Introduction
Payment orchestration is the latest fintech innovation that captures the attention of merchants, payment providers, and other industry players. Although not particularly new, the relentlessly dynamic nature of the payments marketplace is driving change at a rapid pace. In particular, heightened consumer demand for more payment options, greater flexibility, and a seamless experience is an impetus for many merchants and payors to improve their payment systems. These market drivers produce more varied vendor offers and payment service provider options, with payment orchestration at the forefront.
What Is Payment Orchestration?
While the technology behind it may be a little complex, payment orchestration (PO) refers to using one “super” system that integrates and manages the entire payment process from start to finish through a single tech option or platform. Payment orchestration includes authorizing payments, routing transactions, and handling settlements while adhering to PCI DSS requirements. It can help organisations operate more efficiently, reduce costs, expand into new markets, and diversify into new verticals.
How does Payment Orchestration work?
The payment orchestration system executes complete payment processing, from validation to settlement. Payment orchestration brings together all the relevant parties involved in the payment process. This includes customer and merchant accounts, acquirers, issuing banks, card networks, and payment service providers aided by fraud detection services. Payment orchestration can implement validation, routing, and processing of transactions involving these entities. Recently, some PO providers have utilized 'smart routing,' which uses AI to choose the most likely routing to gain maximum approved transactions at the lowest cost.
Greater efficiencies are also often gained from simplifying front-end and back-end integration between an organisation's website and various payment service providers, which usually occurs as part of the process.
What advantages does Payment Orchestration offer?
Businesses such as E-commerce platforms, marketplaces, and other digital platforms can seamlessly integrate various payment methods, ensuring smooth transactions regardless of the buyer's or seller's preferred payment method. This can make transitioning to new markets quicker and easier by removing the need for multiple integrations and avoiding downtime from individual setups.
Businesses can integrate and optimize freely across various payment providers instead of being bound to a single gateway or provider, providing flexibility and global reach. Moving into new foreign markets and customer segments is infinitely more achievable with the flexibility to accommodate local payment preferences, enhancing customer acquisition.
Payment orchestration lessens complexity and makes security management more effortless. Transaction data is routed automatically and quickly using predefined routing rules, which give you greater control over the routing process. It also makes identifying anomalies and questionable transactions easier because you've got real-time data visibility, all in one place.
Companies can track, optimize, and automate core components of their payment processes, such as acceptance rates, chargeback disputes, and reconciliation. By increasing their efficiency, this also helps to lower costs.
At a time when achieving the best customer experience and operational agility are key, payment orchestration is no longer a nice-to-have but a necessity, increasing your business reach while optimizing costs and success rates.
Who Provides Payment Orchestration?
Payment orchestration can be obtained from payment orchestration platform (POP) providers as an off-the-shelf software product. Alternatively, other providers can custom-build a version to meet a business’s unique needs. Some enterprises are currently using a mixture of both types of PO solutions. Don’t hesitate to reach out to get the latest and greatest.
What Should You Look Out For when choosing a PO provider?
Purchasing orchestration should provide impressive benefits, such as increased efficiency and simplified payment management, by integrating multiple payment services and processes into one technology platform. However, in practice, the range of different types of PO in operation in today’s payment solutions market have varying levels of functionality and efficiency. Merchants, in particular, are struggling to keep up with fast-changing consumer demands, operating with PO technology solutions that can become obsolete quickly or limited in flexibility. As some merchants incorporate new technologies, components, and elements into their outdated legacy systems, they find themselves increasingly challenged in maintaining payment processing efficiency.
These uneven results highlight the need for companies to carefully evaluate the capabilities and experience of any PO providers, whether they are offering a ready-to-use software platform or a bespoke technology solution. An important consideration is also the level of service support provided to your business, as future problems are likely to occur, and they will need specialized expert providers in most cases to address critical issues. Any solutions chosen must have the capacity, where possible, to cater to changing consumer payment preferences and the ability to continue delivering improved efficiency and seamless customer experiences into the future. A well-researched review of existing market options may help highlight problems to avoid in future payment orchestration improvement plans.
What does the future hold for companies using Payment Orchestration?
Digital payments are increasing yearly, which is expected only to continue. The trend towards more diverse payment methods is likely to continue growing strongly. Digital wallet usage is rising in many markets around the world. In 2022, mobile wallets accounted for roughly half of global e-commerce payment transactions, with Asia-Pacific contributing nearly half (Statista; online data 2024). Alternative payment methods are also forecasted to increase; however, the most significant increase is in Buy Now Pay Later (BNPL) payments (Truelayer.com/reports; accessed Feb. 2024).
Payment orchestration is widely adopted across many industries by companies and merchants. It is the vehicle many organisations are using this in their digital transformation, as it assists businesses with geographic and vertical expansion.
The future is definitely digital, and payment orchestration looks to be a significant part of it.
Choosing the right way forward with payment technologies can be very complicated. If you would like some help in understanding what your options are when deciding on digital payment systems, please feel free to contact me. I’m happy to talk about your business in a free consultation (30 minutes), at your earliest convenience.
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