So Many Payment Processors

In the current business landscape, e-commerce encompasses any electronic payment. With hundreds of point-of-sale (POS) systems and payment processors out there and new ones being introduced almost daily, it can feel overwhelming to keep up. Each system caters to different industries and has its own unique features and quirks.

As accountants, we have better things to do than log in to each system and manually gather sales data every day, week, or month. So, what can we do to understand and confidently serve this space? I believe getting familiar with the different systems and accounting tools and understanding the financial goals of your client's business will allow you to take on any e-commerce client (or just feel less stressed when a client tells you they started using another system).

The explosion of payment processors

The explosion of payment processors in recent years has been truly amazing. We're seeing more and more payment processors popping up, each offering a wide range of systems designed for specific industries like retail, restaurants, and even cannabis dispensaries.

A few key factors driving growth

1.    The rise of e-commerce and online transactions has taken off as more people prefer shopping online.
2.    Technological advancements and innovations have made it easier for new companies to enter the market with cool, user-friendly solutions.
3.    As businesses expand into new markets and industries, a demand for versatile and reliable payment systems grows.

Understanding these options is crucial for business owners and accountants like us. The right payment processor can simplify operations, improve customer experience, and provide valuable insights into sales and financial data. By staying informed and making strategic choices, we can help our clients thrive in this ever-evolving landscape.

Different payment systems for different industries

Different industries have unique needs when it comes to payment systems. In retail, typical requirements include quick transactions, ease of use, and seamless integration with inventory management to keep track of stock levels in real-time. For the cannabis industry, payment systems must meet unique requirements such as strict compliance with regulations and ensuring secure transactions to handle sensitive customer data and cash-heavy operations. Systems like Kronos POS, Treez.io, and Dutchie address these requirements. Restaurants also have their own specific needs, including efficient order management, smooth tip processing, and integration with reservation systems to enhance the overall dining experience. You'll often see Toast, Square, and Clover when grabbing a bite to eat.

Additionally, peer-to-peer payment platforms like Venmo, CashApp, and PayPal are being used in some instances. These platforms offer a different type of software, enabling quick and easy transfers between individuals and small businesses. They are often appealing for their simplicity and low barriers to entry. Your local food truck probably takes payment this way. Each industry demands tailored solutions, so choosing the right payment system that aligns with their specific operational demands is essential.

Choosing the right payment processor

But, even though there are apps built for specific industries, we often see businesses with multiple payment processors. I get it—they want options for those customers and clients. Accept payment any way you can, right? In reality, the business could be losing money this way, paying for multiple platform fees and transactions, which adds up quickly.

Simplifying and optimizing your payment systems can help reduce these costs and streamline your financial operations. Choosing the right payment processor is crucial for business operations. It's important to consider the specific needs of the industry and the individual organization.

Next, integration with existing systems is another key factor; a seamless connection with your current inventory, order management, or reservation systems can save time and reduce errors. Scalability and future growth should also be considered, ensuring the payment processor can grow with the business. Next, a thorough cost vs. benefits analysis is essential to ensure you're getting the best value.

Comparing popular payment processors

To help illustrate the differences among various payment systems, we chose 10 of the most common payment apps we encounter: QBO Payments, Stripe, PayPal, Square, WooCommerce, Shopify Payments, Toast, Clover, LightSpeed, and Venmo. We compared their fees across several key categories, including card and digital wallet transactions, ACH bank payments, card reader usage, keyed-in cards, and monthly fees. By examining these factors, we aim to provide a clear picture of how each payment processor stacks up, making it easier for you to identify the associated costs and see the best fit for your client's business needs.

For the accountants

Let's not forget the importance for us, the accountants! We need accurate information to keep the books in order, so encouraging clients to use preferred systems isn't just for our benefit—it’s for their success, too. Businesses can streamline operations, improve customer experience, and ultimately drive growth by choosing the right payment processor. We have the power of understanding to help advise our clients on the best software and why—it'll save them money and help their operations run efficiently.

Also, it's crucial to explain to them that there will be a higher cost for accounting with more platforms. This way, they aren't shell-shocked when you give your quote. We must learn the platforms and the best accounting tools to gather data quickly and effectively. Some of my favorites are Bookkeep, Synder, Cin7, and Katana, but each depends on the software used and what data we need to capture. By being well-versed in these tools, we can provide the best possible service to our clients and help them make informed decisions that benefit their business.

Conclusion

With so many options, each platform offers unique features catering to different business needs. Understanding these differences can help you make an informed decision that aligns with the business goals.

Don't worry if you're feeling overwhelmed by the choices or need help optimizing your e-commerce accounting. My team and I at NetDeposited would be happy to help. Reach out to us today for expert guidance and support in finding the perfect tools to streamline your e-commerce operations and drive your success.