The dynamism of the modern world requires merchants to keep pace, particularly in the realm of online payments. However, one can easily get overwhelmed by so many payment methods, technologies, and advancements. Therefore, businesses should partner with reliable payment software providers that will take the burden of handling payments off their shoulders. Payment orchestration emerges as the optimal solution, seamlessly managing intricate transaction processing technicalities.
In this article, we’ll uncover what payment orchestration is, how it works, and what benefits it brings to modern businesses.
What is payment orchestration?
The essence of payment orchestration is perfectly captured in its definition. It is the process of efficiently managing multiple payment methods, providers, and channels on a single platform. Just as a conductor manages an orchestra.
Payment Orchestration Platform (POP) is also called a Payment Orchestration Layer (POL). It allows businesses to streamline their payment process by handling a variety of payment methods under one roof. At the same time, it also manages different payment service providers (PSPs) and acquirers.
The platform’s centralized infrastructure incorporates advanced technologies that route transactions to the most efficient providers. They also prevent fraudulent transactions, improve the customer experience, and much more.
All this contributes to payment orchestration being recognized as the best payment solution for businesses to conquer the evolving landscape of online payments, cater to modern customers’ expectations, and drive growth in an increasingly competitive market.
How does payment orchestration work?
Payments orchestration entails integrating various PSPs, acquirers, and payment methods into a centralized cutting-edge platform via an open Application Programming Interface (API). It efficiently distributes transaction loads among them, guided by predefined rules and criteria. The platform’s goal is to achieve an optimal conversion rate and a smooth checkout experience.
The biggest merit of a payment orchestration platform – smooth transaction processing – happens in a flash. However, behind this is a complex system of various financial technologies working side-by-side. Here’s how payment orchestration platforms work behind the scenes:
- When a merchant decides to integrate a payments orchestration platform, its vendor sets up the platform according to their specific requirements. This includes setting up integrated banks and payment providers, defining anti-fraud rules, configuring transaction flows, specifying intelligent routing criteria, etc.
- Then, when a customer proceeds to checkout, they choose the most suitable payment method among the listed ones. As soon as the customer pays, the payment orchestrator receives a transaction request from the merchant’s system.
- First, it verifies the transaction for fraud using powerful anti-fraud technology. Then, based on the predefined routing rules and criteria the business configures, the payment orchestration platform dynamically selects the most appropriate payment provider for processing the transaction. This decision is based on factors such as transaction amount, currency, provider performance, etc.
- After the transaction is processed, the platform receives a response from the payment provider regarding its status. In the event of a transaction failure or an issue with the selected provider, the platform automatically cascades it to another provider. This way, it will be processed successfully within a single payment attempt.
How payment orchestration differs from traditional payment processing
Payments orchestration is often confused with payment processing. However, it’s crucial to understand the difference between the two distinct concepts.
A payment orchestration platform is software that helps businesses manage their payments effectively with various innovative technologies, optimizing the process for the highest results. In turn, payment processing refers to the processing of transactions by an individual payment provider.
A payments orchestration platform cannot handle transactions itself but integrates with many providers. The availability of multiple acquirers and payment methods offers businesses flexibility and efficiency. They include credit cards, digital wallets, cryptocurrencies, mobile payments, etc.
Benefits of payment orchestration
There are multiple benefits that payments orchestration offers merchants worldwide. The key ones include:
Multi-acquirer approach
Payment orchestration platforms already have multiple integrated banks and payment providers. It means merchants can obtain the necessary integrations easily and quickly. This can be done with one integration to the platform via an open API rather than integrating them individually.
Greater payment system reliability
Relying on various banks and payment providers instead of a single or a few ensures the payment system’s resilience. If one acquirer experiences issues, transactions can be processed through alternative providers, eliminating disruptions. Due to this, merchants avoid losing customers whose payments failed to go through.
Increased approval rate
At the core of payments orchestration lies intelligent routing and cascading. The routing mechanism sends transactions to payment providers most likely to approve them. When one payment provider declines a payment, cascading redirects it to another for successful completion. Together, these technologies can boost transaction approvals by up to 20%.
Optimized processing costs
The payments orchestration layer helps businesses optimize processing costs. It can route transactions to payment providers with the most competitive interchange fees. To establish an optimal transaction processing strategy for your business, you can define routing rules for different transaction types (i.e., local and international payments). In this way, you will ensure each of them is sent to providers with the lowest processing fees.
Enhanced payment security
To provide payment services, a company must comply with the latest security standards. This requirement prevents malicious companies from entering the market. Also, a robust payment orchestration system has multiple features that ensure transaction security. They include anti-fraud filters, tokenization, and encryption. They also partner with third-party risk-scoring providers to prevent unauthorized access or fraud.
Improved customer satisfaction
With a variety of payment orchestration technologies, merchants can identify customers’ payment preferences. Plus, they can address any shortcomings in their existing payment processes. Ultimately, the payment orchestration system is pivotal in enhancing customer satisfaction. It helps merchants deliver a seamless and frictionless checkout experience. It also fosters customer loyalty and encourages clients to return for their next purchases.
Tips for choosing a payment orchestration platform
Although orchestration stands at the forefront of financial technology, its ultimate benefits depend on the payment orchestration provider who implements it. When selecting an orchestration platform for your business, consider these factors:
PCI DSS compliance
Make sure that your platform vendor is Level 1 compliant with Payment Card Industry Data Security Standards (PCI DSS). Besides, they need to renew their certification yearly. Also, prioritize platforms with solid security measures. They include encryption, tokenization, and customizable anti-fraud rules.
Supported payment connectors
Verify if your potential vendor supports banks and payment providers relevant to your business. Additionally, you should find out whether the vendor offers custom integrations upon request. If yes, clarify its costs and timelines.
System scalability
Ensure the platform can accommodate your business’ growth over time. It should be able to handle increasing transaction volumes and support expansion into new markets smoothly.
Customization options
When selecting a platform provider, check how customizable its system is. Consider platforms that offer customizable technologies to tailor the payment experience to your brand and customer preferences. This may include customizing payment flows, branding options, and checkout processes.
Customer support
Be sure to assess the level of customer support provided by the platform. Ensure that your team has access to reliable support resources to address any issues that may arise. In addition, ensure you receive guidance on how to set up your payment technologies to maximum efficiency.
How can Akurateco help?
Akurateco is a white-label payment orchestration provider that delivers a cutting-edge payment platform to businesses worldwide. We offer:
- Access to over 330 integrated banks and payment providers through a single integration to our platform. They cover many traditional and alternative payment methods, such as e-wallets, bank transfers, mobile payments, and cryptocurrencies. We also provide custom integration upon request.
- Intelligent routing and cascading technologies capable of boosting transaction approval rates by up to 20% while enhancing your clients’ overall experience.
- Payment Team as a Service approach, focused on human-driven support. Our dedicated tech team offers thorough troubleshooting and prioritizes customer-centric approaches tailored to your business needs.
- PCI DSS Level 1 certified payment platform equipped with advanced anti-fraud modules. Additionally, the platform works with external risk-scoring providers, including Fraudio, MaxMind, and AcuityTec.
- Advanced analytics technology, allowing access to the transaction database via an open API. The technology enables the generation of customized reports using reporting tools like Power BI.
Frequently Asked Questions
What is a payment orchestration platform?
Payments orchestration platform is advanced white-label payment software created to cater to the needs of merchants across various industries. It stands as a comprehensive solution that consolidates innovative financial technologies and multiple payment integrations into a single platform.
What is the difference between a payment gateway and payment orchestration?
A payment gateway is a technology that facilitates the transmission of transaction data between a merchant’s website and the payment processor. In turn, payments orchestration refers to the process of managing and optimizing multiple payment methods, providers, and channels within a unified platform.
How big is the payment orchestration market?
According to the data from Grand View Research, the market size of payment orchestration platforms has reached USD 1.13 billion in 2022. It is projected to expand at a compound annual growth rate (CAGR) of 24.7% from 2023 to 2030.
Why do I need payment orchestration?
Payment orchestration is essential if your business seeks to optimize payment operations. With POP, you can efficiently manage your payment ecosystem and scale your business effectively in an ever-evolving digital landscape.
What are the key benefits of implementing payment orchestration for businesses?
Using this technology could increase your transaction approval rate, grow your conversion ratio, and increase the number of banks and payment methods. It also facilitates saving on processing costs, improving customer satisfaction levels, expanding your business into new regions, and many more.
What is meant by payment orchestration?
Payment orchestration refers to the process of managing and optimizing payment workflows across multiple payment providers, methods, and channels through a single platform or system. It acts as a centralized layer that connects businesses to various payment service providers (PSPs), acquirers, and payment methods, streamlining the entire payment process. The primary goal of payment orchestration is to improve efficiency, reduce costs, and enhance the customer experience.
What is transaction orchestration?
Transaction orchestration refers to the process of managing and optimizing the end-to-end flow of a transaction across various systems, platforms, or service providers. It ensures that each step in the transaction process—from payment initiation to settlement—is executed seamlessly, efficiently, and securely.
What is the difference between PSP and payment orchestration?
A Payment Service Provider (PSP) is a company that facilitates payment processing by connecting merchants to acquiring banks and payment networks. Payment orchestration, in contrast, is a broader solution that manages and optimizes payments across multiple PSPs, acquirers, and payment methods. While a PSP handles payments within its own network, payment orchestration integrates multiple providers, making it ideal for businesses with high transaction volumes or global operations.
