ERP Payment Processing You are not stuck with the processor your software came with
Most companies running QuickBooks, Sage, NetSuite, Acumatica, Microsoft Dynamics or Prophet 21 assume their expensive credit card processing fees come with the ERP. They do not have to. Most of these platforms let you bring your own credit card processor, so you can pick any processor you want, and many also let you choose your own payment gateway. That second choice is the one that controls most of what you pay.
Written by Robert Day, just under 30 years in credit card processing, including more than a decade as an executive at Fifth Third Processing Solutions, later Vantiv and Worldpay, now part of Global Payments.
The myth: your card fees come with the ERP
When a business goes live on a new ERP, payments usually arrive as part of the package. The software vendor or the implementation partner has a preferred payments provider, the integration is already built, and taking cards from inside the invoice screen feels like a feature of the software. So most finance teams never question it. They assume that if they want card payments inside their ERP, they pay whatever that provider charges.
That assumption is expensive. The default provider is chosen for convenience and for the referral relationship behind it, not because it is the cheapest or the best fit for your card mix. Once it is in place nobody shops it again, and the rates drift up with every statement.
What most ERP users do not know
The built-in option is rarely the only option. Most ERP and accounting platforms connect to outside credit card processors, which means you can choose any processor you want. Many go further and let you pick your own payment gateway, the piece of software that carries each transaction from your ERP to the card networks.
Getting a better credit card processor is important. Getting a better gateway is very important.
Processor vs gateway, and why the gateway matters more
Your processing bill has two layers. Interchange is the wholesale cost set by Visa and Mastercard and paid to the bank that issued your customer’s card. It typically makes up 80 to 90 percent of the total cost of processing. The processor’s markup is everything on top of it. Most merchants only ever negotiate the markup, which means they are fighting over the smallest part of the bill.
The processor sets the markup
Your processor moves the money and charges its margin on top of interchange. A better processor, on transparent interchange-plus pricing, stops the overbilling on that layer. It is worth doing, and it is the part most people think of when they think about lowering card fees.
The gateway decides your interchange rate
Interchange is not one rate. Visa and Mastercard publish hundreds, and which one applies depends on the data that travels with each transaction. Business, corporate and purchasing cards qualify for far lower rates when the transaction carries enhanced data: invoice number, tax amount and line items, known as Level 2 and Level 3 data (Visa now calls its version Product 3). Your gateway is what sends that data, or fails to. A gateway that cannot send it pushes every commercial card into a higher rate, no matter how good your processor’s markup is.
The $80,000 gateway upgrade that unlocked $1.8 million
A US animal health and pharmaceutical manufacturer processed about $425 million a year in card payments, almost all business to business. Its markup was competitive and its statement was clean. But its gateway could not send the data that qualified its transactions for the lowest interchange rates. We recommended a gateway that cost about $80,300 more a year. It recovered about $1.84 million a year in interchange and took the effective rate from 2.87 percent to 2.31 percent.
For the details on enhanced data, read our guide to Level 3 credit card processing and what Visa CEDP changed.
Your options, platform by platform
Every platform below ships with a default payments option, and every one of them can connect to others. What changes is how much freedom you get over the gateway.
QuickBooks
QuickBooks pushes QuickBooks Payments, but both QuickBooks Online and QuickBooks Desktop connect to outside processors and gateways through third-party apps, so you can keep your invoicing workflow and change who processes the cards. See what QuickBooks Payments fees really cost first. Then read our guide to QuickBooks credit card processing.
Sage 100 and Sage 300
Sage’s built-in payments run through its own integrated partner, and for years most Sage users were told that was the only route. It is not. Read about Sage 100 and Sage 300 credit card processing options, including choosing your own gateway.
NetSuite
NetSuite connects to payment gateways through payment processing profiles, and Oracle’s own documentation describes accepting cards using your own processor. Partner gateways are listed on SuiteApp, which gives NetSuite users real choice over the gateway as well as the processor. Read about NetSuite credit card processing.
Acumatica
Acumatica processes cards through plug-ins for different processing centers, and third-party developers build plug-ins for other gateways. That structure means the processor and gateway are a setup choice, not something fixed by the software. Read about Acumatica payment processing.
Microsoft Dynamics
Business Central and the other Dynamics products take card payments through apps from Microsoft’s marketplace, and several of them let you bring your own processor. Read about Microsoft Dynamics payment processing options.
Prophet 21
Epicor offers its own integrated payments for Prophet 21, and distributors on P21 are often told it is the only way to take cards inside the ERP. Third-party connectors exist. Read about Prophet 21 credit card processing options.
What to check before you switch anything
- Find out who your processor really is. The name on your ERP’s payment screen is often a reseller. Your monthly processing statement names the actual processor and shows every fee they charge.
- Check whether your gateway sends enhanced data. Look on your statement for commercial card lines such as VI-US BUS TR5 PRD 3 or MC Business Level 3 Data Rate II. If your customers pay with business cards and those lines are missing, your gateway is costing you money.
- Check your pricing model. If you are not on interchange-plus pricing, your processor can keep the savings a better gateway creates.
- Look for fees you pay twice. ERP payment add-ons often charge their own per-transaction or monthly fees on top of the processor’s. Count both.
- Confirm the workflow survives. Stored customer cards, pay-by-link invoices and automatic posting back to the ERP should all carry over. A good replacement gateway keeps all three.
Or skip the homework. Our statement decoder explains every line, and our free audit tells you exactly what your current setup is costing.
We do the work. You get the savings.
weAudit is America’s #1 Credit Card Processing Auditing Firm. We audit your statement, check what your gateway is and is not sending, and then fix it, whether that means restructuring the deal with the processor you have or moving to a different processor or gateway. You keep your ERP either way.
- The first audit is free, so you can see the numbers before you decide anything.
- Our fee is flat and never a percentage of your savings, so the savings stay with your company.
- We are month to month, with no contract, so we have to earn your business every month.
- We never take a revenue share from any credit card processor, so the advice is not for sale.
Frequently asked questions
Can I use my own credit card processor with my ERP?
In most cases, yes. QuickBooks, Sage, NetSuite, Acumatica, Microsoft Dynamics and Prophet 21 all ship with a default payments option, but each can connect to outside processors through integrations or apps. The default is a convenience, not a requirement.
What is the difference between a processor and a gateway?
The gateway carries the transaction and its data from your ERP to the card networks. The processor moves the money and charges a markup on top of interchange. You can often change one without changing the other.
Why does the gateway affect my interchange fees?
Interchange rates on business, corporate and purchasing cards depend on the data sent with each transaction. A gateway that sends Level 2 and Level 3 data qualifies those cards for lower rates. One that does not sends them to the most expensive rate. Since interchange is 80 to 90 percent of the total cost, the gateway usually matters more than the processor’s markup.
Will switching processors break my ERP integration?
It should not, if the new processor or gateway has a supported integration for your platform. Check that stored cards, invoice payment links and automatic posting back to the ERP carry over before you sign anything.
How do I know if I am overpaying on ERP payment processing?
Start with your monthly processing statement. Look at your effective rate, your pricing model and whether your business card transactions are qualifying for enhanced data rates. Or send us the statement and we will audit it free.
Find out what your ERP payments are really costing you
Send us a recent processing statement. We will tell you whether your processor, your gateway or both are costing you money, and what to do about it.
Or call 800-672-1292
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