Integrated Payments: What They Are and How They Work

Integrated payments are essential for merchants and independent software vendors (ISVs) alike.

Integrated payments consolidate payment acceptance into a single platform, simplifying operations, reducing costs and building retention through improved efficiency and user satisfaction. They are essential for merchants and independent software vendors (ISVs) alike. Learn more from the authority on integrated payments.

In a world of digital convenience, integrated payments are crucial for businesses, particularly software providers or ISVs that develop specialized software platforms and applications often used by merchants. Embedding secure, efficient payment processing directly into platforms streamlines transactions for merchants, increases convenience for customers, and adds operational and competitive advantages for software providers.

With the growth of ISVs, there is a clear need for integrated payments solutions. Research from The Strawhecker Group reveals that integrated payments are expected to grow at twice the rate of the overall market. 

Across industries and use cases, consumer research consistently shows the payments experience to be a major factor in overall satisfaction. Simply put, consumers and business users don’t view payments as separate; the payments function is central to how the brand and the solution are perceived.

Read on to explore how integrated payments work, their benefits and what to consider when implementing them – along with industry insights and best practices. By understanding them, you can ensure your platform meets today’s expectations and drives a seamless user experience.

What are integrated payments?

Integrated payments allow software providers to embed payment processing directly into their software platforms or applications, enabling users to process, manage and reconcile payments without needing to switch between multiple systems. Unlike stand-alone systems, integrated payments work with other business functions – such as accounting, inventory and customer management – automatically updating data across the enterprise. This significantly reduces manual effort spent on administrative tasks and enhances efficiency.

In short, integrated payments offer “a fully embedded payment experience that communicates with other business software,” said Crystal Tran, VP of Product Strategy & Value-Added Services at Fiserv. Instead of segregating payments from the tools used for business operations, payments become part of a collaborative system. This unified, single-source solution supports smoother business operations and provides a cohesive user experience. 

Why integrated payments are gaining popularity

As business software and payment solutions increasingly intertwine, the lines between these functions are blurring, driven by rapid digital transformation and innovation across industries. Technology now powers core business operations for many merchants, resulting in the digitization of payments, greater reliance on software, and a new set of consumer and merchant expectations. Integrated payments have become the new normal, as merchants aim to boost efficiency and meet customer demands for smooth, multichannel payment experiences across platforms – whether in-store, online or through mobile apps.

In response to this shift, software providers and ISVs are exploring ways to stand out, enhance their offerings and simplify user experiences. Integrated payments answer this need by consolidating payment processing with essential business functions such as payroll and inventory, reducing the manual workload and enabling merchants to focus on customer satisfaction.

Integrated systems also foster customer loyalty through seamless, centralized data and automated reconciliation, creating a smooth, efficient environment for both customers and businesses. 

How does payment integration work?

Integrated payments mean seamlessly embedding payment capabilities within business software, effectively combining business operations with payment processing in one place. This is achieved through application programming interfaces (APIs) that securely connect payment gateways, including payment acceptance and transaction management solutions, with business applications and the key tools merchants use to run their businesses. Many APIs also provide real-time reporting and transaction management, so transaction data automatically updates throughout the business. This eliminates the need for manual reconciliations and keeps records in sync.

Additionally, integrated payments support omnichannel experiences across in-store, online and mobile platforms. Cloud-based infrastructure, unified APIs and mobile software development kits (SDKs) enable consistent transactions, regardless of how or where customers pay. And by linking payment processes to customer relationship management (CRM) and enterprise resource planning (ERP) systems, businesses can gain insights into customer behavior to refine offerings and improve satisfaction.

Beyond payment acceptance and transaction management, integrated payment systems also have the benefit of an additional layer of security. This may involve the use of tokenization, which replaces sensitive customer details with digital tokens, and point-to-point encryption (P2PE), a security standard that protects data through the entire life cycle of the transaction. Adhering to data security standards, such as Payment Card Industry Data Security Standard (PCI-DSS), these systems enable businesses to process payments efficiently while safeguarding customer information.

Benefits of integrated payments for software providers

Integrated payments give software providers a competitive edge and boost merchant retention by streamlining business operations and integrating payment processes with other functions. ISVs play a crucial role as conduits to merchants. With more merchants expected to adopt business-management software, especially cloud-based systems, ISVs are positioned to offer tailored, industry-specific solutions that meet complex operational needs.

The “stickiness” of integrated payments makes merchants more likely to stay with their ISV rather than switch providers, further cementing these relationships. ISVs tend to focus on one or two industry verticals, which enables them to address the unique workflows of specific markets. According to Tran, this seamless integration appeals to merchants, as it removes the hassle of managing disjointed systems and instead offers a streamlined solution.

For payments companies, ISV partnerships open new revenue streams and reinforce collaborations, with ISVs benefiting financially from each transaction processed on behalf of sub-merchants. This revenue potential supports further investment in integrated solutions, creating a mutually beneficial cycle that boosts software providers’ market position while enhancing customer satisfaction. 

Fiserv leadership in integrated payments

Fiserv leads in integrated payment technology, offering an end-to-end solution that simplifies payment processing. “There are a ton of payment providers with a payment gateway … but the difference is that Fiserv also owns a number of processing networks that let you run the transaction end-to-end,” said Bryan Greene, Head of ISV Solutioning & Partner Activation at Fiserv. A comprehensive solution minimizes friction and miscommunication, which often occurs when multiple providers manage separate steps of the process. This bundled approach is also more cost-effective, as businesses save by using one system to handle all parts of the transaction.

With dedicated integration specialists, Fiserv combines industry-leading solutions with a comprehensive collection of developer resources and APIs, minimizing development time and making it easy to integrate payments. Fiserv reduces the risks and burden for merchants and providers, simplifying payments, delivering a frictionless user experience and providing a complete, all-in-one solution.

 Industry use cases for integrated payments

Integrated payments are driving industry-specific advancements, enabling ISVs to capture significant market share through specialized, vertical-focused solutions. By tailoring payment integrations to the unique needs of industries such as salons, healthcare and fleet management, ISVs offer merchants more than just generic payment tools – they provide customized solutions that cater to complex workflows and specific operational demands.

For example, in businesses such as salons and veterinary clinics, integrated payments free business owners from juggling multiple systems, enabling them to focus on delivering quality service. “Integrated payments support industries by allowing business owners to focus on their service quality, rather than managing separate systems,” said Anthony Tippett, SVP of Payments at DaySmart. By automating data entry and payment reconciliation, integrated payments can save merchants valuable time, improving accuracy across transactions and enhancing customer trust as a result.

Leveraging a cloud-based solution that simplifies the integration of Clover devices from Fiserv, DaySmart has been able to incorporate new technologies to enhance payment speed and user experiences. “Fiserv was among the pioneers in adopting EMV^® Quick Chip and Tap to Pay features on their Clover devices, significantly improving customer interactions,” Tippett said. “And the sleek form factor of Clover devices adds a touch of style to merchant storefronts, standing out as more than just payment processing tools.”

For fleet management, integrated payments consolidate functions like routing, driver safety and payments into one streamlined system. Charles Layne, CEO of GPS Insight, said, “For HVAC or plumbing companies with large fleets, integrating route management, driver safety and payments into one tool provides a comprehensive, easy-to-use solution.” GPS Insight saw a 25% to 30% revenue boost in the first six months of using Fiserv integrated payment systems. By covering the entire service life cycle – from scheduling to tracking vehicle activity – integrated payments offer fleet-dependent businesses full visibility and control.

With the continued growth of vertically tailored, integrated payments solutions, it’s important for software providers and ISVs to align with a payment processing partner to support their payment operations.