What is the difference between a sales platform and a payment platform?

How to distinguish between these platforms where they generate sales versus process payments

At Bookkeep, we aim to distinguish between a sales platform and a payment platform.  It is very important to understand the difference between the two types and how they sometimes overlap. 

Sales Platforms:

Sales platforms are the foundation of a retail, ecommerce or restaurant business.  In retail or restaurants, this is usually your point of sale system.  In ecommerce, it's typically your system powering your shopping cart.  Sales platforms have all the following in common:

• They keep detailed information on orders which includes the following:

1. 1. 1. Items sold and prices per item
      2. Taxes calculated as a part of a sale and the breakdown of tax types
      3. Gratuity collected as a part of a sale
      4. Discounts on items sold or order-level discounts 
      5. Payments made for the order, broken down by each payment method and amount per payment method 

An example of a sales platforms for retail would be Square, Shopify POS, Lightspeed POS, Toast, and many other POS systems. 

In ecommerce, common sales platforms are Shopify, Woocommerce, Bigcommerce, Squarespace, Amazon Seller, Etsy, and many more.  

• Sales platforms have Order Numbers and an each order may consist of:

1. 1. 1. Multiple items
      2. Multiple tax lines and amounts
      3. Multiple payment methods and amounts (yes, an order can have many payment types)

Payment Platforms:

Payment platforms collect payments from a customer. The most common are merchant processors that can process customers' credit cards.  

The only payment platform that a pure Sales Platform can instantly transact with is cash or check.  Other platforms require you to set up a merchant account.  

A payment platform keeps detailed information on the following:

1. Total amount charged. 
2. Some reference to whom the customer is such as their email, last 4 digits of their card number, and other account information.  
3. Timestamp of transaction and transaction ID.
4. Full credit card (or payment method) details to allow for future reversal of the transaction. 

In retail and restaurants, your common payment platforms are your credit card merchant accounts from the likes of Bank of America or Chase, and there are 1000s of others.  These accounts are connected to your POS system to allow you to swipe a credit card at the register.  You must first set up a merchant account for your business in order to be allowed to process credit cards.  

In ecommerce, common payment platforms include Stripe, Paypal, Sezzle, and Afterpay.  

A payment platform will usually not know the items, the sales taxes, the gratuity, or any other details of an order.  It will only know the total amount charged for the transaction. 

Where this gets confusing:

15 years ago, the above was pretty simple. You got a POS system or cash register for your sales platform and a credit card terminal to swipe cards as your payment platform.  Nowadays, this is getting blurred with the likes of Square, Shopify, Paypal, and Stripe offering features of a sales platform and a payment platform all in one.  If your client is only using one of those platforms then it's pretty easy to handle their books.  

But, if they use multiple sales platforms and payment methods, the reconciliation can get very complex.  

Why? Because Stripe and Paypal (among others) can be used as payment platforms on Woocommerce or Shopify but can also be used as a sales platform. And, if you don't know how to account for this, you will end up with duplicate income postings to your accounting platform.  

The good news is the Bookkeep team is here to help you get this set up correctly from the start.