by Matt Rej
Integrated payment processing has become extremely popular in recent years. We see it offered from software providers in nearly every industry:
- Dental and ortho practice management software
- Veterinary and pet care software
- Field service management tools
- Government and public sector technology
- Hospitality and PMS software
- POS, CRM, and ERP software
- Lawn care, arborist, and pest control software
And so on.
So as a business that’s either currently using these tools or considering them, it’s natural to assume that integrating credit card processing with the software will help you out.
But what if your payment processor doesn’t integrate with the software? Should you switch providers just to get an integrated setup?
Don’t Switch, Keep Your Current Credit Card Processor
Switching payment processors just for the sake of setting up integrated payments is a bad idea for the vast majority of businesses.
Changing providers comes with hidden costs and operational nightmares that are often overlooked. You’re likely looking at new equipment, POS changes, and a completely new merchant account that involves a lengthy underwriting process.
If you sell across multiple locations or channels, you’ll also need new gateway setups, new virtual terminals, and downtime where you’re unable to accept payments during the switch.
All of this assumes your processor doesn’t have strict early termination terms. If your contract has a liquidated damages clause, you could be forced to pay penalties exceeding $100k+ if you switch.
And if you’re switching for an integrated setup, you have a whole range of additional problems to consider.
Why It Doesn’t Make Sense to Change Providers Just For an Integrated Setup
There are several specific reasons why switching processors for an integrated setup tends to work against you. And they compound on each other, each one making the next problem worse.
More Expensive
First and foremost, integrated credit card processing is always going to be more expensive than a traditional setup.
Both the software provider and payment processor each need to maintain additional infrastructure to support the integration through the APIs. It’s more work on their end, so they’re going to bake that into your price to ensure they’re fairly compensated and still profit.
Your processor may even say you’re required to use certain value-added services to support the integration, which can be applied as a percentage to your total volume.
Limited Processors to Choose From
Most software providers only support payment integrations from one or two processors. If you’re lucky, you’ll have three or four options. But it’s rare to see more than that.
This is a huge problem.
The lack of competition means the processor you’re switching to has less incentive to offer you competitive rates. They know you don’t have many (if any) options. So on top of the integrated processing being more expensive to start with, this gives processors even more leverage to set your rates higher.
And don’t be fooled just because you see a few names of processors that integrate with a particular tool. It’s common for multiple providers to be owned by the same parent company, which creates a false sense of competition. We see this all the time with OpenEdge, Worldpay, and Global Payments (all three are owned by Global). Or Fiserv, CardConnect, and Clover (all Fiserv companies).
Added Layers of Complexity
Integrating your payment processing with a business-critical tool sounds like a consolidation that’s going to simplify things. But that’s not always the case.
Instead of having a direct relationship with the processor, lots of these systems offer their own branded payment solution using a PayFac model. This means the software provider sits between you and the processor, so an extra entity needs to get paid for their role in the process, which ultimately inflates your costs.
Other tools integrate only with niche-specific providers or ISOs, adding another layer: You > Software > ISO > Processor.
Between costs, support, and maintenance, the more layers added, the worse it is for you. And you’ll just continue to pay more.
Less Flexibility and Leverage
If you go through the hassle of changing providers right now to get an integrated setup, your new processor knows you’re unlikely to switch again. Your entire payment infrastructure is now tied to your business software, and switching a second time would be a nightmare.
They’ve got you right where they want you.
Now they can continue raising your rates every 12-18 months, knowing there’s little you can do about it. Want to switch? Good luck, no other processor integrates with this tool.
We’ve also seen businesses get screwed when the software provider was acquired by another company. For example, when PetExec got acquired, a new 1% gateway fee was added on total volume unless the merchant switched to Gingr Payments.
Keeping Your Existing Processor Gives You Negotiation Leverage
Your current processor being unable to integrate with a third-party software can actually save you money on credit card processing.
You can use this to gain leverage on your processor, telling them you’re upset about it and considering switching (even if you aren’t).
- Ask for lower rates to compensate for their lack of integration support.
- Identify the junk fees on your statements and demand those get removed too.
- You keep a direct line with the processor instead of working through the software as a middleman or PayFac.
While you might be slightly bummed out that you can’t connect your credit card processor to the software you’re using, it’s not the end of the world.
Spin this into a positive and use it to get cheaper rates on payment processing.
Integrated Processing is Convenient But Nonessential
Here’s the part that most businesses don’t realize.
Software providers all brand themselves as being convenient, consolidating processes, and helping you manage operations from a single source of truth. The key word there is “branding.”
Is it helpful to automatically match payments to a customer profile in your CRM? Of course. But it’s not going to make or break your business.
What you need to realize is that your software provider has an incentive to get you signed up for integrated processing, even though it’s just an optional or add-on feature.
If they’re offering their own branded in-house payment solution, then they’re getting a cut on every transaction. Even if it’s just a straight integration with another processor, those processors often pay commissions to the software provider for supporting them.
We’ve even seen instances where the software provider offers their core software for free if the business uses integrated processing. That should tell you everything you need to know right there. It means they can make more money from you on the payments side than they can from the actual software they’re selling. And they aren’t even a payment processor.
Workarounds to Get Integrated Processing Without Changing Processors
If you really want integrated processing but don’t want to switch providers, you have some options. They don’t always work, but you can try:
Automation: While not quite the same as true integrated processing, you can use Zapier or similar tools to automate your payment workflows with your business software. This will cut down on manual posting and reconciliation. Lots of these tools integrate with Zapier, so you can talk to a developer or someone on your technical team to see if it’s possible.
Alternative Software: This only works if you’re not already fully entrenched in a particular system. But lots of these tools are pretty interchangeable, offering the same core functions. So if you’re evaluating software for a new need for the first time, look at alternatives to see if those ones integrate with your current processor.
Public API Access: Certain tools offer public API access. If that’s the case, you can use the public API to build your own integration (assuming your processor can support this). It obviously takes some technical know-how to do this, and there may even be an added cost for access beyond a certain number of free API calls.
Suite or Special Request: If the software is part of a larger product suite, check whether any of those sibling products integrate with your current processor. Then ask your sales rep if they can support that tool you’re using. Even if it’s not part of the suite, it’s worth reaching out directly to ask. Processors and software providers are sometimes willing to accommodate high-volume merchants with these types of requests that aren’t publicly advertised.
Final Thoughts
To be clear, I’m not against integrated processing.
We have hundreds of clients in different industries that have integrated setups, and it makes perfect sense for their operations.
But integrated credit card processing is expensive. And if you’re switching providers to get integrated processing, it’s really expensive.
Depending on your volume, it could easily be tens of thousands of dollars extra costs every single year. That’s before you factor in termination penalties from your current provider and rate increases from your new provider.
With integrated processing, it’s a bonus if your current provider happens to integrate with the software you’re using or want to use.
Otherwise, switching just isn’t worth the cost or hassle.