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Integrated payments: Definition & how to use them

Integrated payments: Definition & how to use them

Brendan Tuytel, Contributor
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So much of a business’s financial activity occurs in silos. It’s the job of finance and accounting teams to record, reconcile, and match activity to ensure the books are up-to-date and accurate.

But businesses can save time on these tedious tasks by finding ways to connect the tools they use for their financial activity and record keeping.

One example of how you can do this is through integrated payments. Read on to learn about how this technology can simplify your accounting processes, save you time, reduce errors, and improve the payment experience for your customers.

Key takeaways

Integrated payments streamline payment processing by connecting directly to sales systems, saving time and reducing errors.

These systems enhance security with features like encryption and tokenization, protecting customer payment data.

Switching to integrated payments can improve customer experience by offering easier payment options and faster transaction processing.

What are integrated payments?

Integrated payments are a methodology for streamlining customer payments by embedding a payment processor directly into a point-of-sale system, website, or invoice.

Traditionally, payment processors are separate from the sales channel they’re going through. Customers who want to pay for a purchase get rerouted through an external payment gateway to submit their payment information with separate payment gateways for each payment method.

Now, directly integrated payment processors exist to facilitate multiple payment methods in a single interface directly embedded into your point-of-sale system, website, or invoice.

As an added bonus, integrated payments connect to other platforms like your accounting, customer relationship management (CRM), and enterprise resource planning (ERP) software. This helps keep all of your platforms up-to-date without manual adjustments.

How does an integrated payment system work?

Integrated payment systems connect the payment processor component directly to other parts of your tech stack. 

The payment processor directly embeds into whatever sales channel you use, like a point-of-sale system for in-person retail or your invoicing platform if you’re billing for goods or services. 

When a transaction is set to occur, the following steps are taken:

  1. Customer payment information is collected: The customer initiates payment through the integrated payment system using their payment method of choice.
  2. The payment is processed: The payment processor captures the payment information and initiates the transfer of funds.
  3. The transaction is completed: Once it’s confirmed that funds are available, the payment is collected and the transaction is completed (note: payment processing times vary, it may take multiple days before the funds are in your account).
  4. Data is synchronized: Necessary information from the transaction is forwarded to the connected parts of your tech stack. For example, the sales amount, fees, and sales tax collected would be synchronized with your accounting system.
  5. Reporting is updated: Each platform updates its reporting with the latest information so all reports are up-to-date.
Process of integrated payment system

An example of an integrated payment system in action

A marketing agency bills clients by invoices. Their typical workflow is to send an invoice and then request payment by check, ACH payment, or to receive credit card information over the phone.

Lately, payments are coming weeks after the invoice is sent. They ask their customers why and the most common answer is that after receiving the invoice, they forget to follow up with payment.

To combat this, the agency switches to an invoicing software that features an integrated payment system. Now the customers can make a payment directly from the invoice rather than having to manually set up payment.

Their new workflow is as follows:

  1. The customer is billed for services and receives an invoice
  2. The customer pays the amount directly from the invoice using one of the many payment methods offered including credit card, ACH payment, or wire transfer
  3. The payment is automatically recorded in the invoicing platform
  4. An integration with the accounting platform sends the invoice payment information and updated accounts receivable data through to the accounting software
  5. All reports in the invoicing and accounting platform are updated with the payment information allowing for real-time tracking

By switching to an integrated payments system, the agency makes it easier for their customers to pay while also saving themselves time reconciling transactions and performing manual data-entry.

Integrate BILL with any accounting system or ERP.

Benefits of integrated payment systems for businesses

Consider leveraging integrated payment systems in your business to enjoy some of the following benefits.

Saves time

Integrated payment systems save time for both you and your customers.

For your customers, they saved the experience of navigating through a separate payment gateway to get you paid. They enjoy a faster, streamlined payment experience by staying in-platform.

For your business, integrated payments save you precious time spent on manual data-entry and reviews. You win back time that can be spent on high-level, value-generating tasks.

Enhanced security

You have the responsibility to keep your customers’ payment information secure. How you collect and store that information plays a big role in that.

Integrated payment systems are designed with security in mind. Many use encryption to ensure high-risk data is protected by converting it into a coded entry only understandable to the payment processor.

If the worst-case scenario of a data breach occurs, no sensitive information is leaked unless someone has the encryption key.

Reduces errors

Not only does manual data entry take time, but there’s always the risk of human error. One misplaced decimal point or mistyped number and everything is out of balance.

With direct integrations, data flows seamlessly from one platform to the next exactly as it was recorded. You get peace of mind that the amount of the payment that’s processed will be the exact same across all platforms.

Enriched data

In every transaction is valuable information about how your customers interact with your business. If you’re using a separate payment processor, this information is siloed away from the rest of your reporting.

Switching to an integrated payment system gives you insights into the payment and purchasing behavior of your customers. Customizable dashboards and reports give you the insights you need to better manage customer relationships, improve marketing efforts, and optimize pricing.

Challenges of integrated payment systems

Many businesses benefit from the switch to integrated payment systems, however, some challenges need to be navigated as part of the process.

Upfront costs of switching

Making the switch to integrated payment systems may come with initial costs as you switch providers. Beyond the financial impact, there will be setup costs including the time and effort needed to switch systems,

Some integrated payment systems may naturally slot into your tech stack and have minimal impact on your operations. Do some research to find one that is most compatible with your workflows and existing tools.

Setting up the payment integrations

Once you’re set up on an integrated payment system, you need to create connections between the system and the existing parts of your tech stack.

In most cases, integrations are straightforward and there will be helpful guides that will walk you through the process. But some require extra work and testing to make sure the integration is working properly.

Generating a dashboard or custom reporting

With so much new data at your fingertips, you’ll want to find ways to surface the most important information so it’s easy to track over time. Typically, this is done with dashboards or customized reports.

It will take time to review all the new information you have access to and determine what has the most value. But the investment is worth it as these insights can have big impacts on your operations and client relationships.

How do integrated payments affect the customer experience?

The customer payment experience can be significantly improved with integrated payment systems. And when making a payment is easier, it’s more likely to happen.

Integrated payment systems accept multiple payment methods in the same payment portal. This conveniently lets your customers pay as they want to pay rather than forcing a method they may not be open to using.

These systems also facilitate one-click payments where the customer can pay directly on the website or invoice without worrying about navigating a new payment portal.

There are also e-receipts and tracking information that come with the payment. These features give customers better documentation and information that meets their needs.

Security and compliance features in integrated payment systems

Making the switch to integrated payment solutions doesn’t just impact your operations and customer experience. The switch also helps businesses stay compliant with industry standards of security.

PCI-DSS compliance

PCI-DSS stands for Payment Card Industry Data Security Standard. It’s a security standard that must be upheld when processing payments from credit cards to reduce fraud.

Integrated payment systems are generally PCI-compliant. This means businesses using integrated payment systems can meet industry security standards without worrying about the specifics of how they handle credit card payments.

End-to-end encryption

When a customer submits payment information to an integrated payment system, that data is encrypted with a code unique to the platform. The system can safely save this information without risk as it can’t be understood without the code.

Any time that information is used or sent to another platform, it will be unintelligible until the payment platform decodes it. This gives your customers peace of mind that their payment information is always protected.

Tokenization

Similar to encryption, tokenization replaces card information with a coded entry that only the platform can understand. This coded entry is called a token.

Only the integrated payment system can read a token. The token is unusable and unreadable by any other platform.

If there’s a data breach, no payment information will be leaked as it will only be stored as a token.

Getting Started with Integrated Payments

For businesses that bill customers by invoices, BILL can improve your invoicing experience and streamline workflows in addition to leveraging integrated payments.

Send invoices that enable customers to pay directly from the invoice. With automated reminders, auto-charge, and auto-pay, you only need to worry about sending the invoice as the platform handles the collections process.

BILL connects to the top accounting software including QuickBooks, Xero, and Sage to automatically update your books with every invoice sent and payment received.

Automate your financial operations—demo BILL today.
Brendan Tuytel, Contributor

Brendan Tuytel is a freelance writer, who writes content for BILL. He draws from his studies of economics and multiple years of bookkeeping experience where he helped businesses understand and measure their financial health.

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