A simple guide to ERP payment gateways and portals
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. Antiquated legacy systems and manual movement of funds between organizations can be cumbersome, error-prone, and costly.
This guide for enterprise resource planning (ERP) payment gateways and portals will discuss some foundational aspects of payment gateways and portals, benefits and cautions, and provide a blueprint of how to move forward.
History of ERP Payments
Evolving from manufacturing resource planning (MRP) systems of the 1960s, ERP came into its own in the 1990s when Gartner coined the term. ERP extended the inventory and production aspects of MRP to include accounting and other enterprise functions. Although many of the then-legacy systems were designed to integrate and incorporate the majority of internal departments of major organizations, the collection process itself remained outside the ERP system itself.
Although ERP systems could generate purchase orders and invoices, these were, and still are, often sent on paper by mail. Once customers received invoices, they would need to mail a check or, later, log in to an online system to make the actual payment. Often, these payment systems sat outside the actual ERP system and required an accounting professional to transfer payment information from a payment system to the actual ERP system.
This payment process frequently extended the accounts receivable process by a significant amount of time, caused human errors that then needed to be tracked down and corrected, and often became the bane of the accounting professionals’ daily tasks.
History of Payment Systems
Developed in tandem with ERP systems was a payment system, which started with credit card terminals in 1979. Once the internet became popular, the predecessors to today’s payment gateways entered the market, competing with established credit card processors by focusing on technologies that connected merchants and customers virtually, yet directly. Internet-based transactions transformed the consumer market first, adding electronic credit cards and ACH payment options for e-commerce purchases.
Business-to-business transactions were more difficult 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 grew in popularity, payment gateways quickly became more sophisticated. However, payment processors realized that many customers preferred older platforms and were hesitant to migrate. Specialization in market segments also made it difficult for a single gateway to meet all the needs of one customer, which meant processors had to deal with multiple payment gateways.
Better integration, greater processing power, data encryption, and local data storage in the 2000s helped payment gateways evolve to where they are today.
Benefits of ERP Payment Gateways and Portals
By using ERP payment gateways and portals, business-to-business transactions become faster, more efficient, and reduce operating costs. Consider the following significant benefits:
- Customer Convenience. Making life as easy as possible for customers--especially when it comes to paying invoices--is one of the biggest benefits of an ERP payment gateway. As soon as an invoice is received, customers can easily make a digital payment from anywhere and at any time. By integrating single-click “pay now” buttons, businesses remove excuses for payment delays.
- Greater Security. Since digital business-to-business transactions are more secure and traceable than traditional paper-based systems, organizations will reduce their risk for fraudulent payments or cybercrime. Payment portals are generally heavily regulated in order to protect sensitive payment data.
- Tracking Ease. Since digital payment details are stored in segmented databases, it’s easy for both businesses and customers to track invoice and payment status in real-time.
- Faster Collections: Many industry studies have found that providing customers multiple payment options often means businesses collect money faster. That leads to better cash flow and more resources available for expansion and growth.
- Minimize Fees and Costs. Traditional credit card payments come with high fees and processing paper checks can be labor-intensive. By moving toward digital payment portals, companies can minimize or sometimes eliminate these costs. Many payment methods are loaded with fees and soft costs, especially paper checks. For example, Paystand helps businesses eliminate transaction fees through a payments-as-a-service model.
Cautions of ERP Payment Gateways and Portals
While ERP payment gateways and portals offer many advantages, businesses may want to take some cautions when moving to digital online payments as well. Here are some considerations:
- Fraud Risk. Although digital payment portals are highly regulated and more secure than traditional payment methods, the area may be a growing target for cybercrime due to the extremely valuable financial information available. Working with portals that are continuously improving their security protocols to stay one step ahead of these hackers will reduce the risk.
- Compliance Requirements. Related to the security issue above, financial institutions have ramped up their rules, regulations, and compliance requirements in order to keep money movement as safe as possible. Be sure your payment portal solution is staying up-to-date and compliant with all these regulations on your behalf.
- Integration Investment. Although integrating ERP systems with payment portals and gateways is much simpler than it used to be, there are still resources required to make sure these systems work well with one another, especially if older legacy systems are involved.
- High Customer Expectations. Today’s customers are now trained to buy a wide variety of 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 to business-to-business companies to step up to the challenge.
The Paystand Advantage
Paystand is on a mission to reboot commercial finance and create a more open financial system, starting with business-to-business payments. Integration into 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. With years of experience, Paystand is built on SaaS and blockchain technology, making it one of the most efficient, secure, and robust platforms available today. 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. This allows businesses to accept payments in the ways that are most convenient to customers without adding a great deal of manual work or processes to be able to accept and reconcile those options when it comes to accounts receivable processes. When a customer uses Paystand’s "pay now" button in emails, invoices, or sales orders, that customer will be redirected to a payment portal where a preferred option can be selected.
- Lower Costs in Accepting Different Payment. As a value-add, Paystand has worked with processors to secure wholesale processing rates with no extra fees. In addition, least-cost routing tactics also help reduce payment processing costs by shifting extra fees to the end consumer if they choose to use a higher fee payment method.
- Subscription Payment Options. If you offer a subscription-based business-to-business product, that feature can often wreak havoc to accounts receivable processes. Paystand’s ERP gateway allows these organizations to collect any type of flexible subscription payments more easily. Things like custom, negotiated pricing, different billing intervals, and a certain number of repeat payments are easily managed.
- Virtual Terminals. Companies can securely accept payments over the phone, in person, or by mail through a virtual terminal, which moves information securely to the ERP system. This flexibility that Paystand offers can make payment collection even simpler and more efficient.
- The Paystand Bank Network. One of the biggest advantages of working with Paystand is its extensive bank network that allows companies to completely avoid transaction fees. Direct bank payments through this bank network are used by more than 140,000 businesses and can potentially save a business thousands of dollars in transaction fees.
- Tokenization Process. Paystand allows merchants to securely save customers’ preferred payment methods for future purchases by using tokenization to encrypt and securely vault payment information from virtual terminals. Tokenization digitally converts sensitive data to a token, which carries no value outside a specific gateway 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, which means it creates and maintains a secure network, protects cardholder data, has a vulnerability management program, implements access controls, regularly monitors and tests networks, and has an information security policy.
Both ERP and payment portals have been evolving over the past several decades. Now is the time to take advantage of these technologies more completely by integrating them into a single, comprehensive system. This integration of ERP payment gateways and portals promises to help businesses reduce costs, improve cash flow, and be more ready than ever to grow and succeed in the future.
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