What Are Integrated Payment Solutions and Why Are More Small Businesses Using Them?

July 26, 2023

The last few years have seen an explosion in payment options. At the same time, every industry has experienced a growing complexity in financial operations, as organizations broaden their markets and even small businesses can become global players in their niche.

To handle these market dynamics, many companies have turned to integrated payment solutions. However, penetration remains limited among small businesses, as many startups and more compact firms get by on traditional models.

This fact plays out in the statistics. According to McKinsey, 50% of small businesses were using integrated payment solutions as of 2022. That means half of firms have yet to take advantage of this option. Is moving into a more unified system of managing transactions the right step for you?

In this article, we'll help you answer this question. We'll explain what integrated payment solutions are and what benefits they can provide. With this, you'll get the foundation you need to begin deciding whether this investment makes sense for your startup or small business.

What are integrated payments?

In traditional payment structures, many financial processes occur on separate tracks. You might have one system for your POS and another for processing credit cards. Under these conditions, information often needs to be entered multiple times.

This is known as a non-integrated payment. A sale occurs. The customer pays by credit card, with the information delivered to your system. Meanwhile, separately, information needs to be entered manually into the POS. What's more, this could just be the start of the redundant work. Further effort might be needed to update inventory or accounting software.

You can see how this presents inefficiencies. Updating each system along the chain takes additional work. This also comes with the increased chance of errors or missed steps along the way. Mistaken or absent data can occur, creating costs and expanding the likelihood for redundancies.

Integrated payment solutions are meant to solve this problem. As the name suggests, the various parts of your payments process are tied together into a seamless whole. Customer payment information is used to complete a purchase and then automatically shared with any other related systems.

Benefits of integrated payment solutions

Moving to an integrated payment solution requires a leap. Any disturbance to the status quo, especially in such a central part of your day-to-day business, raises concern. As such, it's no surprise that many organizations are hesitant to jump into a major upgrade.

Still, to reach an informed decision, you need to understand the upsides. From there, you can weigh the costs of endeavor and determine whether the investment in an integrated system makes sense at this time. Here are some of the benefits you can expect from moving forward:

Lower Costs

Without integration, you often need manual data entry. Payment information needs to be logged into your system separately. This essentially creates busywork — low-value effort that becomes an expensive blackhole of your employees' time.

Better Accuracy

Manually inputting data also opens up the chance for human error. Transposing numbers, putting data into the wrong entry box, misreading the initial information — any number of mistakes could arise. These errors can have cascading effects. At the very least, it creates the need for intensive QA efforts.

An integrated approach can prevent this problem. Since information moves seamlessly from one part of the system to another, you minimize the chance of human error.

Expand Your Customer Base

Integrated payment solutions also broaden your ability to close sales. This comes by allowing a wide variety of payment options. Depending on the system, these might include:

  • Credit cards
  • Payments through mobile
  • Online platforms like PayPal and Cashapp
  • Gift cards
  • Cryptocurrencies

Meanwhile, an integrated payment offering is also likely to provide a better customer experience. As a result, you further improve your ability to convert sales and keep clients.

An integrated payment offering is also likely to provide a better customer experience. As a result, you further improve your ability to convert sales and keep clients.

What to look for in an integrated payment solution provider

Even if you decide to move forward with an integrated payment solution, you have other decisions to make before you install a new system. You'll need to select the right offering for you from a crowded market of providers. Here are a few categories to consider as you make your choice:

  • Cost: Look at both the upfront and ongoing expenses related to any new system you consider.
  • Security: Obviously, the safety of financial information is paramount. Seek out providers that can ensure data security.
  • Scalability: You may be a small business now. But hopefully this is a temporary condition. As such, you need a payment system that can grow with you.
  • Ease of Use: Gravitate towards systems that are intuitive, both for your employees and for the customers transacting business.
  • Customer Experience: Look for aesthetic qualities beyond ease-of-use as well. Your customers will interact with the payment portion of the system at the crucial moment of sale, meaning a strong user experience is a critical concern.
  • Ongoing Service: Will your integrated system provider be there if things go wrong? Check their service reputation and get the assurances you need to trust the offering's reliability. After all, outages could be devastating.
  • Data Reporting: An integrated process provides the benefit of generating useful data. Make sure your system can capture these potentially meaningful insights.
  • Other Features: What other features does the integrated system provider have to offer? Some have separate products or even financing plans. Take these into account as well.

How to integrate your payment system

As you look to install an integrated payment system, the details matter. As such, you should carefully plan the process, minimizing the chances of potential snarls and maximizing the long-term value. Here are some steps to keep in mind:

Review the Market

What system makes sense for you and your customers? Answering this question requires a detailed look at the situation.

Start by understanding your own business. Gather data about your customers and look at your sales process. This will help you prioritize the features you need in an integrated payment system. From there, you can take a broad view of the market, developing a set of criteria you can use to judge potential partners.

Select the Right Partner for You

Fintech has represented one of the key business trends of the past several years. Rising interest rates and a murky economic outlook have undermined the industry in 2023. Still, the market remains flush with diverse competitors, giving you a wide variety of options as you look to create your integrated payment system.

A large number of choices increases your ability to find the perfect solution for you. However, the sheer volume of competitors also creates a challenge. You'll need to devote resources to a stringent research process to discover the ideal match for your business.

Develop a Detailed Transition Plan

Moving from one payment system to another can cause disruptions. Any potential hiccup can interrupt sales and potentially damage your brand. As such, you need to make the switch as smooth as possible.

This starts with a detailed transition plan. Figure out the logistics of implementing and maintaining your new system. At the same time, develop procedures for moving from your old platform to the new one.

Stay Current with Ongoing Developments

Customer demands will evolve over time. Meanwhile, technology will continue to develop. As a result, even your new system will seem out of date at some point.

Look for an integrated payment system that has the flexibility to adapt through the years. This way, you can add new functionality as it becomes necessary. And as you move forward, continually review your system and look for improvements.

Look for an integrated payment system that has the flexibility to adapt through the years. This way, you can add new functionality as it becomes necessary.

Upgrading your payment system

Integrated payment solutions offer a variety of benefits for startups and small business owners. In a complex financial world, they let you save time and money, while reaching a broader market.

Still, any small business has to weigh the value of an investment versus the potential other uses of scarce resources. Use the information provided here to determine whether using one of these solutions is right for your company. If it is, you'll also have the basics you need to get started on the process.