POS System Credit Card Processing: Without vs. Built-In

  • By Danielle Dixon
  • Aug 23, 2024
  • Last Updated - May 7, 2025
POS System Credit Card Processing

In modern retail, a point-of-sale (POS) system is no longer a luxury; it’s a necessity. You simply can’t scale your business efficiently with an analog cash register.

However, there’s another piece of tech that’s just as important in the retailer’s stack – a credit card processing machine.

When it comes to POS and credit card processing, retailers have two main options:

  • POS system without credit card processing (third-party)
  • POS with built-in card processing (integrated)

Both options offer pros and cons. Businesses might prefer a POS system without credit card processing, for example, if they already have a relationship with a processor but want to switch POS software providers. Alternatively, a POS with built-in payment processing offers simplicity and speed, especially for new businesses just launching.

Which type of card processing system is right for your business? This guide explores POS system credit card processing types and offers reasons why you might choose a POS system without card processing vs. one that has it built in.

Types of Point-of-Sale Credit Card Processing Systems

POS system credit card processing

When shopping for POS systems, consider your credit card processing options. You’ll primarily encounter two main types: integrated and third-party processors.

Integrated POS Credit Card Processors

Integrated credit card processing refers to processors that are built directly into the POS software. The card processing is bundled with the POS system. Your POS provider is also your payment processor.

Pros:

  • Often easier to set up and manage.
  • Can offer streamlined reporting and analytics.
  • May provide hardware bundles/discounts with the POS system.

Cons:

  • Less flexibility in choosing payment options and rates.
  • Potentially higher processing fees.
  • Locked into the POS system provider.

POS Without Credit Card Processing

This is a POS system that doesn’t include card payment technology. In this case, you would need a third-party payment processor to accept card payments.

To accept credit cards at the point-of-sale system, you would integrate the third-party software into your POS checkout process.

Ultimately, your third-party provider would manage payment card industry (PCI) compliance and offer POS-compatible payment terminals, and you would negotiate rates with this card processing provider. The payment processing would be completely independent of your POS system.

Pros:

  • More flexibility in choosing payment options and rates.
  • Potentially lower processing fees.
  • Can switch POS systems without changing processors.

Cons:

  • May require additional setup and integration.
  • Can be more complex to manage.

Choose a POS with processing flexibility. FTx POS offers both integrated (built-in) and third-party payment processing. We give our customers the flexibility to choose the processing solution that’s right for them. Call now for a quote!

Comparison Table: POS With vs. Without Integrated Processing

These points will help you understand things in a better way:

Feature POS With Integrated Processing POS Without Integrated Processing
Payment Processing Built-in, often mandatory, specific processor Requires third-party processor integration
Setup & Integration Generally easier initial setup May involve more initial configuration
Flexibility Limited to the integrated processor’s options Greater choice of processors and their rates
Cost Transparency Can sometimes obscure underlying processing fees Often provides clearer separation of POS and processing costs
Contractual Obligations May involve exclusive contracts with the POS provider Allows for independent processor contracts
Negotiation Power Limited leverage on processing fees Greater ability to negotiate processing rates
Switching Processors Can be complex and disruptive Easier to switch processors if needed
Potential Savings May seem convenient initially but can be costly long-term Potential for significant savings by finding competitive processing rates

POS Systems without Credit Card Processing: A Closer Look

What if you’re happy with your credit card processor, but it’s time to upgrade your POS system?

Many top small business POS systems require you to buy their POS software and payment processing software. If you prefer to use your existing processing solution, you can’t. It’s that simple.

Lightspeed POS, for example, is a POS provider that requires both, and in the past, they’ve even charged customers a fee to use third-party processors.

Who Should Choose a System with Non-Integrated Payments?

There are cases when you’d consider a POS system without credit card processing. They include:

1. You want to keep your current payment processor. We see this a lot. Customers have an outdated POS system without card processing. They just want to upgrade their POS but keep their card processing solution. In this case, shop for a standalone system.

2. You want flexibility. You can switch POS providers any time in the future without changing payment processors.

3. You need an industry-specific solution. Many integrated solutions don’t support high-risk industries or offer businesses in those industries unfair rates. A third-party processor can help you secure better rates. Or consider an integrated solution with experience in your industry. (For example, FTx POS offers great rates for kratom, smoke shops, CBD, and vape shops ).

POS System Without Credit Card Processing

4. You process a small volume of transactions. Manually inputting transaction details (which may be required with a third-party solution) is easier with a small number of sales. This, along with flexibility, is why smaller businesses might prefer a non-integrated payments solution.

5. You need advanced features or specialized payment types. Standalone payment processors often allow you to accept more payment types (like digital wallets or bitcoin) and may offer advanced features like real-time fraud detection.

Why Businesses Avoid Credit Card Processing

Several compelling reasons drive businesses to seek a POS system without credit card processing:

1. Fees: The world of POS credit card processing fees can be opaque. Many businesses are wary of bundled solutions where costs might be inflated or hidden. Understanding the difference between flat-rate pricing (a fixed percentage plus a per-transaction fee) and interchange+ pricing (the actual cost charged by the card networks plus a transparent markup) is crucial. The latter often proves more cost-effective for businesses with consistent transaction volumes.

2. Control: Locking into an exclusive contract with a POS provider for payment processing can feel restrictive. Businesses want the freedom to choose a processor that best suits their needs and to negotiate rates independently.

3. Simplicity: For certain businesses, particularly local pop-ups, seasonal ventures, or those with a predominantly cash-based clientele, the immediate need for deeply integrated POS credit card processing for small businesses might not outweigh the desire for a straightforward POS system focused on core sales management.

4. Addressing the Needs of Small and Seasonal Operations: For ventures with fluctuating activity or those prioritizing simplicity, the extensive features and associated costs of fully integrated processing might not always be the optimal choice. In such cases, exploring a POS system without credit card processing offers the flexibility to select a payment processor with terms aligned with business seasonality.

Options like low or no monthly fees coupled with pay-as-you-go transaction rates can be particularly advantageous. Some processors even allow for temporary suspension of services during off-seasons, minimizing unnecessary expenses. The key is to identify a solution that adapts to the business lifecycle rather than imposing a constant overhead.

Why Some Businesses Choose Not to Accept Credit Cards

Industries That Benefit Most

Certain types of businesses often find significant advantages in a POS system without credit card processing:

1. Retail shops with local buyers: These businesses often have a loyal customer base and may benefit from offering diverse payment options without being tied to a specific processor’s fees.

2. Restaurants and food trucks: With varying transaction volumes and the need for quick service, the flexibility to choose a processor with competitive rates and reliable service is paramount.

3. Medical or dental practices: Offering patients flexible payment options while maintaining control over processing costs is essential.

4. Nonprofits and donation-driven setups: Maximizing the funds received requires minimizing transaction fees. The ability to choose a processor with favorable rates for nonprofits is a significant advantage.

Non-Integrated Payments

Why Consider a POS with Credit Card Processing?

On the other hand, let’s say your business is just starting out, and you need both solutions? Or maybe you’re unhappy with your card payments provider?

In these cases, a POS system with card processing might be the best solution. Integrated payments can be a strong choice for businesses that prioritize efficiency, simplicity, and a better customer experience. Here are some scenarios where integrated payments might be the best option:

1. You want to simplify processes. With a third-party solution, you must reconcile your POS with the card payments terminal. Using an integrated solution, this step – and several others – would be eliminated, improving your data accuracy and accounting processes.

2. You want an all-in-one solution. Modern POS systems include tools to manage every aspect of your business. FTx POS includes inventory, accounting, Time Clock, and payment processing. A POS system with card processing reduces your software costs and keeps everything unified.

3. You want to reduce tech needs. An integrated system reduces your need to manage multiple vendors and tech. Plus, this simplifies your support needs. If you have a problem with either system, you can contact the same help desk.

4. You want to hit the ground running. Integrated solutions have less complexity compared to integrating separate systems. They’re ideal for businesses that want to open and start accepting payments ASAP.

5. You want a bundle deal. Choosing an integrated solution increases your negotiating power. FTx POS offers bundled hardware and, even, free POS hardware if customers meet processing volume requirements.

How Much Will You Save? FTx POS will meet or beat your existing rate. If you’re looking for an integrated solution or want a better rate, contact our team now for a personalized quote!

Benefits of Keeping POS and Credit Card Processing Separate

Opting for a POS system credit card processing setup where the components are distinct offers several key advantages:

1. Cost transparency: You gain a clearer understanding of both your POS software fees and your payment processing charges, making it easier to identify potential savings.

2. Negotiation leverage with processors: You have the freedom to shop around and negotiate directly with payment processors to secure the most competitive rates.

3. Faster change if support declines: If you experience poor service or unfavorable rate hikes from your payment processor, you can switch providers without the upheaval of changing your entire POS system.

4. Compliance flexibility: You can choose processors that specialize in your industry’s specific compliance requirements.

Key Considerations When Choosing a POS Processing Solution

No matter if you need a system with or without card processing, always shop around. Credit card fees, having service interrupted for vague reasons, or having funds locked away can happen if you choose a processor that’s not right for your business.

Here are some points you should always consider:

1. Fees

Compare point-of-sale payment processing rates, transaction fees, and monthly fees (if there is one) between options. On average, for in-person, card-present transactions, rates average 1.5% to 3.5% of the transaction value, plus a per-transaction fee averaging 9 to 30 cents.

For a large-volume processor, just a 0.1% difference can equate to a big boost in profitability. Therefore, compare quotes from 3-5 processors before you consider narrowing your list.

How to Choose the Right POS Processing System

2. Features

Assess the features the processor offers. You might consider payment types accepted (credit, debit, mobile, cryptocurrency). Or you might look at features like chargeback protection and dual pricing processing.

With our integrated payment solution, FTx POS offers dual pricing credit card processing and advanced chargeback protection.

3. Hardware

Learn about the recommendations for card terminals and readers that are available. Assess all the tools that you will need to understand hardware costs. With integrated payments, hardware is often bundled with the POS system.

A POS system without credit card processing would require you to invest in hardware, either purchasing it outright or leasing it.

4. Customer Support

A key advantage of a POS with card processing is that you only have to service and maintain one system. You can connect with a single help desk for the whole solution.

For third-party processors, assess the provider’s service processes, hours of operation, and more to ensure you’ll avoid downtime during peak hours.

5. Contract Terms

Finally, carefully review the terms and conditions, including the processor’s cancellation policies. Specifically, aim to secure a locked-in rate, understand the length of the contract (1 to 3 years is standard), and understand equipment leasing options.

An established business, for example, might prefer a longer-term contract, while a new business or a business operating in a high-risk industry may prefer a shorter term, as the business may evolve.

Alternative Payment Methods for POS Without Card Processing

Why might businesses actively seek a POS system without changing credit card processing in the traditional sense? The answer lies in the growing demand for flexible and low-cost payment solutions that go beyond traditional credit and debit cards.

Popular Non-Card Payment Options:

1. Digital Wallets & Mobile Payments

Platforms like Apple Pay, Google Pay, and various other digital wallets are gaining significant traction. Integrating with a POS that supports these options can attract tech-savvy customers and potentially offer lower transaction fees compared to traditional card processing.

2. Bank Transfers & ACH Payments

For larger transactions or specific business models, offering direct bank transfers or Automated Clearing House (ACH) payments can be a cost-effective alternative to card processing.

Payment Methods for POS Without Card Processing

3. Buy Now, Pay Later

The rise of “Buy Now, Pay Later” (BNPL) services provides customers with flexible payment options and can potentially increase sales for businesses. Integrating with BNPL providers through your POS can be a strategic move.

On-Site Cash Alternatives:

1. Contactless NFC Payments

Beyond digital wallets, Near-Field Communication (NFC) technology allows for quick and secure contactless payments using enabled cards or devices.

2. POS Cash Discounting

Offering discounts for cash payments can incentivize customers to use non-card methods, potentially reducing your overall processing fees.

3. Closed-Loop Gift Cards & Store Credit

Implementing your own gift card or store credit system can keep revenue within your business and reduce reliance on external payment processors for those transactions.

Wrapping Up: Choose the Best POS Credit Card Processing Provider

Your choice of POS software and card processor can impact your profitability. Don’t settle for a provider that forces your hand. FTx POS offers both third-party payment processing and integrated POS processing. Plus, we offer standalone processing without POS.

With FTx Card Payments, you can expect:

  • Better Rates – Starting at 2.59% + 10¢ for in-person transactions
  • No High-Risk Fees – For industries like tobacco, CBD, or kratom
  • Chargeback Protection – Tools for fraud detection and more
  • Receive Next-Day Sales Funds – Access your card processing funds faster
  • 24/7 Support – Have an issue? Connect with our team anytime
  • Bundled Deals – Qualify for discounted hardware and software plans

Enjoy Low Fees, Quick Payouts, and Stress-Free Transactions

FAQs

A POS system is software used to manage sales transactions. It can include features like inventory management, customer relationship management, and employee management. A POS system with card processing is equipped to handle credit and debit card payments, typically requiring additional hardware (card readers) and integration with a payment processor.

This is often referred to as integrated POS processing. The other option is a POS without card processing, in which the terminals and software come from a third-party vendor.

When selecting a POS system with card processing, consider:

  • Cost: Initial setup, monthly fees, transaction fees, and hardware costs.
  • Features: Inventory management, customer management, employee management, reporting, and payment options (credit, debit, mobile payments).
  • Hardware compatibility: Ensure compatibility with your existing equipment (cash drawers, receipt printers, barcode scanners).
  • Payment processing rates: Compare processing fees and contract terms offered by different providers.
  • Customer support: Evaluate the quality and availability of customer support.
  • Security: Look for systems with strong security measures to protect customer data.
  • Integration: Consider how the POS system integrates with other business software (accounting, e-commerce).

Yes, you can use a POS system without credit card processing. Many small businesses that primarily deal with cash or checks find basic POS systems sufficient for their needs. These systems often focus on inventory management, sales tracking, and customer information. A third-party processor can then fill the gaps, and allow the business to accept the occasional credit card payment.

A POS system without card processing can offer lower costs, flexibility in your choice in both processor and POS provider, and you’ll also be able to potentially negotiate a better rate.

POS card processing typically involves several fees, including an interchange fee (about 1.5 to 3.5 of the transaction amount) and a per-transaction fee of about 10 cents.

However, the rates climb higher for ecommerce businesses. This is because there’s greater potential for fraud online. For example, for card-not-present transactions, FTx POS charges 3.75% + 35 cents.

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Danielle is a content writer at FTx POS. She specializes in writing about all-in-one, cutting-edge POS and business solutions that can help companies stand out. In addition to her passions for reading and writing, she also enjoys crafts and watching documentaries.

Danielle Dixon

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