6 Reasons Your Business Should Consider a Customized Payment Processing Integration
Business needs can vary drastically, but one thing remains consistent: payment processing is a must. Yet, as consumers, we may not often stop to think about the intricacy of payment processing.
Click a button, swipe a card, or transfer funds, and you’re well on your way. That's not always true on the business backend, where payment processing can be a complex necessity that requires a well-designed, secure, and efficient fintech solution.
For many businesses, plug-and-play solutions like Stripe or PayPal, represent reliable processing solutions for straight-forward transactions. However, as transactions and financial management needs become more complex, businesses may need an additional layer of support or more advanced integrations to complete, manage, and track transactions and related activities. .
Customized integrations help startups, SMBs, or enterprise businesses by bridging the gap between their existing payment processing solution and their business needs. How does payment processing work?
How does payment processing work?
Before talking about how payment processing works, we need to identify the primary players: merchant accounts, payment processors, and payment gateways.
Merchant account
A merchant account is a commercial bank account that acts as the middle man between your customers and your business bank account. It is used only to accept customer or client payments, specifically those made via credit or debit card.
When your company receives payment, the funds go directly to your merchant account. You can then transfer those funds to your traditional business bank account to manage expenses, like utilities, rent, etc. In addition, merchant accounts may accept online payments or payments made through a card processing terminal.
Payment Processors
While a merchant account stores the money, a payment processor oversees, facilitates, and transmits relevant data to the customer and your merchant account. Payment processors log activity and relay that activity to both your customer’s bank and your account. It also ensures a transaction’s integrity by verifying that the provided information (e.g., CVV, expiration dates, cardholder info, etc.) is correct.
Payment Gateway
Payment gateways are essentially virtual point-of-sale systems. For example, if a customer completes a transaction in person, they may swipe their card through a POS system or credit card reader.
If, however, they complete a transaction via online checkout, they use a payment gateway. The payment gateway captures the information, and that data is sent to the payment processor.
When each payment player performs as intended, a customer will enter their information at check out. The payment gateway will capture and send that information to the payment processor.
The processor will then perform an integrity check on the information. If everything is accurate, the transaction is complete. Once the payment is processed, the funds will enter into the merchant account, where they will remain until the merchant makes or schedules a withdrawal or transfer.
Custom Payment Processing Solutions vs Off-the-Shelf Payment Processing Software
Today there are numerous payment processing solutions available to business owners. Companies like Stripe, Clover, Square, etc. all offer basic payment processing solutions that business owners can pay for. Because payment processing can be so complex, many businesses are quick to turn to these off-the-shelf payment processing solutions. And though they may be a popular option, many clients find that they lack reliability, security, and efficiency when integrated with existing or new platforms—fintech or otherwise. Though each business is different, we’ve found the following six benefits to be true for clients who choose custom payment processing software over an off-the-shelf alternative:
1. Customized for easy integration
In some cases, integrating existing payment processing solutions with backend and customer-facing platforms can be challenging. This is particularly true when you want to automate or streamline processes that are complex, like automatic billing, or unique to your business and therefore not easily accommodated by basic applications. Those shortfalls can have sweeping and detrimental effects on the security, integrity, and efficiency of payment processing and related activities within your company. Custom payment processing software improves integration and makes it easier to provide customers and employees with a transactional experience that meets your standards.
2. Fewer fees
Payment processors and payment gateways aren’t free to use. Typically, merchants must pay for services upon sign-up or on a subscription basis, but that’s not the only cost associated with third-party payment processing. Each time a customer completes a point of sale purchase or makes their way through online payment processing, the merchant is responsible for per-transaction fees. If your customers frequently or only use credit cards or electronic payments, transactional fees can add up. Over time, those fees can eat away at your revenue. However, custom payment processing software can streamline billing processes, reduce unnecessary transactions, and give your business more control when handling chargebacks, fraud concerns, recurring transactions, and refunds. As such, customized integrations can reduce the amount of money spent on fees and related expenses.
3. Enhanced security and compliance
Payment processing is rife with compliance and regulatory demands, all of which are implemented to secure consumer and company data. For instance, payment processors and merchants must adhere to the requirements set by the Payment Card Industry (PCI) Data Security Standards (DSS). Failure to do so can lead to data vulnerability, steep fines, and negative brand awareness. Popular payment processing solutions are held to these standards and represent a secure and reliable way to process payments. However, as your transactional needs become more advanced and your business relies on cross-company platform integrations, manual processes, or on-the-fly customizations, the risk of costly security or compliance issues increases. By investing in customized payment processing software, you can ensure that transaction-based processes remain streamlined and secure and data is collected, processed, and stored properly.
4. Support for multiple payment processing solutions
Today’s consumers have their pick of payment methods, but that doesn’t mean that every off-the-shelf payment solution supports their chosen method. Some may not accept certain credit cards, while others may be limited to a specific payment platform, like PayPal, Amazon, or Apple Pay. In an effort to accommodate customers, you may need to rely on multiple payment processors, and that can create a series of back-end integration issues. Customized software makes it easy to integrate multiple payment processors with your backend platforms, applications, and workflows.
5. Scalable to meet evolving business needs
Your business is ever-evolving. At times, that may mean an influx of customers and transactions. At other times, especially during traditionally slow seasons or quarters, those things may decrease. Customer needs and payment processing trends also change over time. Custom-designed payment processing software empowers your business to change alongside business and consumer needs, whether they’re industry, consumer, or company-specific. In addition, because you’ll own the customized software, you’ll be able to adapt as necessary instead of relying on external applications or complicated backend workarounds to address needs.
6. Centralized payment processing
We often think of payments as a fluid process, where funds are easily transferred from customer to merchant and vice versa, but that’s not the case. Payment processing looks different depending on who is receiving the funds. That can be challenging when businesses need to process refunds or otherwise deposit funds into a customer’s account. Investing in custom payment processing solutions makes it easier to centralize activities and quickly and efficiently move funds as required. There’s no need to go through a prolonged dispute or arbitration period or rely on a third party to repair or reinforce the customer experience.
At DADEN Software, we strive to provide clients with the custom software they need to elevate their business above the competition while also implementing applications that will simplify everyday tasks for customers and employees alike.
Your business can’t operate without a reliable payment processing solution, but that doesn’t mean you need to put the future of your business in the hands of a third-party solution. Investing in a custom payment processing solution will empower your business to manage transactions and funds in a way that supports the needs of not only customers but your business as a whole.
Contact us today to to schedule a free innovation session so we can work together to design a payment solution that helps your business grow and evolve.