credit card processing integration

You hear it most every day on the phone, I’m sure.  Someone calls you from the credit card processor du jour and tells you they want to give you a credit card processing integration.  Or, maybe it’s the same one guy who’s been hounding you for months (hopefully in a professional manner), but you still don’t quite know what he’s selling you… What’s the deal?  You think.  Why would I want to do that?  Or, maybe the concept of a credit card processing integration is entirely new to you, and you’re genuinely curious about the implications of using such a system.  I’m happy to let you know that using a credit card processing integration makes life much better–no matter how you slice it.  There are three distinct ways something as simple as an integration can greatly improve your quality of life at work.  This is a monster of a post, but you should come away from it having learned a good bit, so read on!  I’ll try to make it interesting.

One: Using a credit card processing integration gives you more time to do other things

If you don’t use a credit card processing integration now, your process for every transaction might look something like this:

1. Take order over the phone, on the internet, or in person.

2. Walk over to card terminal, swipe or key in credit card.

3. Print paper invoice and attach paper receipt to invoice, file away invoice for later.

4.  After business is closed, sit down at accounting system with stack of unpaid invoices.

5. Sort through invoices and receipts, taking care to match them correctly and make sure everything is marked as paid.  Balance general ledger to reflect this.

6. Cry.

Whereas if you used an integrated system, your process would look like this:

1. Take order over the phone, on the internet, or in person.

2. Sit down at accounting system and swipe or key in credit card directly.

There isn’t even a third step (although I took a liberty in leaving crying off the list)!  That’s really all there is to it.  Now, just imagine what you’d be doing rather than sitting down entering payments into your system at the end of the day… Maybe you’d be working on something else more pressing.  Maybe you’d go home early!  No matter what, you get a little bit of your life back whenever you use a system that does work for you, and that leads me to my next point.

Two: You can save money on labor costs with a credit card processing integration

It follows that if you cut all those steps out of your daily routine and get to go home early, you save yourself a bit of aggravation, but, if you employ someone else to do the double work at the end of the day, you can cut labor costs by simply not having that extra work to do!

How much money does that give you?

Let’s be pessimistic and say entering payments into your accounting system only takes a half hour every day and you’re open five days a week.  That means you save 2.5 hours per week.  Multiplied by 52 weeks per year, you save 26 hours of labor.  And, multiplied by your accountant’s hourly rate, that might be a significant chunk of change back in your pocket.  Not bad for cutting out a half hour every day!

Of course, if you really need this integration because you’re spending hours after work or during work marking unpaid invoices, the labor savings will be significantly higher, not to mentioned the aforementioned time savings.  There is one final point that seems to sway most people if the time savings and labor cost reductions don’t do it, though.

Three: Using a credit card processing integration saves you money on the transactions themselves

This tends to be the deciding factor in whether or not you’ll switch to a credit card processing integration from a non-integrated (but familiar) solution.  Time savings makes life less stressful, which is great, and labor cost gives a little cash back to you too, but, compared to saving money on the transactions themselves, those piddling gains might not mean a thing to you…because when your integration has the power to give you lower transaction costs, you stand to gain significantly.

Let’s say you operate a one-man shop selling very expensive computer programs to other tech businesses.  Each piece of software costs $10,000, and sometimes you go a day or two without a credit card sale.  We immediately know you won’t be intrigued much by the time savings, because you only spend a couple of minutes each day–or maybe none at all–marking your invoices as paid in your ERP system.  You won’t be saving much money on labor costs for the same reason; even if you hire someone else to do your bookkeeping, it won’t save much time at all to have an integrated system.  Where’s the draw?

The fact is some processors who provide credit card enhancements try to give you an advantage by qualifying transactions at lower interchange levels.  Be wary that NOT all processing integrations come with this advantage, but, let’s consider what happens when you come across one that does.  Let’s say for a moment that you’re that software business owner from before, and you make 15 sales a month for $10,000.  Your credit card volume, then, is $150,000.  Let’s also say that, since you’re selling solely to other businesses, they’re all using corporate credit cards.  And, finally, let’s say, for the sake of simplicity, that they’re all using very specific cards, Visa purchasing cards, which normally cost you 2.65% of a transaction’s volume to accept for payment.  Now, let’s crunch some numbers.

credit card processing integration

The fun part

We know that right out the door, irrespective of any other fees and charges–which, let’s face it, will be trifling in comparison to a 2.65% rate for a $150,000 volume–you’re paying $3975 every month.  That’s just the cost of doing business with credit cards, you figure.  But, it’s not as set in stone as you may think.  Using a properly developed credit card processing integration can qualify that same Visa purchasing card at just 1.95%.  Now, if everything else stays the same, that same $150,000 only costs you $2925.  So, you save over $1000 every month…for doing absolutely nothing.

Now, imagine if you also paid a staff of 2 or 3 to help with entering invoices into your ERP system, and you ended up saving their labor costs and making everyone less stressed around the office.

The difference in the company morale would be absolutely staggering.

Now, of course not every customer of yours is going to use a Visa purchasing card, even if you’re strictly B2B.  But, if you use a properly developed integration, the re-qualifications across the board end up cutting 0.5% to 1.0% from your rates.

A gentle push & conclusion

This is, first and foremost, an educational piece, but, I would be remiss if I didn’t point you in the direction of some of our own credit card processing integration pieces (for Sage BusinessWorks, QuickBooks, Peachtree, Microsoft Dynamics NAV, and MAS 90, for example), which do all of the things I just explained, and more.  Do you feel like your business would benefit from something like this?  Give us a buzz and we’ll put together a savings comparison for you.

In any event, I do hope you took something away from this article.  Credit card processors operate in a sadly saturated industry, and there tend not to be very many solutions that really benefit businesses. (Or use technology from the ’70s.  I’m looking at everyone who’s ever hocked their special black box terminals and said they were the best, yech.)  Solutions like these help businesses do a little more and take a little load off every single day.  Hopefully you get to take advantage of things like them if you ever have the chance.