Joom Tech Ease

Integrating a business software package with a payment processing module is simple. The module can be fully integrated with a tabbed section inside the application or accessed via buttons within the applications. Or, it can be created as an external module that uses batching for transferring data between the processing program and the main application. Payment processing can also be provided as a separate online bill-pay feature that does not directly integrate with the main application database. This integration technique can also be used to embed a “pay now” link in email invoices generated by the business software package. Examples of each kind of implementation, along with general guidance on implementation time, cost, and revenue potential, are provided below.

FULLY INTEGRATED

A payment processing module can be integrated into any business management software be creating a button that links to the processing module. By clicking on the “payment processing” button, users will be able to collect on any individual invoice. By selecting a recurring billing option from the menu, they will be able to process all recurring transactions queued in the system. By using the payment processing system’s API, the core business application can be mapped to the payment processing component for completely seamless integration. Typical Integration Time: 3 days (programming time)

Cost of implementation: $3000

Cost to support payment processing functionality: $0 (payment processing company absorbs all cost)

EXTERNAL MODULE

Data can be transferred between a business software application and a payment processing application using a pre-programmed export module. Field-mapping is programmed into the module in advance to enable one-click integration. For example, a simple modular interface can enable invoices from QuickBooks® to be exported, using pre-defined field mapping, as a batch for payment processing, and then the batch results can be uploaded back into QuickBooks for reconciliation.

Typical Integration Time: 1 day (programming time)

Cost of implementation: $1000

Cost to support payment processing functionality: $0 (payment processing company absorbs all cost)

ONLINE PAYMENT FORM

Any business software application that includes invoice printing functionality can easily include online payment functionality as an option for customers. This simple step can completely eliminate the need to print and mail paper invoices. Instead, electronic invoices which include a link to a secure online payment form are emailed to customers. The customer clicks the link and can pay the invoice online via credit card or direct debit from a checking or savings account. With a marginally more complex link, fields such as invoice #, amount, and customer number can be embedded within the link and auto-filled in the online payment form. Payment processing companies can often host this online payment form, so a user need not have a website to benefit from this type of system. See an example of this type of form.

While this type of integration is clearly the easiest to implement, it does have the drawback of requiring the customer to maintain a payment processing database separate from the main business application. However, most payment processing applications, including PaySimple, have customizable export functions that can be leveraged to transfer transaction results back to the main business application.

Typical Integration Time: 3 hours (programming time)

Cost of implementation: $300

Cost to support payment processing functionality: $0 (payment processing company absorbs all cost)

ADDITIONAL REVENUE POTENTIAL

There are multiple options for payment processing providers available to business software developers. However, some large companies do not offer the developer a revenue share. There are other choices-and it is best to select one that offers an ongoing revenue share for all transactions processed by the partners’ customers. In addition, the best payment processing partners also offer marketing programs, and technical support for their systems. The following is a breakdown of potential revenue. Marketing Cost: $0 (payment processing company absorbs all cost of marketing add-on functionality to software customer base, and of marketing electronic payment option to their customers.)

Revenue Share: A number of variables will determine potential revenue share includingsize of customer base, percentage adoption of electronic payment functionality, percentage of end-user accounts paying electronically and type of transaction (ACH or Credit). The following is a typical scenario.

Customer Base: 3,000 (compaines using the business application)

End-User Accounts Managed: 650,000

Revenue Generated @ 15% Penetration: $17,000/month

Revenue Generated @ 30% Penetration: $35,000/month

Accepting credit cards from your customers isn’t as simple as some merchants might imagine. Not only is the process by which the transactions are approved and funds are delivered complicated, but there are many terms that are used. Many of them can be confusing. Chargebacks, payment gateways, ISOs, discount fees, and batches are just a few of the terms that business owners need to learn. Below, we’ll provide you with easy-to-understand definitions for the terms that are used most often.

Merchant Account – A merchant account is a contract between a financial institution (called an “acquiring bank”) and a business owner. The contract allows the business owner to accept credit card payments.

Issuing Bank – An issuing bank is the financial institution that offers credit cards to consumers. When a cardholder makes a purchase, the issuing bank either approves or denies the request for funds from the merchant bank.

Chargeback – A chargeback occurs when a customer requests that a credit card transaction be reversed and the funds returned to him. Often, this happens due to a customer identifying a transaction as unauthorized or fraudulent. The issuing bank will reclaim the funds that were used for the purchase from the merchant bank.

Payment Gateway – Retail stores have credit card terminals through which customers swipe their cards or the card’s numbers are input manually. A payment gateway is used for the same purpose for online purchases. The gateway encrypts the card data and communicates the details of the transaction to the merchant’s bank.

Settlement Time – Many payment processors and merchant banks will hold the funds from a card transaction for a predefined time period. This may be for 1 day or several weeks. For business owners who rely upon steady cash flow, a long settlement time may be impractical.

Payment Processing Fees

Fees are an important of each credit or debit card transaction. Some fees are exclusive to merchant accounts while others are associated with third party processors. Here are a few of the most common fees that business owners will need to know about if they intend to accept credit cards for payment:

Interchange Fee – An interchange fee is the portion of every purchase transaction that a cardholder’s issuing bank retains when sending payment to the merchant’s bank. It is only relevant for transactions that are processed using Visa or Mastercard.

Discount Rate – The discount rate reflects an assortment of fees that are paid by business owners whenever they process a credit card payment. The interchange fee (described above) is one of the fees that make up the discount rate. This rate can vary wildly between merchant accounts.

Authorization Fee – Whenever a transaction is processed, a request is made to the cardholder’s issuing bank for authorization. Whether the purchase is approved or denied, the merchant must still pay a small authorization fee.

Batch Fee – At the end of each day, a business owner should “batch up” and send that days’ transactions to his merchant bank. Some merchant banks will charge the business owner a small batch fee for the daily settlement of the merchant account.

Knowing The Terms

If you do not already have a merchant account or payment processing solution, the terms described above may seem confusing. Once you gain experience by accepting credit card payments, you will begin to appreciate how each facet impacts your business. There are many other terms that are used within the industry. But, if you have a clear grasp of those explained above, you should feel confident about exploring your payment processing options.