What is Payment Orchestration, and Why Does It Matter for Your Business?
Modern consumers demand a seamless payment experience. To meet this, merchants and payment service providers are integrating advanced payment options. Payment orchestration is a process that unifies all the elements of a transaction, enabling automation and end-to-end management. In short, it helps you keep up with the unprecedented customer demand for a hassle-free payment experience.
So what is payment orchestration? Why is it important? In this detailed guide, you’ll find answers to these questions and more. Here’s what to expect:
- What is payment orchestration?
- How does payment orchestration work?
- Why does your business need payment orchestration?
- Reduce processing cost
- Enable smart routing
- Streamline customer experience
- Avoid downtime
- Provide data analytics and reporting
- Maintain security and minimise fraud
- Is payment orchestration the future of FinTech?
- The bottom line
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What is payment orchestration?
The payment orchestration platform (POP), also referred to as Payment Orchestration Layer (POL), is a solution that manages the entire payment process. It involves payment authentication, transaction routing, and settlement and basically offers a great way for e-commerce businesses to manage their online payment processes.
But where it really stands out is….
Payment orchestration provides you with a single platform through which you can connect to multiple different PSPs. It allows you to simplify and dramatically improve your payment service, ensuring a seamless customer experience, maximising online sales and reducing decline rates.
How does payment orchestration work?
Every integration in your payment processing ecosystem is aligned in a way that delivers the best possible route for every transaction. This helps your organisation save on multiple integrations while enabling a truly frictionless customer experience and, in turn, grow your business.
Unexpected payment failures result in lost sales. In the case of payment failures, the POP routes transactions to alternative payment processors. As long as the alternate payment processor can approve the transaction, the payment can still be successful.
By directing transactions to the best-performing processor, businesses can minimise failed transactions and ensure a smooth payment experience for their customers.
Let’s walk through an online buyer’s journey to better understand how payment orchestration works.
- On an e-commerce site, a person adds an item to their cart and selects a payment option of their choice on the checkout page.
- After order placement, payment details are transferred to a payment gateway.
- The payment gateway encrypts the cardholder's personal information and securely sends it to the payment processor and acquiring bank.
- After receiving the encrypted data, both issuing and acquiring banks communicate to authorise the transaction.
- The acquirer will then send the response code (authorised or failed), back to the payment gateway and the merchant.
- In the case of a failed payment, the customer would normally get a declined message. However, with payment orchestration the same payment request can be sent to another payment processor, and if that is successful, then the payment is approved.
If the alternate payment processor can approve the payment, then the transaction is successful. Customers don't have to go through recurring failed attempts and merchants don’t miss out on potential sales. It's a win-win.
Payment orchestration solutions can also handle payment settlements and generate real-time transaction reports within the platform. This helps merchants conveniently manage the entire payment process and optimise their business operations.
Why does your business need payment orchestration?
By now, you have got the answer to “What is payment orchestration?” But as a business owner, you may be thinking about what’s in it for your business. So, let’s look at the myriad of benefits that we can enjoy by integrating payment orchestration into your payment infrastructure.
1. Reduce processing cost
High payment processing fees are a big expense for businesses. Payment orchestration helps to save money, by allowing you to route payments to the PSP with the best transaction fee.
If your customer base is international, you can also drastically reduce your fees by leveraging POP to route payments to the best PSP based on your customers’ geographical locations, payment methods and currencies.
Saying no to a POP setup means you often have to set up individual accounts and manage multiple PSPs, costing you additional resources as well as high fees. Luckily, payment orchestration offers a single consolidated platform with lower setup and maintenance fees.
2. Enable smart routing
The dynamic payment routing feature of payment orchestration has transformed the process. This smart routing system will find the best conditions for your payments.
As well as opting for the provider with the best fees (mentioned above) it can also mean opting for more reliable providers to reduce latency and improve the customer experience. The intelligent routing system also sends your payments to the most suitable provider in the case of transaction failures, helping to increase your approval rates.
3. Streamline customer experience
Recent statistics show that 70% of online customers undergo cart abandonment. When a customer faces multiple payment failures, they often avoid those sites in the future. So if you want high conversion rates for your website, ensure an exceptional user experience.
Payment orchestration also offers a wide range of payment options, to improve conversion and ensure you’re offering the most relevant payment method for your customer base.
Wondering how to find the right eCommerce payment method? We have shared some of the most important considerations that will aid you in finding the right payment method for your e-commerce site. Read now.
4. Avoid downtime
The availability of several PSPs also helps merchants avoid downtime. In the absence of payment orchestration, businesses mostly rely on a single service provider and, as a result, sometimes have to suffer from service outages.
Payment orchestration, on the other hand, provides multiple choices to merchants in terms of payment service providers giving you full control of your payment process.
5. Provides data analytics and reporting
In a typical payment system, using multiple PSPs means managing different accounts and applications, making it difficult for merchants to track data and metrics.
The payment orchestration platform manages different providers from one platform, allowing you to quickly analyse important metrics and track holistic customer data.
6. Maintain security and minimise fraud
A key focus for PSPs is to ensure that merchant or customer data and funds are properly secure and protected. Luckily, payment orchestration can offer analytical reporting to detect any potential risks. Fraud detection and prevention services can be incorporated into your payment orchestration layers to avoid fraud incidents, chargebacks, and related payment issues.
Is payment orchestration the future of fintech?
Payment orchestration has seen a huge rise in adoption over the past couple of years, mainly thanks to its immense capabilities. As a result, many merchants and e-commerce sites are catching the momentum of this latest trend. In fact, the global payment orchestration market size is expected to reach $6.52 billion by 2030.
The future of payment orchestration is bright. Online shopping isn’t going anywhere, nor does the demand for more robust and advanced payment options. Digital transactions are climbing to new heights, automated payment solutions are getting incredibly affordable, and PSPs are getting more innovative with each passing day.
Modern consumers have varying payment demands. In the words of Lucy Peng: “Consumers expect a safe, convenient, and affordable globalised payment platform.” Some want cross-border payments, while others look for local transactions with reliable payment service providers. And some want payments not to happen readily in response to the growing Buy Now Pay Later (BNPL) and other advanced payment schemes.
Meeting all these demands would be highly challenging for merchants in the absence of a robust and unified payment platform that integrates PSPs, acquirers, and issuers. Luckily, payment orchestration is equipped with a comprehensive set of advanced payment services to provide a close-to 100% success rate for transactions.
The bottom line
Digital payments have shown exceptional momentum over the past few years. As a result, e-commerce sites are embracing robust banking capabilities to meet ever-evolving customer demands. By now, you probably know what payment orchestration is.
Payment orchestration platforms are a great solution for optimising your payment flows and delivering the best possible customer experience.
With a smart routing system and integrations, you can deliver an exceptional customer experience, improve your sales and boost your business’ growth.
Optimise your online payments
Here at Judopay, we deliver a complete payment orchestration solution with high-class flexibility, multiple PSP options, and real-time transaction insight, ensuring exceptional customer experience and improved business scalability.
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