You know you pay processing fees every time you accept a credit card payment… but are you overpaying?
If your point of sale (POS) system isn’t integrated with your payment processing system, you might be adding hidden costs to every transaction in the form of duplicate gateway fees, compliance charges, and manual entry errors.
Most stores assume these kinds of fees are just the cost of doing business. But when your POS and payment processing are integrated, you can minimize your fees and protect your margins.
This post breaks down six specific fee categories that integrated payment processing eliminates or significantly reduces. You'll see exactly where the savings come from, how much you could recover, and why music retailers who switch to integrated systems save hundreds of dollars (or more) every month.
If you want to minimize the processing fees you pay, you first need to understand where your money is actually going and which parties are taking a cut. Here's what makes up your total payment processing costs:
When your point of sale system and payment processor operate separately, you might end up paying things like gateway fees twice. Plus, you waste time and effort reconciling data manually.
With this context in mind, let’s explore the benefits you can enjoy when your POS and payment processing systems are fully integrated.
Gateway fees pay for the process of transmitting payment data from your card reader to your processor. Essentially, you’re paying to keep that card data secure during the transmission process.
With a nonintegrated setup, you often pay this fee twice — once to your POS provider and again to your payment processor. When you process hundreds of monthly transactions, that adds up fast.
When you work with an integrated solution, like Music Shop 360, you have a single gateway that connects your POS and payment processing, so you only pay once.
If you accept credit cards, you're required to follow Payment Card Industry (PCI) security standards. These rules protect customer payment data from breaches and fraud. When your POS and payment processor are separate systems, you have to manage PCI compliance across two platforms, which multiplies your vulnerability.
With integrated payment processing, tokenization happens automatically. Your system converts sensitive card data into secure tokens, which reduces your compliance scope and helps you avoid juggling separate security protocols or paying duplicate compliance fees.
Related Read: 9 Must-Have Music Store Software Features [+ Top Providers]
When your POS and card reader aren’t fully integrated, your staff must manually type the total into a card reader after ringing up the customer on your POS terminal. That extra step wastes time and opens your store up to expensive mistakes.
A few of the costs associated with manual entry include accidental undercharging, refund and chargeback fees, and lost time in manual effort. You also run the risk of damaging customer relationships with accidental overcharges.
Even careful employees can make mistakes under pressure. With integrated payment processing, the sale total transfers automatically to the card reader. There's nothing to type, so there's nothing to miskey.
At the end of each business day, your payment processor settles all transactions in a batch. This moves funds from your customers' accounts into yours. When your POS and payment processor don't communicate, batch processing becomes a manual task, which can result in a few key challenges:
An integrated tool like Music Shop 360 automatically reconciles batches in real time, saving you time, money, and hassle.
A chargeback happens when a customer disputes a charge with their credit card company. Even if you win the dispute, you're paying $15–$100 per occurrence in chargeback fees. No retail store can avoid chargebacks altogether, but a nonintegrated system makes them more likely.
Another challenge related to chargeback comes when you’re in the midst of a dispute. You need to be able to prove that your customer purchased and received the item in question if you want to win the dispute.
When your POS and payment data live in separate systems, you're piecing together evidence from multiple sources. Missing details, delayed updates, and unclear transaction descriptors all increase your risk of losing the dispute.
Related Read: Fraud Prevention in the Music Space
Managing separate systems means managing separate billing statements. You may end up with separate invoices from your POS provider, payment gateway, and merchant service, forcing you to do the legwork to reconcile that data.
Here are some items to look for on your monthly statements:
Reconciling these statements takes real time. An integrated solution gives you one statement filled with centralized data showing your true cost per transaction across all locations. You save yourself the headache of manual reconciliation and get more accurate, useful data in the process.
When you add up the potential savings of eliminating redundant gateway fees, reducing compliance costs, cutting reconciliation time, and lowering your chargeback risks, you save hundreds of dollars per month — adding up to thousands of dollars per year. But the financial benefits aren’t the only win.
An integrated system also gives you more valuable reports, helps you save time on manual processes, and sets you up for success with customer trust. An integrated payment processing system streamlines your processes and helps your bottom line — it’s a true win-win.
Music Shop 360 is a fully integrated point of sale solution designed specifically for music shops. Our system syncs every sale, rental payment, repair deposit, and lesson fee across your POS and payment processing. This simplifies your processes and ensures you don’t juggle multiple providers, statements, or support teams.
Ready to see how much your music store could save? Request a demo of Music Shop 360 to discover your potential savings.