Payment orchestration has emerged as a game-changer for businesses navigating the complexities of global transactions. By streamlining processes and enhancing efficiency, payment orchestration provides merchants with a competitive edge in an increasingly digital world.
In this guide, we’ll explain what payment orchestration is, how it works, how to choose the right payment orchestration platform, and some best practices for implementing payment orchestration at your business.
What is payment orchestration?
Payments orchestration is a layer of technology that sits on top of a company’s existing payment stack; it is responsible for integrating and coordinating all of the various payment service providers and payment methods that a business has through a single interface.
Payment orchestrators have become an essential solution for global merchants that manage multiple payment providers they use to accept and process payments. These merchants can include ecommerce platforms, gig marketplaces, gaming companies, travel agencies or subscription services - all of which typically accept traditional credit and debit cards as well as alternative payment methods like digital wallets, prepaid cards, and bank transfers.
Payment orchestration platforms allow businesses to offer multiple payment options, helping them expand their reach and capture revenue opportunities. At the same time, they help businesses navigate the complexities of accepting payments in different geographic regions or managing multiple payment processors.
Payment gateways vs. Payment orchestrators
Payment gateways and payment orchestration platforms are sometimes used interchangeably but they are actually quite different. A payment gateway is a single-point solution that connects a company’s checkout to an acquirer bank or financial institution that processes payments. Payment gateways like PayPal, Stripe and Adyen allow businesses to integrate multiple payment methods without having to set up multiple integrations with different processors.
Payment orchestration platforms, on the other hand, offer the ability to connect and manage multiple payment gateways. Essentially, payment orchestration sits on top of a business’s various payment getaways, providing them with greater flexibility and control over all of their payment providers.
How does payment orchestration work?
Payment orchestration acts as an intermediary layer in the payment process, optimizing and managing the flow of transactions. Here's how payment orchestration fits into each step of the payment journey.
1. Customer initiates a payment
A customer selects a product or service and begins the checkout process on a merchant’s platform. The payment orchestration platform provides the interface for the checkout experience, typically offering a variety of payment methods including: credit and debit cards, digital wallets (e.g. PayPal, Apple Pay), bank transfers, or alternative payment methods like BNPL or local payment options.
2. Routing transactions
Payment orchestration then uses intelligent routing algorithms to determine the best payment gateway or provider to process the transaction. This decision could be based on a variety of factors, including:
- Provider/gateway performance (e.g., success rates, speed).
- Transaction costs
- Region (e.g., local gateways for regional payments).
3. Fraud detection and security
Payment orchestration platforms also take on the responsibility of screening every payment transaction for fraud. Typically, payment orchestrators will offer multiple layers of anti-fraud tools, based on the needs and preferences of the merchant. These tools analyze the patterns, behaviors and risk indicators of each transaction in order to block or verify suspicious activities. Additionally, payment orchestrations ensure each transaction complies with global security standards, such as PCI DSS, to ensure consumers’ data is safely handled.
4. Processing the payment
Based on the merchant’s routing preferences, the payment orchestrator then directs each transaction through the appropriate gateway or processor. A key feature of payment orchestration platforms is the ability to reroute and retry transactions through another provider in real-time, if the transaction fails. This ensures higher payment approval rates.
5. Settlement and reconciliation
Payment orchestrators perform reconciliation, which ensures all processed transactions have been properly settled into the merchant’s account.. The transactional reconciliation process checks account balances with a business’s acquirer banks to ensure that all sets of records are true, consistent, and up-to-date.
6. Transaction reporting and analytics
Payment orchestrators give businesses visibility into all of their payments so that they can analyze conversion rates, revenue, provider performance and transaction activity. Armed with this information, businesses can then make smarter decisions about how to optimize their payment strategy.
What are the benefits of payment orchestration?
Payment orchestrators can offer a variety of benefits to merchants, including:
- Higher approval rates - By intelligently routing payments through multiple providers, payment orchestrators can lead to higher payment approval rates, which positively impacts a merchant’s revenue.
- Streamlined checkout - Payment orchestration allows merchants to seamlessly add new payment methods to their checkout process, without having to code and develop each integration.
- Enhanced customer experience - By offering more payment methods through a payment orchestrator, merchants can cater to the needs and preferences of their customers, ultimately supporting customer satisfaction.
- Reducing fraud risk - By integrating multiple fraud prevention tools, payment orchestrators can help merchants lower the risk of fraud across multiple payment providers.
Is a payment orchestrator right for my business?
A payment orchestration platform may be right for your business if experience any of these key indicators:
- Managing multiple payment providers - If you’re using multiple payment gateways or payment processors, you’re likely managing multiple integrations manually, which can lead to unforeseen issues or errors. The more providers you add into your payment stack, the more layers of complexity it’s going to create for your business.
- Operating in multiple regions - Payment orchestrators are particularly useful for businesses that operate or plan to operate in different countries. Navigating all of the various local payment methods, and all of the tax, data privacy and compliance challenges that come with them, can be cumbersome. But a payment orchestration platform can simplify these processes by integrating them into a single interface.
- Scaling quickly - For businesses that experience rapid payments revenue growth, it’s critical to have a robust enough payment infrastructure to avoid payment processing issues or increased fraud risk. A payment orchestrator allows businesses to quickly scale their payment operations across new regions and payment providers, without drastically increasing their budget.
In addition to these key indicators, businesses may want to invest in a payment orchestration solution if they feel they could use support in boosting payment approval rates, optimizing their payment workflows, or trying to achieve cost efficiencies.
How to choose the right payment orchestration platform
When considering options for a payment orchestration platform, it’s critical to find a solution that meets your business’s short- and long-term needs.
Here are a few questions to ask yourself to guide the provider evaluation process:
1. Does the platform offer the payment methods my customers want to use?
Every payment orchestrator is going to have different levels of integration with various payment providers. For instance, some payment orchestrators focus solely on payment methods popular within a specific region or industry; whereas others may offer more global coverage. For larger enterprises with plans for global expansion, it may be important to select a payment orchestrator that specializes in global coverage to ensure you can account for local payment preferences.
2. Does the platform offer tools and features that will support my payment optimization and growth goals?
Beyond core functionality, it’s important to evaluate the tools a payment orchestration platform provides to help capture more payments revenue, optimize cost structure, or reduce fraud. These tools will be essential for aligning your payments strategy with the long-term growth of your business. Additionally, you may want to inquire about the tools and features on the payment orchestrator’s future product roadmap, and how they support your evolving needs.
3. Does the payment orchestrator understand my industry and target customer?
Domain expertise is incredibly important within payment orchestration, given how different payment workflows are across different industries. For instance, payment orchestration for an e-commerce marketplace is very different than it would be for a subscription service or gaming company; therefore, it’s important to ensure that the team and technology you’re partnering with understand those nuances. It may be helpful to ask the provider for references or case studies that demonstrate domain expertise in your particular business area.
Real-world examples and case studies
Many global merchants have experienced the benefits of payment orchestration in the form of higher approval rates, more satisfied customers, and greater efficiency within their payment operations.
Here are two examples of Yuno customers that have benefitted from integrating payment orchestration at their business:
Future trends in payment orchestration
As global payments continue to be a challenge for merchants, the payment orchestration market is expected to grow at 19% over the next 8 years.
In addition to refining these solutions they already provide, we can expect payment orchestrators to focus on a few key areas of growth and development:
- AI/Machine Learning - Payment orchestrations will continue to leverage intelligent algorithms to improve their ability to detect payment anomalies and route payments to the best providers. AI will also provide opportunities to streamline payment workflows and offer more predictive insights into consumers’ buying behaviors.
- Alternative Payment Methods (APMs) - Consumers continue to demand faster, more frictionless payment experiences, which is leading to an abundance of new alternative payment methods. From real-time payments to BNPL solutions, APMs are a key growth area for payment orchestrators, and for the merchants that want to integrate them.
- Unified Payment Solutions - Payment orchestrators will continue to look for ways to unify siloed payment processes, and deliver efficiency. For example, unifying payins and payouts through one solution can give merchants greater control over their cashflow.
Conclusion
For businesses that are managing complex global payment operations or want to expand into multiple territories, payment orchestration is a powerful solution to solving their payment challenges. Payment orchestration gives merchants the tools to simplify their payment workflows and scale their infrastructure.
What separates Yuno from other payment orchestration solutions is our global reach and emphasis on usability. Yuno integrates over 300 payment methods worldwide and it is our mission to make payments as simple and seamless as possible for small and large enterprises.
To learn more about our payment orchestration solutions, please contact us.
Additional resources
You might also want to check:
- What can a payment orchestrator do for your business?
- How to choose the correct payment orchestrator
- How payment orchestration optimizes cross-border transactions
- Improving customer experience with a payment orchestrator
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