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Payment orchestration - 1 vs many PSP integrations

If you are like most retailers, your payment service provider (PSP) is one of your most critical business partners. It connects you with paying customers in a wide range of markets and makes sure your payments are handled securely and efficiently. A well-executed payment process will deliver lower payment costs, increased sales, and more satisfied customers.


Payment orchestration: The easier way to manage multiple PSPs

PSPs have filled an important gap by simplifying payments. But due to the globalization of e-commerce, another gap has emerged: PSPs are unable to serve merchants on a global scale. So, what happens when your business expands into a new market or region and you need to start working with additional PSPs? In cases like that, managing your payments can become increasingly complex again. 

Fortunately, you can now simplify things by using a payment orchestration platform (POP). In this post, you’ll find out what payment orchestration means, how it works, and how it helps your business grow.

What is payment orchestration?

Not all PSPs offer the same reach in payment methods or facilitate card acquiring in all the regions where your company operates. Perhaps you want to optimize processing flows and have an active failover to another provider at your fingertips. The ability to actively steer and manage transaction processing over multiple providers enables you to optimize conversion rates, availability and benchmark.

Costs per transaction can be another reason to take control and prevent a lock-in with a single PSP.  To fill in the gaps, your company probably works with multiple international PSPs, like Adyen, Stripe, Checkout.com or Worldpay. On the bright side, each of these companies give you access to the payment methods and the leading functionality your business and customers need. But on the not-so-bright side, each one requires you to have a separate account, and you’ll have to use different dashboards to oversee transactions being processed by each different PSP. This can quickly make your company’s payments system complex and hard to manage.

To keep things easier and more transparent, you can add a POP to your payment system. A POP lets you integrate and manage multiple PSPs using a single platform. You can oversee payments from authorization, to routing and settlement, without having to log in to multiple applications.

If your company operates across borders, dealing with multiple currencies and a spread of APMs, you can benefit from integrating a POP into your shop. A POP keeps your payment system lighter and more manageable and gives you a single point of contact for all your payments-related needs.

How does a payments orchestration platform work?

When a customer places an order on your website, the POP offers a unified payment experience to your customers while giving access to multiple PSPs to process the transaction. The POP determines the best route for processing the payment, depending on business rules and AI technology. Business rules can be created based on payment method, acceptance cost, the risk profile, customer country and many other factors. 

A POP may also send failed payments to another payment processor to perform a smart retry. This reduces the risk of failed payment, which increases your conversion rate.

To better understand the role of the POP, take a look at this step-by-step explanation of a common path that digital payments follow:

  1. Your customer goes through the checkout process on your website and chooses their preferred payment method from the options you offer.
  2. Their payment information is sent to your payment gateway.
  3. The payment gateway sends the payment details to the acquirer and payment processor.
  4. The acquirer requests payment authorization from the issuing bank (the customer’s bank).
  5. The issuing bank either approves or declines the payment. They notify the acquirer  accordingly, which then sends an approval or declined payment message back to your payment gateway.

As long as the payment is approved, the process ends here. Your company processes the customer’s order and you’ll receive the payment during reconciliation with your PSP.

But what if the payment is declined by the first payments processor? If you are using a POP, the payment can be sent to another processor (automatically in some cases), reducing the chances of the customer receiving a ‘failed payment’ message.

And once the payment succeeds, some POPs take care of reporting and provide you with an  overview of all your payment information via its platform across multiple PSP’s. This can include reconciliation but, as usual, not all providers offer the same functionality. 

How does payment orchestration benefit your business?

As you can see, using a POP can streamline your payment process and reduce the risk of failed payment attempts. This prevents you from losing sales when a customer’s card is unnecessarily declined for technical reasons.

But there are other benefits to integrating a POP into your shop. These include:

  • Customer-focused payment experience: With a POP, you have more flexibility to respond to your customer’s preferences. You are no longer limited to the specific payment methods and the checkout flow that your PSP offers. Instead, you own the checkout process and can add more PSPs to cater to local preferences and include alternative payment methods. That includes region-specific payment methods that help you grow your cross-border business.
  • Scalability: POPs let you set up new payment methods, currencies or local acquiring in new countries or regions faster. That means your payment system does not slow down your business’s expansion. You can reach more people faster.
  • Secure and compliant payments: POPs offer the same level of security and compliance as you would get when working with multiple PSPs via separate licenses.
  • Lower payment processing costs: Especially for larger companies, using a POP can result in considerable savings throughout your payment system. You’ll save by not having to integrate multiple PSPs separately, but also by avoiding additional fees that each PSP charges (such as automatic transaction routing fees).
  • Clear overview of your payments and data analytics: A clear view of all your payments will benefit and continually improve your business strategy. But consolidating all you payment data can be a daunting task for which there are solutions. Some POPs can help in this by providing you the data for easier consolidation..
  • No need for additional integrations: POPs offer you a single API that enables you to add more PSPs whenever you need without having to integrate each one separately.

The scalable solution for cross-border payments

Cross-border retail continues to expand and is quickly becoming a major focus for companies of all sizes. Especially for companies with a complex global payment setup, including multiple PSPs, will be inevitable as your international customer base expands. 

Using a POP brings more clarity to your complex payment setup and allows you to perform many routine tasks with greater ease. And since it gives you a one-stop platform for your company's global payment flows, a POP can be a vital asset. 

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