What is Payment Orchestration?

Payment orchestration is not new, but it's taking on an expanding role as companies and merchants try to keep up with customer demands and the ever-increasing number of payment options out there. Merchants are struggling to keep up as they add newer technologies, components, and elements to their existing legacy infrastructure, making them less efficient at processing payments.

These intricate and fragmented layers make it hard to plan for digital growth across the organization. Instead of focusing on product development, they've had to look at their backend systems and back-office processes to see how they can meet customer demands while still being efficient with their technology architecture.

The widespread adoption of Payment Orchestration across many industries is driving the digital transformation in the payments space. It's helping companies and merchants develop a more efficient payment ecosystem that can handle today's sales and deal with expansion in the future. From airlines and travel companies to retail and logistics firms, everyone's looking at Payment Orchestration to drive global expansion and grow into new market verticals.

Let's take a closer look at Payment Orchestration and the solutions or platforms that can profoundly impact your company and business.

What is Payment Orchestration?

Payment orchestration refers to all the software, systems, and services that are involved in authorizing and processing payments. More specifically, Payment Orchestration optimises how these systems work together to ensure the most efficient route for a quick and secure transaction. It does this through a Payment Orchestration platform that sits between the external-facing technology and the backend software and processes your company uses to handle all transactions, settlement, reporting, and so on. For example, online education platforms use it to offer courses internationally, online streaming apps use it to manage digital payments and integrate new global payment options, and travel companies use it to offer and manage omni-channel, mobile-first payment options.

Whether it's deployed as a Payment Orchestration platform or layer, it bundles everything your company needs to initiate, validate, route, and process transactions into a single tech option.

Payment Orchestration Platform Architecture

Unifying all these components under a single control layer enables end-to-end management of payments processing instead of dealing with multiple, individual systems. Companies can monitor, optimise and automate key elements of their payment operations such as acceptance rates, chargeback disputes and reconciliation, more efficiently, helping to reduce operational costs.

Many Payment Orchestration layers and platforms also have robust integration features such as APIs that make them easily integrable with existing software and architectures, including cloud-based platforms and solutions. Implementing Payment Orchestration makes it simpler for merchants to build and operate the sophisticated payment ecosystem needed for today's online world.

Why Payment Orchestration matters today

The ultimate goal in the payment world is to be invisible. A transaction that happens so seamlessly that it fades into the background of the customer journey and barely registers. Invisibility is hard in a world where payments are made globally, and payment methods are as varied as the products people buy.

Payment orchestration brings that invisibility to the payments industry. It allows companies to streamline their payment operations while still delivering the flexibility and ease customers look for in their shopping experience. That will matter a lot more soon, as online shopping is forecast to rise to nearly 25% of all retail purchases and reach nearly $7.4 trillion in total spending in the next four years. In the U.K. alone, it'll account for nearly 30% of total retail sales or over £148 billion by then.

Shopping in the New Economy

Consumers have become more accustomed to shopping online and dealing with new retailers in the last few years, leading them to be more accepting of new payment methods. One-third of all U.K. shoppers have used a digital or mobile wallet to pay for purchases, while nearly three-quarters of consumers use them in Asia. Alternative payment methods continue to gain traction globally and account for approximately $65 billion in revenues globally. People are shopping online more often and are using a wider variety of payment methods than they have before.

These are massive shifts in consumer behaviour for online retailers to manage. As an online retailer, you've got to look beyond website traffic numbers and abandoned shopping cart rates to remain relevant with shoppers. Being able to offer more flexible payment options through orchestration could play a crucial role in your business growth, but only if you're prepared.

New Customer Expectations

As technology has evolved so quickly in the last decade, so too have customer expectations regarding online shopping. Shopping from a branded app or purchasing through a chatbot has made the customer experience more efficient and customisable, so customers will baulk at anything that creates friction for them – especially when it comes to payment methods and reducing payment friction.

According to one study, nearly half of all shoppers abandon their online shopping carts when they see high extra costs on their purchase, such as shipping and taxes. One-quarter will abandon them if they have to create an account to purchase, 18% will abandon their cart if the checkout process is too complicated, and 7% will give up if their preferred payment method wasn't available.

Reasons for Abondonments During Checkout

“Have you ever abandoned any online purchases during the checkout process in the past 3 months? If so, for what reasons?”

Answers normalized without the ‘I was just browsing’ option.

4,329 responses / US adults / 2021 / © – Source: Baymard

And that's just from a payment perspective!

Understanding your customers has always been critical to online sales, but unless you're digging deeper into your metrics, you won't find out why they walk away. A flexible Payment Orchestration solution can help you streamline key actions like returns and automate processes such as refunds. It can help you prioritise the post-sale or post-browse service to the level customers expect today and ensure high customer loyalty and satisfaction, so they complete every online shopping trip.

Serving International Customers

Getting international customers to click "buy" can be challenging if you don't have the right localised payment options. It won't matter if your prices are the best; if your checkout process is complex or you divulge the shipping costs too late in the process, you'll lose customers. The shift to digital has unlocked the potential of international consumers, but you need a payment ecosystem that can match it. Most consumers wish to pay in their local currency, and some countries and cultures use different payment methods than what a merchant is used to.

Payment orchestration platforms can help merchants prioritise the right payment option for their target consumers and stay on-side of financial regulations such as PCI DSS, PSD2, and GDPR. Easy payment options are a must, as are efficient return and refund options. Legacy systems will struggle in this type of fast-changing environment. Meanwhile, a centralised Payment Orchestration layer is dynamic and agile enough to manage it smoothly for both the retailer and consumer.

As more people shop online, you'll need to simplify your backend processes to keep up. That means automating or streamlining traditionally slow parts of your operational processes, such as reconciliation and refunds. To support these digital transformation efforts, you'll need to add newer technology to your payment architecture, which is where Payment Orchestration comes in.

Unifying the payments portion of your online business will keep you relevant in the new economy, align your operations with the highly demanding customer expectations, and open your business to new international markets. And that's just the beginning. Here are a few more benefits of Payment Orchestration that'll future proof your business and set you up for sustained growth.

The Benefits of Payment Orchestration

Switching to a Payment Orchestration layer or platform will offer your business many advantages, including:

- Automated payment routing
- Unified payment analytics and reporting
- Better transaction security
- Automated payment options based on location, transaction costs, customer preference, and more

5 Benefits to Payment Orchestration Today

  1. A Better Customer Journey that Serves a Global Audience

    The top benefit to Payment Orchestration is its ability to improve the customer journey at every touchpoint. Simplifying the payment process with features like embedded checkout, integrated biometric validation, and less intrusive fraud rules removes many of the obstacles consumers face before completing their transactions.

    Additionally, the ability to offer consumers a wider range and choice of payment methods helps you meet the increased demands of the modern customer and maximise conversions. Digital Payment Orchestration makes it easier for you to adapt to new payment solutions as they're released or integrate existing ones as you expand into new markets.

  2. Increased Fraud Protections

    One reason merchants may hesitate to add new payment methods is the increased risk of financial fraud. And there's a good reason for that. So far this year, global fraud losses grew by 18% to $2 billion, with 86% of global consumers becoming victims of payment fraud and identity theft. Merchants cannot afford to rely on a patchwork of legacy systems that can't detect fraudulent transactions no matter where they occur during the process. Without Payment Orchestration, transaction data is spread over multiple payment gateways and providers, making it difficult to analyze from an insight perspective, much less to detect fraud.

    With Payment Orchestration, however, data is routed automatically and dynamically based on predefined routing rules. These rules give you greater control over how the transaction routing is done and makes it easier to spot inconsistencies and risky transactions because you've got real-time visibility into the data in one spot.

    For example, you could automatically route transactions to the channels that provide the best conditions for both you and your customers. That could mean offering low-risk payment methods to the highest-risk customers or choosing the lowest transaction cost channel for the highest volume customer. Your Payment Orchestration platform gives you access to the data in real-time, so you can spot the risky transactions and then adjust your response accordingly before placing your business at risk.

  3. More Resilient Payment Ecosystem

    The way most merchants combine separate payment channels and systems leave them open to single points of failure. Implementing Payment Orchestration improves the payment ecosystem's resilience by layering redundant systems that can take over processes if there's a failure. By connecting multiple PSPs or acquirers, there's a more robust failover process for transactions.

    Merchants will enjoy a higher transaction success rate, and a lower per-payment cost as the backend automatically reroutes to a second or third alternative processor to complete the transaction. Customers will be more satisfied with the payment experience as they can complete the transaction with their preferred payment method. No more mysterious payment failures that were out of their control.

  4. Lower Total Payment Costs and Higher ROI

    The high cost of ownership of separate payment system solutions makes it difficult to develop new features or integrate new payment options. The maintenance, IT, resource, development, and licensing costs can add up quickly when you're dealing with multiple systems. A Payment Orchestration solution or platform leverages modern infrastructure and architecture to reduce those costs by upwards of 20% while consolidating many individual expenses.

    A Payment Orchestration platform is designed to work with existing cloud infrastructure such as AWS, Google, and other cloud software, reducing storage and bandwidth costs. It aggregates data and can easily compile data reports for multiple PSPs, making it possible to share the data with other merchants, fraud detection services, or financial authorities to identify and reduce overall financial risk. Plus, a Payment Orchestration platform uses automated services and processes that optimise back-office functions and uncovers transactional efficiencies that make it less expensive than conventional payment processing.

  5. Access to a Wider Selection of Payment Solutions

    While some businesses choose the best payment solution for their needs, others are restricted by their current vendor agreements. This can lead to choosing an option that doesn't quite fit your business or your consumer's needs, which leads to frustration for everyone involved.

    On the other hand, a Payment Orchestration solution is a scalable, flexible solution that works with whatever you or your consumers need. It provides easy access to the ever-growing payment processing ecosystem, so you can pick and choose the PSPs and acquirers you need to offer the best payment options to your consumers. You're not dependent on a singular partner or vendor but instead can choose the ones that work best for your business.

    You'll have access to fallback providers that'll increase your resiliency and give you the option to switch providers in case of payment outages, feature updates, or policy changes that don't suit you. Finally, you'll be in a more favourable position when it comes time to negotiate pricing and charges with your vendors and other integrated partners.

    Unlike other initiatives that provide a temporary boost in profitability or revenue generation, Payment Orchestration allows businesses to prepare for and adapt to the ever-evolving payments landscape. Payment orchestration is one way to future-proof your business, enabling a scalable, resilient, and cost-effective solution to end-to-end payment processing.

Learn more

Payment orchestration is a future proof payment solution that enables a scalable, resilient, and cost-effective payment ecosystem for any business that sells online. It brings end-to-end visibility to payment processing, provides a fast time to market for new payment methods, and is flexible enough to integrate new acquirers or backend processes as they become necessary for your business. And it provides the ease and simplicity consumers demand from their online payment experience, which is essential for a business in today's online world.

To learn more about how CellPoint can help tune up your business' engine with Payment Orchestration, reach out to us today. We'd love to speak to you and see how we can create a customised Payment Orchestration solution for your business.

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