Industry Guide

Integrated Payment Processing

Integrated payment platforms have the power to help merchants streamline operations, centralize reporting and optimize the customer experience

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What are integrated payments?

Integrated payments refer to a consolidated approach to accepting and processing payments within a business. As its name implies, integrated payments require integrating payment processing systems with other core systems, such as eCommerce platforms, point-of-sale (POS) systems, accounting software, order management systems and enterprise resource planning (ERP) systems.

By integrating their payment processing infrastructure with other systems, merchants can automate data capture and transfer, streamlining operations and ensuring that all systems have access to the same accurate, up-to-date information.

What is the difference between integrated and embedded payments?

Integrated payments and embedded payments are similar, but distinct concepts. With integrated payments, payment processing infrastructure and core systems are connected and able to communicate with each other in real time using application programming interfaces (APIs); however, these systems remain separate and are maintained by two different service providers.

In short, although all embedded payment systems are integrated, not all integrated payment systems support embedded payments.

With embedded payments, payment processing capabilities are embedded directly into core systems and applications, and both payment processing infrastructure and core systems are maintained by the same service provider.

Embedded payments essentially take the concept of integrated payments one step further by consolidating everything within a single platform. In most cases, solution providers work closely with payment partners to license and integrate payments into their solutions. The only problem with this approach is that updates to these unique integrations are often slower, issues typically take longer to resolve and end users are stuck with the same payments provider unless or until they change solutions. 

How does integrated payment processing work?

Integrated payments automate payment acceptance and processing, saving businesses the time and effort of keeping physical receipts, printing out invoices and having to manually match accounts receivable to a general ledger.

Here’s an overview of how integrated payment processing works:

  1. Payments Initiation: When a customer initiates a payment through a system with integrated payments, it triggers a request to the merchant’s integrated payments solution. The request will include any pertinent details about the transaction, including the purchase amount, the customer’s information and their chosen payment method. Many integrated payment solutions support a wide variety of payment methods, including credit or debit cards, digital or mobile wallets, and bank transfers.
  2. Payments Authorization: The integrated payments solution captures the request in a PCI-compliant environment, evaluates the transaction details, determines whether it’s a legitimate request, selects the appropriate processor, tokenizes the primary account number and securely routes the request for authorization. Once the integrated payments solution receives an approval authorization code, it notifies the platform with which it’s integrated that the transaction is approved.
  3. System Processes: Once the primary system receives payment approval, it moves to the next stage of its internal process — as well as notifies or updates any dependent systems — to deliver the customer the product or service they purchased.
  4. Stored Details: The integrated payments solution securely stores the transaction details using the payments token it generated. The matching payment details are stored inside a token vault and that token — or another unique ID — is then used in all other systems to facilitate interfacing and updates. In many cases, card networks return approvals with their own token, which they expect the merchant to use the next time they need to process an authorization request for that customer. Networks will process these authorizations at a discount, so any integrated payments solution must be able to either associate this token with the one already created and stored or swap them.

What are the benefits to implementing integrated payments?

Integrated payments offer a wide range of benefits to merchants, including:

  • Streamlined Operations: Integrated payment solutions eliminate the need for manual reconciliation processes. Instead, they automatically capture and transmit payment details to core systems, including accounting software, ERP systems, loyalty management systems, inventory management systems, order fulfillment systems and so on. This not only increases efficiency and boosts productivity for accounts receivable teams, but also reduces the risk of human error during data entry and provides immediate access to transaction insights for accurate real-time reporting.
  • Centralized Reporting: Speaking of reporting, many integrated payment solutions offer built-in data analytics and reporting capabilities, enabling merchants to access and analyze transaction data and generate reports. Based on this information, merchants can more easily monitor customer behavior and market trends, identify anomalous and potentially fraudulent activity, and make more informed, data-driven decisions across their organizations.
  • Enhanced Security: From data encryption and tokenization to machine learning algorithms and strong customer authentication, integrated payment solutions often include robust security features and protocols to safeguard sensitive payments data, including customers’ payment credentials. When combined with analytics and reporting, these capabilities also enable merchants to detect fraud sooner, mitigating fraud risk to customers and chargeback risk to merchants and reducing merchants’ compliance burden.
  • Cost Savings: By integrating payment solutions with their ERP systems, merchants can lower credit card processing costs through interchange optimization. Interchange optimization refers to the strategic management of interchange fees — transaction fees merchants pay to card issuers and payment networks for processing card payments — in order to minimize costs. By providing access to rich transaction data — including level 3 data processing, such as product codes, invoice and order numbers, and tax rates — integrated payment solutions increase the likelihood of merchants qualifying for lower interchange rates.
  • Preferred Payment Methods: Integrated payment solutions support a wide variety of payment methods, including traditional payment methods such as credit and debit cards and alternative payment methods such as digital wallets, digital currencies and buy now, pay later. This degree of flexibility contributes to a better overall customer experience, enabling consumers to use their preferred payment method, and creates more sales opportunities for merchants. With the right solution, merchants can even add popular new payment methods, further expanding their customer base and boosting revenue.
  • Optimized Experiences: Integrated payment solutions offer customers more ways to pay, so that they can purchase products using their preferred payment method. And, since they integrate with various systems, including eCommerce platforms and POS systems, integrated payment solutions also enable customers to make payments through their preferred channels, whether that’s in-store, online or through a mobile application. This eliminates friction from the checkout process and enhances customer satisfaction, which has a positive impact on conversion rates and customer retention.

How can I implement integrated payments in my business?

To implement integrated payments, you first need an integrated payments platform. A payments service provider (PSP) can deliver the platform itself and offer live support to help set up integrated payment processing, while the PSP’s development team will supply the APIs to integrate the platform with your existing systems.

A woman is sliding her credit card through the point of sale system while the cashier observes
Paying by credit card.

What should I look for in an integrated payments platform?

When selecting an integrated payments platform, there are a few important things to keep in mind:

  • What type of platform do you require? Do you need a plug-and-play solution, or one that can be customized according to your business’s needs? Which core systems will it need to integrate with? It’s important to have a clear sense of your needs and to share them with your PSP to help ensure that you choose both the right solution and the right provider.
  • Who will be responsible for implementing the system and setting up integrations? That depends on your organization’s capabilities. Does your organization have the internal IT resources to implement the solution, integrate it with your core systems and establish a connection to the payments gateway yourself, or will you require support from the PSP and its development team?
  • How does the PSP handle security and compliance concerns? The right integrated payments solution should have robust data protection and fraud prevention measures in place, both to keep customers’ sensitive data safe and to ensure your compliance with relevant regulations, including anti-money laundering regulations, know your customer requirements and Payment Card Industry standards.

How does ACI Worldwide support integrated payment processing?

The ACI Payments Orchestration Platform provides integrated payment processing and much more. A vendor-agnostic, cloud-based solution, the ACI Payments Orchestration Platform enables merchants to connect their entire payments ecosystem using a single integration via an open RESTful API, thereby helping them sell more, lose less and maximize margins. The platform works in-store, online and through mobile channels to support true omni-commerce and supports real-time payments to reduce costs and clear funds faster.

For more information about the ACI Payments Orchestration Platform, schedule a call with a member of ACI Worldwide’s sales team today.