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Why Do Global Retailers Need Payment Orchestration?

Boaz Gam

Boaz Gam

CEO

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15.06.2022
5 min

What Is Payment Orchestration and Why Retailers Need It

Article content
  1. Payment Orchestration Definition
  2. How Payment Orchestration Works
  3. Top 8 Reasons for Retailers to Implement Payment Orchestration
  4. Experience All the Advantages of Payment Orchestration with Payneteasy

eCommerce sales boomed in the past few years, with the online share of total spending globally increasing from 10.3% in 2019 to 14.9% at the peak of the pandemic in 2020. Such rapid growth of online sales has transformed the landscape for retailers and raised the need to implement optimized payment solutions.

To keep up with the unprecedented consumer demand and streamline financial transactions, many merchants have turned to payment orchestration platforms (POPs). Read ahead to find out what exactly payment orchestration is and how it’s redefining purchase processing.

Payment Orchestration Definition

Payment orchestration refers to all the software and services involved in the integration, coordination, and management of the entire payment process. This means dealing with operations like transaction authorization, routing, and settlement by connecting to various PSPs, acquirers, and financial institutions on one unified software layer.

What Is a Payment Orchestration Platform?

A POP is a software solution that acts as a centralized hub for payment processing. Its goal is to enable eCommerce businesses to offer their clients a more efficient payment process while optimizing the back office.

How Payment Orchestration Works

What Is Payment Orchestration and Why Retailers Need It

As you can see, payment orchestration is a comprehensive system that covers a variety of aspects related to transaction processing. But how does it work?

Here is an overview of what the payment orchestration process is like:

  1. The consumer decides to place an order on an eCommerce site, proceeds to checkout, and selects their preferred payment method.
  2. Once the client completes the order, the payment details are forwarded to a payment gateway.
  3. The gateway encrypts the sensitive information and transmits it to the acquirer and payment processor.
  4. Then, the acquiring and issuing banks connect to verify and authorize or decline the pending purchase.
  5. While usually the acquirer sends the authorization response code directly to the payment gateway and the merchant, POPs use a different strategy. If a transaction fails for the first attempt, the platform automatically routes it to a different payment processor to minimize the chance of false declines.
  6. If the transaction is approved from the second attempt with an alternative processor, the client won’t be disappointed with a failed purchase, and the retailer will receive profit.

Thus, a major benefit of payment orchestration is the fact that it determines the best route to conduct a payment. However, its functions aren't limited to just that - keep reading to find out what other advantages POPs offer to eCommerce businesses.

Top 8 Reasons for Retailers to Implement Payment Orchestration

What Is Payment Orchestration and Why Retailers Need It

Cooperating with a POP is a great decision for an online retail business. Here are the main reasons why:

1. Simple Integration

A payments orchestration layer allows merchants to work with a multitude of PSPs through just one unified API. This spares the retailers the need for third-party integrations even if they need to connect with local PSPs or the ones that support alternative payment methods.

2. Higher Customer Satisfaction

Fast, secure, and frictionless transactions contribute to an excellent shopping experience and lead to high customer satisfaction.

3. Appealing to a Wider Audience

The variety of payment methods available with payment orchestration makes the completion of purchases on a given eCommerce site accessible to a wider customer base.

4. Increased Sales

What Is Payment Orchestration and Why Retailers Need It

The more approved transactions an eCommerce website hosts, the higher the merchant’s revenues. With payment orchestration in action, false purchase declines are reduced to a minimum, resulting in bigger sales.

5. Scaling Opportunities

Managing a single integration means that the introduction of new payment features and methods takes the merchants less time, increasing their speed to market. This helps the merchants to adopt innovative functions faster, boost consumer loyalty, and scale effectively.

6. Reduced Payment Processing Costs

It can be cost-effective for beginner retailers to rely on just one PSP. However, as the business scales, payment orchestration is advisable to reduce the setup fees for multiple integrations, avoid extra costs that stand-alone PSPs charge for automated transaction routing, and mitigate other unnecessary expenses without compromising the purchase processing quality.

7. Payment Security and Compliance

Complying with regulations like PCI DSS is compulsory for payment service providers, including POPs. Thus, when deciding to collaborate with a payment orchestration platform, you’ll be able to forget all your worries regarding digital transactions rule compliance and rest assured that your eCommerce site is provided with top-notch payment security.

8. Centralized Reporting and Data Analytics

Collecting, processing, and storing data from different payment gateways can be a challenge. Besides, analyzing such unsynchronized data and gaining insights for business improvement would have been even more overwhelming. POPs, on the other hand, combine all the transaction data in one dashboard that contains useful real-time analytics.

Experience All the Advantages of Payment Orchestration with Payneteasy

What Is Payment Orchestration and Why Retailers Need It

Now that you are aware of the advantages offered by POPs, it’s time to set up your store for success with Payneteasy. We create all-in-one payment solutions tailored to match the needs of your eCommerce site. With our smart software, your online store will be able to provide a wide variety of payment methods, maximize the transaction speed, simplify the back office operations, avoid lost sales, and boost customer satisfaction.

Contact us already today to start reaping the benefits of payment orchestration in no time!

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