What is payment orchestration & how can it benefit businesses?
Global online retail sales are set to hit $6.51 trillion in 2023, increasing to $7.36 trillion in 2024 and $8.5 trillion in 2025. Specifically, online shopping revenue in the United States is anticipated to reach $1.11 trillion in 2023, with forecasts indicating that retail ecommerce revenue will exceed $1.7 trillion by 2027.
The rapidly growing ecommerce market means that online retailers must enhance their workflows and improve their processes to remain competitive and keep up with unprecedented customer demand for a seamless payment experience.
One of the ways ecommerce companies are meeting these two goals is by implementing payment orchestration platforms to streamline the payment process.
What is payment orchestration?
Payment orchestration means integrating and managing the end-to-end payment process, including authorizing payments, routing transactions, and handling settlements. Payment orchestration can help organizations to be more agile and scale more rapidly. Enterprises can also more easily enter new markets, integrate payment providers from different regions, and accommodate a variety of currencies while still ensuring these businesses comply with relevant regulations.
Payment orchestration platforms make it easier for online businesses to connect their websites with payment service providers. Specifically, payment orchestration platforms enable one website to connect numerous payment processors simultaneously, simplifying the back-end and front-end processes while also giving consumers a variety of payment options.
By bringing together payment service providers and payment methods, such as PayPal, Mastercard, American Express, and Visa, payment orchestration platforms enable each online retailer to manage its payment service providers from just one web page.
How does payment orchestration work?
Payment orchestration platforms use automated transaction routing to automatically detect the best routes to send payments. Sending payments to the best payment service providers will likely reduce false declines and boost the number of authorized transactions.
Here's how payment orchestration works:
- A consumer adds a product (or service) to their shopping cart on an online merchant's website, then chooses their preferred payment method from the list of options at the checkout page.
- After the customer places their order, the details of their payment are transmitted to a payment gateway.
- The gateway encrypts the customer's payment card information, then sends it to the acquiring bank and payment processor.
- Once the data is received, the acquiring bank communicates with the issuing bank to verify and authorize the payment.
- The acquiring bank will usually send the authorization or failure response code to the payment gateway and the merchant. However, the payment orchestration platform uses another method. If a payment fails, the platform automatically routes that same payment request to another payment processor to cut down on the number of false declines.
- If sending the payment to the other payment processor works, the payment is approved.
Benefits of payment orchestration
From small online merchants to large multinational enterprises, payment orchestration platforms can benefit any company that wants to stay competitive and thrive in today's business environment. Orchestration platforms help simplify the payment process, enhance the customer experience, boost conversion rates, and increase revenues.
Here's a deeper look into those benefits:
Since payment orchestration platforms simplify the payment process and improve the customer experience, ecommerce companies can boost online sales and increase their revenue. Integrating with numerous payment service providers allows retailers to accept a wide range of payment types, enabling them to offer their goods and services internationally.
Additionally, online merchants can include such services as stored cards and buy now, pay later (BNPL), which improve customer conversion rates.
Reduced costs of processing payments
Payment orchestration platforms automate the payment process, enabling online merchants to reduce their operational costs. They help ecommerce businesses minimize the fees to process their payments by routing transactions through the channels that offer the lowest fees.
Using payment orchestration platforms can eliminate added fees for automated transaction routing as well as reduce setup fees. And since they integrate with a variety of payment providers, they enable ecommerce companies to work out better terms and rates.
Analyze, monitor, optimize
Payment orchestration allows online businesses to benchmark their payment performance against other companies to determine where they can improve as well as understand how to resolve inefficiencies and boost their potential cost savings.
Another benefit of payment orchestration platforms is that they can dynamically route payments. Thanks to this feature, ecommerce merchants can better control payment flows by setting up specific rules.
For example, businesses could set a rule to automatically route transactions via the channels that offer the best conditions, which could include offering high-risk customers low-risk payment options or selecting a channel that offers low costs for transactions.
Real-time data analytics and reporting
By using payment orchestration platforms, retailers get access to real-time data, including payment trends, consumer behaviors, and any fraudulent activity. They can then use this information to better enhance the payment experience for customers and identify new business opportunities.
Payment orchestration also simplifies the process of assembling data reports for numerous payment service providers simultaneously because all the data for the service providers is kept in the same place. Ecommerce merchants can share data with third parties, such as financial authorities and other companies.
Easier payment integrations
Ecommerce merchants that use payment orchestration can work with local as well as international payment service providers through one integration, which makes it much easier than having to connect with third-party payment service providers via different platforms or accounts. Because payment orchestration platforms simplify the integration process, they allow companies to save time and money as well as reach new customers.
Ability to access various payment methods
Another benefit of payment orchestration platforms is that they offer online retailers access to a variety of pre-approved payment service providers. This means that as their requirements change, they can easily add other payment methods to their websites via one API connection.
This is perfect for merchants that have international customers with different payment preferences, such as buy now, pay later (BNPL), mobile wallets, and credit and debit cards.
Increased acceptance rates
Vendor-agnostic orchestration platforms allow online retailers to connect to multiple payment service providers, and they also offer smart payment routing, which increases acceptance rates by routing transactions to the most relevant payment services provider.
Additionally, these platforms retry transactions automatically, reducing the number of transactions that are declined, improving the overall customer checkout experience, and boosting profits.
Does Checkout.com have a payment orchestration platform?
Yes, Checkout.com does have a payment orchestration product: ProcessOut. A vendor-agnostic payment orchestration platform, ProcessOut helps ecommerce merchants monitor and optimize their payment performance.
ProcessOut enables online merchants to securely tokenize customers’ cards at the merchant level and become independent from their payment service providers while taking much of the PCI burden away from the mechant.
Online retailers can use Telescope, ProcessOut's payment monitoring solution, to assess, benchmark, and boost their authorization rates as well as save money on their payment fees. A free audit tool, Telescope works without any technical integration. It helps ecommerce merchants understand what performs well and what doesn’t in their current setups.
Because ProcessOut monitors payment data from hundreds of merchants worldwide, it can tell users how much they could recover by leveraging multiple payment providers.
And ProcessOut's smart routing technology allows online business to optimize their acceptance rates or their fees by routing payments using any parameter of a transaction and retrying failed transactions across different payment service providers.
Get in touch with us today to learn more about our payment orchestration product, ProcessOut.