Payment Orchestration: Benefits, Process & Strategies

As the world completely transitions towards eCommerce, businesses need every advantage to get ahead in competition. That’s where a payment orchestration platform comes in.

This innovative technology is changing the game for online retailers, banks, and financial institutions alike. By streamlining payment processes and providing valuable reporting and analytics, these platforms are becoming essential tools for businesses looking to boost their bottom line.

So, how exactly does a payment orchestration platform work its magic? Well, it acts as a central hub for all your payment needs, connecting various payment providers, gateways, and acquirers. This means smoother transactions, fewer declines, and happier customers. Plus, with advanced features like smart routing and real-time analytics, you’ll have the insights you need to make data-driven decisions.

What is a Payment Orchestration Platform?

A Payment Orchestration Platform (POP) is a sophisticated software layer that integrates and manages various payment service providers, acquirers, payment gateways, and banks on a unified platform. It acts as a central hub for all payment-related processes, from validation to routing and settlement.

This innovative technology streamlines digital payments by simplifying front-end and back-end integration between an organization’s website and various payment service providers ^[1].

POPs encompass several crucial components:

1. Smart routing: Ensuring funds are directed to the right destinations
2. Billing and settlement: Managing payment distribution
3. Payouts: Facilitating fund transfers to appropriate parties
4. Analytics: Monitoring and analyzing payment performance

These platforms can function as backend technology for routing transactions or as a unified frontend combined with backend capabilities, offering a user-friendly checkout experience while optimizing transaction routing.

How it Works

The payment orchestration process typically follows these steps:

1. A customer selects their preferred payment method at checkout.
2. The POP securely collects and encrypts payment details, passing them to the appropriate gateway.
3. The platform automatically routes the payment request to multiple processors to reduce false declines.
4. If the first processor can’t authorize the payment, the request is sent to another processor.
5. Once approved, the authorization response is sent back to the merchant.

By leveraging multiple payment processors and a sophisticated routing system, payment orchestration platforms minimize the risk of false declines and maximize payment acceptance rates. This approach enhances the customer experience, boosts revenue, and prevents lost sales due to payment processing issues ^[2].

Benefits of Using a Payment Orchestration Platform

Payment orchestration platforms offer numerous advantages for businesses looking to streamline their payment processes and boost sales. Let’s explore some key benefits:

1. Increased payment options

A payment orchestration platform allows businesses to offer a wide range of payment methods to their customers. This includes credit cards, digital wallets, bank transfers, and even local payment options.

By providing this flexibility, companies can cater to diverse customer preferences and expand their reach into new markets^[3]. This increased choice has a positive impact on customer satisfaction and can lead to higher conversion rates.

2. Improved conversion rates

One of the most significant benefits of using a payment orchestration platform is the potential to boost conversion rates. These platforms use smart routing to direct transactions to the most suitable payment processor, which can significantly reduce false declines and increase acceptance rates ^[3].

In fact, studies show that up to 50% of e-commerce customers abandon their carts due to payment-related issues ^[4]. By offering a smooth, embedded checkout process and a variety of payment options, businesses can address these concerns and reduce cart abandonment rates ^[5].

3. Reduced costs

Payment orchestration platforms can help businesses save both time and money. By consolidating multiple payment providers into a single platform, companies can streamline their operations and reduce manual efforts.

These platforms also enable businesses to route transactions through the most cost-effective channels, minimizing transaction fees and processing costs. Additionally, the ability to negotiate better rates with payment service providers due to increased leverage can further lower expenses ^[6].

4. Enhanced security

Security is a top priority in the world of online payments. Payment orchestration platforms typically come equipped with advanced security features such as tokenization, encryption, and fraud detection mechanisms ^[7]. These measures help protect sensitive customer information and reduce the risk of data breaches.

Moreover, these platforms often facilitate compliance with international payment standards and regulations, such as PCI DSS and GDPR, minimizing the risk of non-compliance penalties ^[6].

How Payment Orchestration Boosts Sales

Payment orchestration platforms (POPs) have a significant impact on boosting sales for businesses. Let’s explore how these platforms enhance various aspects of the payment process.

1. Seamless customer experience

POPs improve the customer experience by offering a wide range of payment options. Studies show that 69% of consumers will abandon their shopping cart if their preferred payment method isn’t available ^[7].

By providing diverse payment options, POPs not only increase transaction success rates but also open up new demographics. This flexibility allows businesses to cater to customer preferences, ultimately leading to higher conversion rates and increased sales.

2. Global market expansion

POPs facilitate rapid international expansion through their extensive network of acquirer, payment method, and payment service provider integrations across multiple markets ^[8].

This capability allows businesses to easily support multiple currencies and payment methods, enabling them to tap into global markets. In fact, businesses using payment orchestration have reported a 20% increase in their global sales ^[9].

3. Optimized payment routing

POPs use smart routing to direct transactions to the most suitable payment processor, which can significantly reduce false declines and increase acceptance rates^[10]. By routing payments to the most optimal provider, businesses can reduce the likelihood of declined transactions and improve authorization rates ^[11].

This is particularly important for companies expanding into global markets, as they can analyze which payment service providers have higher authorization rates for specific data points, such as particular issuing banks.

4. Real-time analytics

POPs provide real-time analytics, offering insights into payment performance, customer behavior, and market trends. According to Gartner, businesses that leverage real-time analytics can improve decision-making and increase revenue by up to 20%.

These platforms extract, analyze, and pinpoint areas of optimization within the payment stack, allowing businesses to make data-driven decisions to improve performance and optimize costs ^[9].

Choosing the Right Payment Orchestration Platform

Selecting the right payment orchestration platform is crucial for businesses looking to streamline their payment processes and boost sales. Let’s explore the key factors to consider when making this important decision.

Key features to look for

When evaluating payment orchestration platforms, businesses should focus on several essential features:

1. Vendor-agnostic approach: This allows merchants to connect to any payment service provider (PSP) and payment gateway they need.
2. Smart routing capabilities: These help increase acceptance rates and approved transactions ^[10].
3. Compliance tools: Look for platforms that help reduce compliance scope and adhere to industry standards like PCI DSS.
4. User-friendly interface: Consider how easy the platform is to use, especially if you don’t have a dedicated IT team.

Integration capabilities

Smooth integration with existing systems is paramount. Look for platforms that offer:

1. Compatibility with e-commerce platforms, point-of-sale systems, and enterprise resource planning software.
2. APIs and developer tools that facilitate easy integration and customization ^[11].
3. The ability to integrate preferred third-party apps and services.

Scalability

A payment orchestration platform should be able to grow with your business. Consider:

1. The platform’s ability to handle high volumes of transactions.
2. Support for expanding into new markets and adding alternative payment methods.
3. Flexibility to adapt to evolving business needs and market dynamics.

Support and maintenance

Ongoing support and maintenance are crucial for the long-term success of your payment orchestration solution. Look for:

1. Robust customer support, especially for global businesses.
2. Regular performance monitoring and data analysis capabilities.
3. Continuous updates to stay current with technological advancements and regulatory changes ^[12].

By carefully considering these factors, businesses can choose a payment orchestration platform that not only meets their current needs but also supports their future growth and success.

Is Payment Orchestration Worth The Effort?

Payment orchestration platforms have a huge impact on boosting sales and streamlining payment processes. These platforms offer a wide range of benefits, from increasing payment options and improving conversion rates to reducing costs and enhancing security.

By providing a seamless customer experience, facilitating global market expansion, and optimizing payment routing, these platforms are game-changers for businesses looking to grow their bottom line.

When choosing a payment orchestration platform, it’s crucial to consider key features, integration capabilities, scalability, and ongoing support. The right platform can help your business adapt to changing market dynamics, expand into new territories, and stay ahead of the competition.

With the power of real-time analytics and smart routing at your fingertips, you’ll be well-equipped to make data-driven decisions and take your sales to new heights. So, why wait? It’s time to explore how a payment orchestration platform can transform your business.

References

[1] – Encoded – The Ultimate Guide to IVR Payments for 2023. https://www.encoded.co.uk/ivr-payments-the-ultimate-guide-for-2024/

[2] – BPCBT – Payment Orchestration. https://www.bpcbt.com/payment-orchestration

[3] – Pymnts – Shipmate fulfillment on using payment orchestration to break down Cross-Border barriers.  https://www.pymnts.com/news/cross-border-commerce/cross-border-payments/2021/shipmate-fulfillment-payment-orchestration-cross-border-barriers/

[4] – VeryGoodSecurity – Payments Orchestration Platform. https://www.verygoodsecurity.com/use-cases/payment-orchestration

[5] – RPGC Group – Announcing the Payments Orchestration Layer: the necessary functionality in the Payments stack – RPGC Group. https://rpgc.com/announcing-the-payments-orchestration-layer-the-necessary-functionality-in-the-payments-stack/

[6] – AciWorldWideThe complete guide to Payments tokenization. ACI Worldwide. https://www.aciworldwide.com/blog/a-primer-on-tokens-tokenization-payment-tokens-and-merchant-tokens

[7] – Paypalobjects – Orchestrating and optimizing for profitable business growth. https://www.paypalobjects.com/marketing/web/brc/BRC_LE_EvolvingPayments_ebook.pdf
[8] – fliphtml5.com – payment orchestration platform Pages 1-5  https://fliphtml5.com/aqeho/mytr/basic

[9] – How Payment Orchestration optimizes subscription payments for businesses. (n.d.). https://merchantriskcouncil.org/learning/resource-center/member-news/blog/2024/how-payment-orchestration-optimizes-subscription-payments-for-businesses

[10] – Payment Orchestration Layer | Documentation. (n.d.). https://pol.ovotech.org.uk/docs/

[11] – Treasury Intelligence Solutions GmbH. (2024, June 3). US B2B Payments & Cashflow Solutions | TIS Cloud Platform. https://tispayments.com/solutions/payoptix/b2b-orchestration/

[12] – Paul, I. (2022, June 22). Digital payments orchestration is becoming a problem for retailers. Ecommerce News, Conferences, Platform Reviews and Free RFP. https://www.ecommercenext.org/digital-payments-orchestration-is-becoming-a-problem-for-retailers/