment processor.

And this is where KORONA POS stands out from many other POS providers. While KORONA POS is not a payment processing service provider, we understand the importance of choosing the right payment processing service for your needs. We advise store owners to help them select the best payment processing services that fit your budget. You can request a free cost comparison to see how much you can save with our trusted processing partners.

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:

• Integration Requirements: If you require seamless integration with your existing systems, such as your POS or eCommerce platforms, and value a streamlined user experience, integrated payment processing is the best choice.

• Security and Fraud Prevention: If data security and fraud prevention are top concerns for your business, integrated payment solutions with advanced security features can provide added peace of mind.

• Scalability and Flexibility: If your business has expansion plans or needs the flexibility to switch between payment processors easily, integrated solutions offer more scalability and adaptability.

• Cost Considerations: Evaluate your budget and cost structure. While integrated payment processing may involve higher initial setup costs, it can provide long-term cost savings through increased efficiency. Non-integrated solutions may be more cost-effective upfront but may have additional fees or limitations in the long run. Ultimately, the decision should align with your business’s unique requirements, goals, and resources.

Conclusion

In payment processing, the choice between integrated and non-integrated methods can significantly impact a business’s operations and shopping experience.

Integrated payment processing offers streamlined operations, enhanced user experience, improved security, and accurate reporting. Non-integrated payment processing, on the other hand, provides quick setup, flexibility, and cost-effectiveness.

Understanding the differences and weighing the advantages of each method is crucial in determining the right payment processing approach for your business. Consider your integration needs, security concerns, scalability requirements, and cost considerations to make an informed decision that aligns with your business goals.