A Simple Guide to ERP Payment Gateways and Portals
Integrating front- and back-end systems is vital as online business transactions surge. Traditional fund transfers can be cumbersome and costly. The solution? Enterprise Resource Planning (ERP) systems.
As more business transactions move online, it's easy to see why there's a need for even greater front- and back-end system integration. Traditional methods of transferring funds between organizations can be challenging, error-prone, and costly. The answer? An enterprise resource planning (ERP) system.
According to a recent Cybros report, 77% of SMEs reported that their ERP helped them to standardize back-office processes. The same report showed that this tool also helped businesses optimize spending by 11%. And that's likely before any integrated payment add-ons were used.
And since we specialize in online payments, we know how much an integrated payment solution can further improve ERP software.
This guide will cover the basics of ERP payment gateways and portals, including their benefits and cautions. It will also provide a blueprint for future usage in your company.
History of ERP Payments
To understand how ERP makes payments faster, let's look at the history of these systems and business payments. Then, we can look at how these two can work together.
Evolving from manufacturing resource planning (MRP) systems of the 1960s, ERP emerged in the 1990s when Gartner coined the term. They expanded MRP to include accounting and other business functions. The old systems connected internal departments, but the collection process was separate from the ERP.
Although ERP systems could generate purchase orders and invoices, these were, and still are, often sent on paper by mail. Once customers receive invoices, they must mail a check or log in to an online system to make the payment. Usually, payment systems were separate from the ERP system and needed an accountant to transfer payment data.
The payment process often made the accounts receivable process longer and caused errors. Accounting professionals found it frustrating.
The Evolution of Payment Systems
Developed in tandem with ERP software development, a payment system started with credit card terminals in 1979. After the internet became popular, payment gateways emerged to rival credit card processors. These gateways connected merchants and customers using new technologies. The consumer market changed when Internet transactions were introduced. People could use electronic credit cards and ACH payments for online shopping.
B2B transactions were more challenging to transition due to contracts, negotiated terms, varying discounts, proprietary legacy systems, and complex accounts receivable workflows. As a result, businesses have been slower to adopt integrated electronic payment options.
Once Amazon and eBay became popular, payment gateways quickly became more sophisticated. But payment processors saw that customers liked older platforms and didn't want to switch. Using different gateways for different customers made meeting all their needs difficult. Processors had to handle multiple gateways.
Payment gateways in the 2000s improved in various ways. They integrated better, became more powerful, encrypted data, and stored data locally.
Businesses found that combining their ERP software with external payment systems improves performance. As a result, integrated payment solutions and gateways are used to supplement the base ERP accounting modules.
5 Benefits of ERP Payment Gateways and Portals
B2B transactions are faster and more efficient when using ERP payment gateways and portals. This also reduces operating costs.
Consider the following significant benefits:
- Customer Convenience. One of the biggest advantages of an ERP payment gateway is making it easy for customers to pay invoices. Customers can easily make a digital payment anywhere and anytime once an invoice is received. Businesses can eliminate payment delays by integrating a portal with embedded "pay now" buttons.
- Greater Data Security. Digital B2B transactions are safer and easier to track than paper-based systems. This helps organizations avoid fraud and cybercrime. Payment portals are generally heavily regulated to protect sensitive payment data.
- Tracking Ease. Digital payment details are stored in separate databases, so businesses and customers can track invoice and payment status in real time.
- Faster Collections. Businesses can collect money faster by offering customers different payment methods. Merchants with more payment options made seven times more money than those without. This dynamic leads to better cash flow and more resources available for expansion and growth.
- Minimize Fees and Costs. Using credit cards has expensive fees, and processing paper checks takes a lot of effort. Companies can reduce or remove these costs by transitioning to digital payment portals. Many payment methods include fees and soft charges, especially paper checks. For example, Paystand helps businesses eliminate transaction fees through a Payments-as-a-Service model.
Potential Risks of ERP Payment Gateways and Portals
Businesses should carefully select payment gateways, even though ERP gateways offer many advantages. Here are some considerations:
- Fraud Risk. Digital payment portals are regulated and secure, but cybercriminals can target them. Using portals with strong security protocols is crucial to stay safe from security risks.
- Compliance Requirements. Financial institutions have increased their rules and regulations to keep money movement safe. This relates to the security issues mentioned earlier. Ensure your payment portal solution stays up-to-date and complies with all these regulations on your behalf.
- Integration Investment. Integrating ERP systems with payment portals and gateways is easier now. However, it still requires resources to ensure compatibility, especially with older legacy systems.
- High Customer Expectations. Today's customers are trained to buy various consumer goods online, pay quickly, and take possession of those items within a day or two. That expectation is moving its way up the supply chain, adding pressure on B2B companies to overcome the challenge.
The Paystand Advantage
Paystand aims to reboot commercial finance and create a more open financial system, starting with B2B payments. Integration with ERP systems is a primary part of that mission.
Paystand offers payment gateways into ERP systems as a robust, state-of-the-art payment-as-a-service provider. It has years of experience and uses SaaS and blockchain technology, making it efficient and secure. Here are some key features of Paystand's ERP payment gateway:
- Variety of Payment Options. Paystand allows customers to accept all major credit and debit cards, ACH, and direct bank payments with a single integration. Businesses can receive payments easily from customers without adding extra work or processes. This makes it more convenient to handle accounts receivable. When customers click Paystand's "pay now" button in emails, invoices, or sales orders, they will be redirected to a payment portal. From there, they can choose their preferred payment option.
- Lower Costs in Accepting Different Payments. As a value-add, Paystand has worked with processors to secure wholesale processing rates with no extra fees. Additionally, using least-cost routing tactics can reduce payment processing costs. This is done by transferring extra fees to the end consumer when they select a higher-fee payment method.
- Subscription Payment Options. If you have a subscription-based business product, that feature can cause problems in the AR process. Paystand's ERP gateway allows these organizations to collect flexible subscription payments more efficiently. Managing custom pricing, different billing intervals, and repeat payments is simple and efficient.
- Virtual Terminal. Companies can safely receive payments over the phone, in person, or by mail using a secure virtual terminal. This terminal securely transfers information to the ERP system. Paystand's flexibility can make payment collection even simpler and more efficient.
- The Paystand Bank Network. Working with Paystand has a big advantage: its Bank Network helps companies avoid transaction fees. Over 140,000 businesses use this Bank Network for direct payments, saving thousands in fees.
- Tokenization Process. Merchants can save customers' payment methods securely with Paystand. It encrypts and vaults the information using tokenization. This converts sensitive data into a token that only works within a specific system. Best practices are then used to store, audit, authenticate, and authorize credit card payments. This process is more secure than encryption because a token cannot be mathematically reversed into usable data.
- PCI DSS Compliance. Paystand is a PCI DSS-certified payment processor. The system creates a safe network and protects cardholder data. It also has a program to manage vulnerabilities and implement access controls. Additionally, it regularly monitors and tests networks and has an information security policy.
Both ERP and payment portals have been evolving over the past several decades. This is the perfect time to fully use these technologies by combining them into one system. Combining ERP payment systems and portals can help businesses save money, increase cash flow, and be ready to grow and succeed.
Ready to get started using Paystand for your business? Click here to get your free demo today.