Any merchant who takes payment-card based cashless payments has to balance a seamless customer experience with a high level of payment security. Using integrated payments can make achieving a balance much easier.
This popular form of payment processing will not only ensure greater convenience for your customers by eliminating the need to enter payment information with every purchase, but also ensure a high degree of security while giving you valuable insights into your sales and customer behaviour.
In this guide, we’ll explore what integrated payments are, how they might work for your business, and the many benefits they can offer you and your customers.
The term integrated payments can technically cover any payment system where your point of sale (POS) system transmits data from transactions to other critical software used by your business.
In practical terms, integrated payments are usually part of a system where a POS is connected with other tools supplied by a payment processor, such as a business account, inventory management software, and others.
This allows you to manage payments and keep accurate records without having to manually record the details of a transaction, transmit payment data between different terminals, or carry out other tasks to ensure accurate and useful records.
Integrated payment processing works by consolidating the various touchpoints that merchants use to facilitate and manage payments into one system.
With integrated card payments set-up at your business, you’ll be able to connect your payment methods, sales, inventory, and accounting in one system. This way, you’ll know that once a payment has been taken the data associated with it will be shared seamlessly between other essential systems.
While the details of integrated payment systems can vary greatly, all systems tend to include 5 key steps:
Customer payment: A customer will pay for a product or service through your POS system using their credit or debit card details, or a digital wallet identifier.
Authorisation: A secure payment gateway ensures that the payment is valid and secure with funds available in the associated account.
Data sharing: The payment gateway shares the data received with the other nodes integrated in your payment system, for example accounting software.
Funds transfer: As with any other payment made through your POS, the funds will be transferred to your merchant account once authorised.
Reporting: The integrated payment system will maintain accurate records for relevant touchpoints, such as your inventory management software, your accounting tools, and so on.
Imagine, for example, that you run an SaaS tool that depends on an online payment gateway, customer relationship management (CRM) platform, and accounting software to manage its operations and finances.
With integrated payments, you’ll be able to process a payment as normal, have this transaction data logged under a specific contact profile within your CRM, then sent on to your accounting software.
Many payment providers provide integrated POS systems by default. However, it’s still important for merchants to understand the difference between an integrated and non-integrated POS system when you’re planning to optimise your business’s approach to payment processing.
Here’s a summary of some key features distinguishing each system, and what these will mean in a business context:
Non-integrated POS systems function independently of other crucial systems, such as accounting and inventory management systems.
Because they have a tendency to create data silos, non-integrated POS systems can often require manual data entry and admin to ensure all business tools and records remain consistent.
Non-integrated POS systems generally have lower up-front and maintenance costs compared to integrated payment systems. However, because of the increased reconciliation and data entry requirements and risk of errors happening, non-integrated POS systems often cost you more money in the long run.
Integrated POS systems tend to have much higher efficiency than their non-integrated counterparts, as they’re designed for seamless communication between other key business functions, such as customer databases, accounting tools, and inventory management.
Integrated payment systems also ensure a certain standard of data accuracy. Because the payment data is synchronised between systems automatically, the risk of financial discrepancies is greatly reduced, with less room for human error.
As a small business owner, it’s essential to maximise efficiency in all possible areas and free-up time and resources as you grow.
Though you may not have considered finding an integrated payment system before, there are many ways that this payment processing model can help you succeed as a small merchant when running a business.
Here are some of the most significant benefits of integrated payments for small merchants in the UK:
The benefits in efficiency and convenience offered by integrated card payments are significant. However, it’s important not to forget that using integrated payments at your business can also be an effective way of improving security.
Integrated payment systems incorporate several layers of security in the process of transferring data from one touchpoint to another, using advanced security protocols such as PCI compliance and encryption to minimise the risk of credit card fraud and other threats.
This can be a particularly big advantage for e-commerce merchants, where large volumes of customer card data can make the business a target for criminals.
In a modern climate where security and data privacy are hugely important in the eyes of consumers, using integrated payments can reassure your customers and foster a strong sense of trust and customer loyalty in your brand.
Any small business that deals in physical goods, for example e-commerce stores and subscription box businesses, need to have robust inventory management to keep their day-to-day operations running smoothly.
With an integrated payment system, you can enjoy instant inventory updates with every transaction you process, ensuring you always have an accurate view of your business’s stock levels.
When your integrated payment system tracks items sold and updates your inventory management software accordingly, you and your staff will have an accurate real-time image of customer demand. This will help you avoid overstocking products that don’t see high demand.
Overall, having this detailed view will help you project for more efficient inventory management, reducing storage and carrying costs and .
When determining what is good customer service, many business models rely on having fast and consistent communication between the point of sale and various other tools used by staff.
Integrated payments can make this communication much more fluent and reliable, leading to greater efficiency in your service and a better customer experience.
If, for example, you’re running a small cafe or restaurant, integrated payments can be a fantastic way to reduce order processing time. When a member of staff takes an order from a customer, this information will be relayed instantly to the kitchen, where the team can start working on the order.
This will not only mean that your customers get their order sooner, but that there’ll be a reduced chance of manual errors, ensuring they’ll get exactly what they ordered.
Many small online businesses, for example e-commerce stores, are accessible to a broad range of customers and process large volumes of transactional data.
In some legacy payment processing systems, merchants would have to engage in a lot of manual admin work to properly analyse this data and find actionable insights such as trends in customer preferences.
With an integrated payment system, previously separate data sets are consolidated in a centralised system, making it easier to mine this data for insights that will inform your future strategy.
If you’ve been in business for some time and you’re looking to improve efficiencies, you may already have a payment processing system in place that you’re familiar and comfortable with.
Though making the switch from a legacy payment system to integrated payment may seem like a big leap, it’s important to note that adopting integrated payments doesn’t have to disrupt the kind of workflows you’re used to.
Most integrated payment systems are designed to integrate, rather than replace popular legacy systems.
This flexibility means that you can modernise and optimise the way you process payments, without having to completely overhaul your established processes or free up resources for training employees.
Small business owners often have to fill several different roles when they’re first starting out. Aside from being the CEO of the business, it’s likely that you’ll have to act as a hiring manager, accountant, head of marketing, and much more.
A lot of the tasks involved in maintaining professional and accurate accounts for your business can be automated away through integrated card payments.
With integrated payments, recording sales, generating invoices, and other accounting tasks can be automated with transactions as a trigger. This means you can reduce the amount of manual accounting administration and stay secure in the knowledge that your financial records are up to date.
It’s common for many small businesses such as cafes and e-commerce stores to run programs that reward customer loyalty for those who shop with them frequently.
With an integrated payment system that tracks customers’ purchases, businesses are able to automate adding loyalty points to a customer’s account, and quickly check on the rewards customers are entitled to when they come to claim them.
Aside from further reducing the admin burden for merchants, incorporating loyalty programs into your integrated payments will make participation easier for your customers, as they’ll no longer have to carry physical loyalty cards to participate.
This added convenience will motivate customers to make repeat purchases and help you achieve a more healthy and predictable cash flow.
Aside from the various benefits integrated payments can offer you as a small business owner, there are aspects to these payment systems that will also benefit your customers directly.
Here are some of the key ways that an integrated payment system will improve customer experience:
With payment processing, authorisation, and the transfer of funds all contained within one streamlined system, an integrated payment system will benefit your customers by making their payment experience significantly faster and more convenient.
Whether in a physical store setting, an e-commerce website, or a service-based model, customers will appreciate the guarantee of fast and hassle-free purchases.
Consumers have a range of different in-store and online payment methods available to them. With integrated payments, you can accommodate a wider variety of payments compared to legacy systems, and give your customer base the high degree of payment flexibility they want.
Whether your customers tend to look for businesses that facilitate payments with their favourite digital wallets, buy now pay later instalment plans, or more niche online payment methods, an integrated system will help to attract a broader range of customers through a promise of flexibility.
With cybersecurity threats like card not present fraud and widespread concerns about the way that businesses gather and use customer’s data, having robust security is an essential prerequisite to making your customers feel comfortable when shopping with your brand.
Integrated payment systems come with a broad number of in-built security layers, such as tokenisation and data encryption, to protect customers’ sensitive data during transactions.
Whether they’re making their purchase in-person or through an online payment gateway, offering secure payments will help to foster more trust with your customers and give them greater peace of mind when dealing with your business.
Integrated payment systems are designed to maintain clear and detailed records of the various transactions they process.
This not only reduces the amount of admin required by the merchant, but also make for a more convenient shopping experience for your customers.
Because integrated payments create instant records of transactions after they’ve been processed, they can give customers easy access to detailed digital receipts and purchase history.
With access to digitised records, your customers will find it easier to keep track of their personal expenses and budgeting, initiate exchanges or returns when necessary, and enjoy a higher level of financial transparency when interacting with your brand.
Integrated payments can be used alongside popular CRM platforms to build a more detailed customer profile for each sales account.
Equipped with this data, you can work to create more personalised sales experiences with your client and customer contacts, offering tailored recommendations and offers, and building a more intimate understanding of your customer base and target market.
Personalised experiences are an increasingly powerful draw for modern consumers, and integrated payment solutions are a highly effective tool you can use to provide them.
There are a wide range of systems that can be part of an integrated payment solution. These can range from simple card readers used in a physical POS system all the way to customised loyalty programs.
To help you get a better idea of what integrated payments can mean for your brand, here’s 6 systems that can be included in an integrated payment solution.
Merchant accounts: A form of account provided by a payment processor that’s been set-up to receive digital payments through a POS system or payment gateway.
E-commerce platforms: Platforms used for building an online store can be used to feed datasets like your product listings, customer shopping carts, and behaviour during checkout into your integrated payment system.
Mobile wallet apps: Apps allowing customers to make purchases both through online platforms or in-person using Near Field Communication (NFC) technology, represent another popular payment method that can be brought into your integrated payments system. This can help to keep payments flexible and accessible for a wider range of customers.
Payment processing application programming interfaces (APIs): Most small business owners will be able to process payments and track their cash flow effectively with the tools facilitated by a reputable payment provider. However, there may be cases where you have to embed payment methods into customised mobile apps, websites, and other tools to achieve your vision for your business. Payment processing APIs are another system that can be used in your integrated payment system, helping you better organise the data that passes through your business’s payment systems.
Inventory management tools: If you’re running an e-commerce business, a subscription box service, or any other business that deals in physical products, it’s essential to have a clear view of your stock levels, trends in demand, and other variables relating to inventory. Inventory management tools are a popular system to connect with integrated payment systems, as the movement of data can update stock levels in real-time, and give merchants greater support in their inventory management.
Gift card processing: For many businesses, gift cards are a great way to stimulate new business and encourage word of mouth marketing among their target audience.
Similar to the way they process sales trends and stock levels to give merchants a more detailed view of their business’s performance, the data generated from digital gift card programs can also be transferred through a wider integrated payment processing system, helping merchants to understand the program’s successes and shortcomings, and how it can be improved.
Disclaimer: The contents of this page are intended for informational purposes only and should not be construed as professional advice. For matters requiring legal or financial expertise, it’s recommended to seek guidance from qualified professionals.
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