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Payment Orchestration

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Your business likely isn’t payments. But payments are essential to your business.

And as payments have become simpler for customers, they have become more complex for merchants. There are multiple components, partners, currencies, software and regulatory compliance to manage.

The solution to mastering this complexity is payments orchestration.

What is Payment Orchestration?

payment orchestration definition with TreviPay branding

Payment orchestration refers to both the integration and managing of all aspects of the payments process.

It is carried out on a payment orchestration platform (POP), which is a comprehensive solution that manages and optimizes payment operations connecting merchants, payment service providers (PSPs), acquirers, banks and other key stakeholders through one single unified interface.  

Payment orchestration is often referred to as the ‘payment orchestration layer’. This is because it acts as a layer between the merchant and their payment services.

In effect, payment orchestration offers merchants what merchants offer customers: a simplified end-to-end payment process.

Different payment orchestration models

The term ‘payment orchestration’ can be used by companies with subtly different operating models.

In its purest sense, it tends to refer to companies that are payments agnostic. That is, companies that will simply route payments in the most efficient and cost-effective way, regardless of provider.

However, an almost hybrid model of this exists. It involves orchestration providers offering a solution that favours their own preferred payment networks.

There isn’t currently a clear distinction between these kinds of providers. Some in the industry believe that there should be.

Global Payment Orchestration

In the dynamic territory of international trade, businesses seek streamlined solutions to navigate complex payment ecosystems seamlessly. Global payment orchestration emerges as a strategic asset, empowering enterprises to optimize payment processes worldwide for enhanced efficiency and effectiveness.

Global payment orchestration serves as a centralized hub, integrating diverse payment methods, currencies and regulatory requirements across borders. This unified approach simplifies complexity for businesses operating on a global scale, facilitating smoother transactions and enhanced operational agility.

Harnessing the power of data analytics, global payment orchestration enables businesses to gain actionable insights into their payment operations. Through real-time reporting and analytics capabilities, businesses can monitor transaction performance, identify trends and optimize payment strategies. Additionally, global payment orchestration facilitates compliance with regulatory requirements, ensuring adherence to industry standards and mitigating risk in cross-border transactions.

Is a payment orchestration platform a product or a service?

A payment orchestration platform is primarily a product. However, in many cases, it is also a service.

For many SMEs, there is an out-of-the-box solution that quickly integrates for them. For others, the platform provider may manage a more bespoke payment orchestration solution. 

Many large enterprises will often use their own sophisticated in-house payments teams to manage the platform.

Why is it called payment orchestration?

Payment orchestration is an apt name because it provides an appropriate metaphor to what it does.

Like orchestras, payments have multiple different parties trying to work together in concert. These include:

  • Cardholders
  • Merchants
  • Issuing banks
  • Issuing processors
  • Payment gateways
  • Acquiring processors
  • Acquiring banks

To the two primary parties (cardholders and merchants), the payments process appears simple. After all, this is the whole point of it. 

But in reality, it is an increasingly sophisticated and complex process. And increasingly so: new players and (financial) instruments regularly join the orchestra.

So, without orchestration, the whole payments process will become increasingly fragmented, disordered and out of tune.

Benefits of Payment Orchestration

Numbered points giving 5 benefits of payment orchestration

There are several immediate benefits to payment orchestration. Collectively, these benefits also increase your company’s ability to scale and enter new markets.

1. Increases revenue

Payment orchestration can increase revenue in two main ways.

It increases authorization rates by routing via different acquirers when issuing banks decline transactions. And it improves conversions through this routing process and the fact that it helps make more payment methods available.

2. Reduces payment processing costs

Payment orchestration automates finding the most cost-effective pathway for transactions. It calculates the variables needed to attain lower acceptance costs and better pricing more generally.

One way it does this is through tokenization, which is a method of replacing sensitive data, such as credit card numbers, with unique identifiers called ‘tokens’.

This lowers payments costs in several ways, including reducing the risk of data breaches and simplifying the compliance issues.

3. Improves analytics and reporting

Payment orchestration allows for the consolidation of data and analytics. This includes information on basket abandonment rates, 3D Secure (3DS) declines and more. 

This access to a comprehensive and holistic view of data can help an organization to make more informed business decisions and reduce reporting errors.

It also helps automate and streamline reporting processes with real-time data across platforms for multiple team members and stakeholders.

4. Provides easier payment integrations

The services provided via the payment orchestration platform free up an IT team from many integration and maintenance tasks. 

Payment orchestration providers bring technical know-how, experience, and industry expertise. They can also provide industry insight and trends analysis.

5. Better regulation compliance

If a business is looking to enter new markets, keeping up to date on regulatory compliance is essential. Payment orchestration platforms help stay on top of this.

It does this by maintaining data security standards and local payment methods per region. This includes providing automated updates for regulatory changes.

This simplifies market expansion by significantly easing the burden of regulatory compliance when doing so.

3 Ways Payment Orchestration Helps the Payments Process

Many of the above benefits are achieved through the following three ways.

1. Increasing the range of payment methods you can accept

Payment orchestration platforms can incorporate new payment providers, methods and currencies into your existing available payment options.

If you rely on a single payments service provider, you might not be able to easily add other payment options. Or you might have to manage them on separate platforms.

Increasing your range of available accepted payments increases the range of clients you can convert.

Incorporating financing, invoicing and other payments-related functions

Customer financing has been a popular trend in recent years. 

For example, being able to offer eCommerce-specific financing solutions is increasingly important for online retail stores.

Payment orchestration enables you to keep track of these alongside your existing payment services in one integrated platform.

2. Routing transactions

When your customers’ attempted transactions fail, payment orchestration platforms can automatically route those requests to another payment processor.

This increases the chance the transaction will still take place. And it reduces the number of declines your customer experiences.

Instead of your customer having to find an alternative payment method (or, worse, an alternative seller), a payment orchestration platform finds them an alternative payment pathway.

This positively contributes to the customer’s user experience.

What is smart routing in payments?

Smart routing refers to a task carried out by automated payment technology (including payments orchestration platforms). It involves a smart router automatically directing transactions to the optimal payment provider.

It calculates what is optimal by considering factors like success rates, costs and regions. This helps transactions automatically follow the most effective and cost-effective route available.

3. Handling settlements

In payments, settlement refers to the process of transaction funds being transferred from the buyer’s account to the seller’s account. It comes after authorization and clearing processes are completed.

Payment orchestration consolidates including settlements and helps you track them in real-time. It also standardizes and automates them. 

So, instead of managing multiple formats and procedures for different gateways or providers, companies can follow a single, streamlined settlement process.

Finally, orchestration services support cross-border settlements by managing currency conversions and adhering to regional settlement regulations.

What kind of companies need payment orchestration?

A variety of different companies benefit from payment orchestration.

In general, large merchants or merchants looking to scale should generally consider having more than one payment provider. This gives them control and flexibility. 

However, it also means that there is more to manage. So, in theory, if your company relies on several payment providers, you should consider payment orchestration.

At present, this translates to companies working in eCommerce, travel, and many other cross-border industries. It also applies to companies that require multiple payments providers.

Payment orchestration vs. payment gateway

Payment gateway is a backend technology necessary for all card payment processing. 

If a payment fails, the payment gateway will simply inform the issuer processor with a response code. However, a payment orchestration platform will route the payment. 

Payment orchestration for B2B companies

There are differences between how business-to-consumer (B2C) and business-to-business (B2B) companies operate, particularly in the areas of payments, marketing, order volume and frequency, etc.

But payment orchestration is just as relevant to B2B companies now as it is B2C ones. This is simply because it drives revenue, reduces costs and improves the buying process for B2B buying customers.

TreviPay’s B2B payment solutions

At TreviPay, we offer B2B payment solutions that help you increase acceptance rates and conversions. 

We have partnered with BlueSnap to offer a unified payment solution for B2B eCommerce that integrates trade credit and card-based payment processing. 

This collaboration aims to eliminate the need for multiple payment vendors, simplify reconciliation, and reduce checkout friction. 

It offers a comprehensive solution for infrequent or smaller buyers who don’t qualify for trade credit. The integrated system enables real-time account updates and ensures data transfer with each transaction. 

Conclusion

Payment orchestration has emerged as a critical tool for businesses navigating the intricate landscape of today’s global digital payments. 

Its ability to integrate various payment methods, streamline operations, and provide robust data analytics offers remarkable advantages for companies. 

These include driving revenue growth, minimizing processing costs, enhancing regulatory compliance, and enabling seamless payment integrations. 

Whether a company operates in the B2B or B2C realm, payment orchestration platforms provide a strategic advantage by increasing operational efficiency and improving customer experience. 

As digital transactions continue to evolve, businesses that leverage the power of payment orchestration will be well-positioned to adapt, innovate and thrive. 

Therefore, payment orchestration is more than a necessity – it is a key enabler of future-proofing businesses in the increasingly complex world of global commerce.

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