Payment Orchestration

There was a time when customers used to make purchases from shops and pay in cash. The payment process was simple. But today, the scenario has changed with the huge advancement in technology and fintech.

Today, customers can shop online or offline and expect to pay using their favorite payment options, such as credit or debit cards, mobile wallets, and even crypto.

With so many payment options, gateways, and banks to choose from, it’s not easy for merchants to offer every customer their favorite mode of payment.

Merchants also need to consider the ease of payment operations, costs, and payment success rate, as these may lead to revenue loss if not optimized carefully.

This is where payment orchestration comes into action and in this guide, we explain the same in detail.

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What is payment orchestration?

Payment orchestration, also known as routing, is the process of integrating and managing the entire payment cycle, which includes payment authorization, transaction routing, and settlement.

Payment providers, banks, and acquirers are connected on a single software platform through payment orchestration.

Payment orchestration makes managing all the payment stacks in one platform feasible rather than juggling multiple integrations with different PSPs. It is key in helping businesses expand to new markets, accommodate different payment methods, and integrate multiple payment providers.

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What are the benefits of payment orchestration

Payment orchestration has several benefits for businesses. Some of them include:

Analyze transaction data

Payment orchestration platforms collect and analyze transaction data and provide valuable insights into customer behavior, payment trends, operational efficiencies, etc.

All these data-driven insights come in handy for businesses to improve their overall payment strategy.

Improve time to market

Businesses often need to implement a new payment method when foraying into new markets, considering the customer preference of the region.

However, such processes are complex and take time. The payment orchestration platform simplifies this process.

As a result, businesses can be agile and easily enter the new market with new payment options.

Edge over competitors

Offering customers their preferred payment choice can be a great differentiator for businesses.

Payment orchestration just makes that possible for businesses by offering a secure and convenient payment experience.

Seamless payment flow with enhanced success rate

As payment orchestration allows businesses to access multiple PSPs, businesses can easily route and optimize payment processing and ensure the transaction is completed cost-effectively.

Consolidating multiple providers into a single platform also simplifies integration and streamlines the management of multiple providers for different systems.

Moreover, it ensures that the most reliable channels are used, which increases the transaction success rate and minimizes failed transaction attempts.

Improve operational efficiency

Payment orchestration automates payment processing, reconciliation, routing, reporting, etc., minimizing the chance of manual errors.

Additionally, automation helps free up resources so that they can focus on core activities. Together, these improve operational efficiency.

Increased revenue

The payment orchestration process simplifies payment processing and streamlines operations, giving customers a better transaction experience and boosting online sales and revenue.

As more transactions are completed successfully and customers feel delighted with their transaction experience, businesses see a higher NPS and experience better topline revenue.

Access to a wide range of payment methods

One of the biggest benefits of payment orchestration is that it gives merchants access to various payment methods.

As the business grows and forays into new business territory, it can offer the customer’s preferred payment method, such as credit/debit cards, mobile wallets, buy now/pay later, etc.

Lower cost for payment processing

As an organization grows, it may need to add multiple payment options. However, adding new payment methods can increase the business's costs, leading to revenue loss.

However, a payment orchestration platform makes it easy for businesses to keep the cost of payment processing low by routing transactions to processors with the lowest cost.

Better customer experience

Payment orchestration supports multiple payment methods, faster and more reliable transactions, and a consistent checkout experience, all of which contribute to a positive customer experience.

Fraud prevention and security

Payment orchestration platforms often come with fraud detection and security features that secure all transaction details.

Business continuity

Payment orchestration offers business continuity in case of an outage. This is possible because payment orchestration platforms provide the redundancy needed for business continuity. Thus, payment orchestration saves revenue loss in case of any outages.

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How does payment orchestration work

Payment orchestration integrates the acquirers, payment gateways, processors, banks, and financial service providers into a single centralized platform.

It aims to create a unified platform, making payment processing a seamless experience for customers. Let’s understand how a typical payment orchestration platform actually works.

Initiating a transaction

This is the first step triggered when a customer initiates a payment. The orchestration platform then decides the optimal route for the transaction processing based on real-time data and pre-defined rules.

Some factors that play a key role in determining this optimal route are customer preference, cost, location, compliance regulation of the location, and success rate.

Processing the transaction

In the next step, the selected payment provider processes the transaction securely. The platform ensures that the transaction meets all the necessary security and compliance guidelines while automatically reconciling it.

Analyzing data

The orchestration platform gathers all transaction data to provide insights into operational performance, customer behavior, and payment trends and helps businesses optimize their future payment strategies.

Customizing platform rules

Guided by the data analysis insights from the orchestration platform, businesses customize the rules of the orchestration platform to meet their requirements. For example, they can customize the platform for better workflows and more control over payment processing.

How payment orchestration platforms (POPs) help streamline payment processing and improve transaction success rates

Here’s why POPs are becoming important for payment orchestration:

• Better security and compliance: POPs offer enhanced security protocols and ensure that all major compliance regulations are met (think of PCI-DSS, 3D Secure, etc.) so that every transaction remains safe, guided by compliance regulations.
• Reporting and analytics: POPs provide unified reporting and analytics to help businesses analyze transaction history, identify trends, and gain significant insights into payment performance. This helps businesses make data-driven decisions.
• Connecting to multiple payment gateways: POPs work like aggregators, connecting different payment gateways, banks, financial services, and processors so businesses can offer their customers their preferred payment option.
• Easy currency conversion for global customers: POPs facilitate easy currency conversion for international transactions. Thus, they help in the global expansion of the business, scalability, and streamline international transactions.
• Automatically routing transactions: POPs can automatically route transactions for better speed and cost. This process considers various factors, such as cost efficiency, past transaction success rate, geographical locations, etc.

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Key features to look for in a payment orchestration platform

While every business may have specific requirements, here are some basic features that a payment orchestration platform must have:

• Multi-currency support: As you expand your business into foreign lands, you must offer international payment systems to your overseas customers. Ensure your payment orchestration platform offers international payment methods and currency conversion options.
• Easy integration with multiple payment gateways: Ensure you pick a payment orchestration platform that provides easy integration with different payment gateways so your customers can find their preferred payment option.
• Fraud prevention: A good payment orchestration platform must include fraud prevention tools, customizable rules, and risk assessment benefits.
• Seamless integration: A modern payment orchestration platform should have API-first architecture that allows seamless integration with the existing tech stack, CRM, ERP, etc.
• Smart routing capability: A smart payment orchestration platform must route transactions optimally to minimize cost and improve the success rate of the transaction.
• In-depth analytics and reporting capability: Good payment orchestration platforms offer real-time reporting that helps businesses monitor transaction performance and measure success rates, among other key metrics.
• Built-in payment retries: Look for a payment orchestration platform that has automatic payment retry capability, where any failed transactions undergo retry through an alternative processor.
• Supporting scalability: To implement a payment orchestration platform, you will need a robust infrastructure system capable of handling a high volume of transactions. Remember, too much downtime can interfere with payment processing, leading to revenue loss, so invest in an infrastructure that has failover capabilities for minimal downtime.
• Tailor-made payment workflows: Every business has specific requirements based on customer profiles, regional regulations, transaction types, etc. So, choose an orchestration platform that offers flexibility for customizable workflows.
• Adherence to compliance guidelines: Finally, opt for an orchestration platform that adheres to standard compliance regulations like GDPR and PCI-DSS, along with security protocols, including 3D security and tokenization.

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Common challenges in setting up payment orchestration

While a payment orchestration platform can improve the payment processing experience and bring in a unified approach, setting up a payment orchestration platform can be challenging. Some of the common hurdles businesses face include:

• Vulnerability to cyber attacks: A POP that does not have strong data security measures can be vulnerable to cyber attacks, as it handles a lot of sensitive financial data.
• Implementing a POP is expensive: The initial set-up and ongoing maintenance charges can be expensive. So, businesses must carefully evaluate the cost against the ROI before implementing it.
• Non-adherence to compliance guidelines can result in penalties: To avoid high penalties, the POP must operate within compliance guidelines like PCI DSS and the EU’s General Data Protection Regulation.
• Need technical expertise: While implementing a POP can make life smoother for everyone, its implementation and maintenance require technical expertise. Hiring a specialized team to manage the POP can cost additional money.
• Downtime means revenue loss: Most businesses implementing POP depend on third-party providers. Any outage or technical issue on the vendor’s side can impact the entire processing flow, leading to potential revenue loss.
• Not having employee buy-ins: Implementing a payment orchestration platform will significantly change workflows, such as introducing new processes. This means you can face resistance from the employees. A strong change management plan must be in place to minimize employee resistance. This plan must help facilitate easy transitions, reduce friction, and encourage good adoption among platform users.
• Limitations in customization: Depending on your POP, the extent of customization on the platform might be limited. This can be a challenge, especially if there are complex payment processes.

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Conclusion

Payment orchestration is crucial for businesses that want to wow their customers with a seamless customer experience while saving costs and achieving operational efficiencies. It allows businesses to provide a secure payment environment where customers can transact safely by selecting their preferred method.

Integrating a payment orchestration platform is complex, but it can be easily managed by choosing a suitable payment provider like PayBy.

PayBy is a one-stop payment platform that helps users choose their payment mode. Its solutions are built to simplify online, in-store, and global transactions.

PayBy empowers businesses with innovative online and offline digital payment infrastructure, such as an online payment gateway, pay link, QR code payments, direct pay, JSAPI payment, recurring payments, point-of-sale, Smart BOX, etc., so you can meet customer expectations and delight them.

PayBy is safe and secure and is licensed by the UAE Central Bank. It has been given the highest financial service approvals to conduct Stored Value Facility (SVF) and Retail Payment Services (RPS) operations.

Get started with PayBy today.