In-House versus Outsourced Payment Processing: Which is Right for Your Business?
Whether you run an eCommerce business or any other type of enterprise, establishing a well-supported payment processing system is absolutely essential. Payment processing is one of the key components of running a business and will help assure that all funds can be easily tracked and directed as necessary.
As you might expect, the broad term “payment processing” can describe many different things. Essentially, anything that involves either the distribution of funds or the receipt of funds can be considered payment processing. This includes functions such as check printing and mailing, payment automation, fraud detection, and many others.
Creating a comprehensive payment processing plan that involves every component of the process will help ensure your business runs smoothly. With an experienced payment processing partner, you can delegate these important responsibilities to the experts and turn your attention back towards the profit-generating aspects of your business.
One of the most important decisions a business owner will need to make is whether they want to outsource payment processing or keep these operations entirely in-house. The decision that makes the most sense for your business will depend on its unique dynamics, though it is clear why payment processing is often the first function business owners choose to outsource.
Below, we will discuss the key things to keep in mind when deciding whether to outsource your payment processing needs:
The Most Important Components of Creating a Payment Processing System
Payment processing happens every second of every day, all around the world. Payment processing is a crucial component of infrastructure that helps the global economy keep running.
- Some of the most important components of payment processing include:
ACH/Automatic Direct Deposit: currently, ACH payments are responsible for more than 23 billion transactions per year. Automatic clearing house and direct deposit payments make it easy to distribute funds where needed, without the need to initiate a new transaction every time.
- Check Printing and Mailing: even in the digital era, paper checks still account for about 7 percent of all financial transactions (Atlanta Fed). Having a reliable and secure check printing system in place will help protect your business.
- Tax Form Management: if you are paying employees or certain business partners, you will need to have tax forms—including 1099 and W-2—available for use.
- eCommerce Infrastructure: creating an eCommerce store and developing the corresponding infrastructure will help your business increase digital sales.
- Fraud Prevention: though less common than it once was, payment processing fraud presents a threat to your business. Investing in additional security features, such as positive pay and thermochromatic ink, can help keep your business safe.
- Tracking and Reporting: to run a business, you need to know where your funds are at all times. Smart Payables offers advanced, closed-loop reporting features that make it easy to stay in control. With USPS tracking, you can also know whether checks have been received.
With a reliable outsourced payment processing partner, you will be able to integrate each of these features (and more) into a single system.
The Benefits of Hiring an Outsourced Payment Processing Firm
As suggested, payment processing is often one of the first functions a business—even large businesses like Honeywell—will choose to outsource. Developing a functioning payment processing system notoriously involves many moving pieces and these systems are also extremely important for your business.
Access to expertise is among the most commonly cited reason that businesses outsource their payment processing needs. With the SmartPayables team, you can be confident that every component of the broader process is being actively managed and monitored by experts. Key infrastructure—industrial printers, specialized checks, security features, digital systems, etc.—is already in place, meaning that you don’t need to make any significant investments.
Companies also choose to outsource payment processing because it helps them save money. If you choose to manage these systems in-house, you will either need to hire a payment processing expert (expensive) or try to take care of everything on your own (time-consuming and profit-reducing). Choosing to go with an outsourced partner, on the other hand, makes it much easier to give your business the full attention it deserves.
The Benefits of Conducting Payment Processing In-House
For larger firms, the most common reason to keep payment processing systems in-house is that it helps the company maintain control. When companies are operating at an economy of scale, they may try to develop all key infrastructure on their own. However, with the right partner, you will still be able to have significant input and control over the entire payment process.
For smaller firms, business owners—especially solopreneurs—might want to “cut costs” and manage every component of their business that they possibly can. At first, this might be feasible and even responsible for some businesses to keep things as in-house as possible. But eventually, for a firm to grow, ownership will need to be willing to delegate power. When the timing is right, it will probably make sense to make a change.
Deciding which Payment Processing System is Right for You
While the benefits of outsourced payment processing are obvious, it remains true that not every business will want to “take the leap” and make the decision to outsource. If your business is still unsure about which decision is best, ask yourself the following questions:
- How much time am I spending managing payment processing on my own?
- Are there any components of the payment processing system that can be improved or that I am unable to manage on my own?
- Are resources being efficiently utilized and distributed in the status quo?
- Can outsourced payment processing help my business grow?
SmartPayables offers scalable and customizable solutions, making it easy for your business to access the essential payment processing services it needs without overpaying. While it is important to compare your options before making any final decisions, we are confident that outsourced payment processing is a logical choice for most firms.
Interested in learning more? Contact us here.
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