Mastering the Symphony of Payments: A Deep Dive into Payment Orchestration
You have probably heard the term “payment orchestration” and wondered what it’s all about. Well, listen up because this emerging payment trend is music to merchants’ ears.
This simplifies integrations and knocks down costs compared to plugging in providers one by one. Data also sings in harmony instead of a fragmented cacophony. It’s no wonder the global payment orchestration market is poised to reach $3.7 billion by 2028, up from $815 million in 2021. That’s a compound annual growth rate of 22.4%, according to an August 2022 market report.
What is payment orchestration?
Just like a maestro leads an orchestra to create a harmonious symphony, payment orchestration intelligently manages and coordinates your business’s entire payment journey. It does this through a payment orchestration platform, a software layer between your online storefront and various payment service providers (PSPs).
Imagine it as a central control panel that intelligently handles all the technical complexities involved in:
- Accepting diverse payment methods: From credit/debit cards and UPI to wallets and Net Banking.
- Connecting with multiple payment gateways: This allows you to offer more payment options to customers.
- Routing transactions efficiently: Transactions are sent to the most optimal PSP based on success rates and cost-effectiveness.
- Data security: Ensuring all transactions meet the highest security standards.
How does payment orchestration work?
Here’s how payment orchestration works
Solution-centric orchestration
For merchants, maybe those problems are chargebacks and friendly fraud within your payment system. To combat this challenge, you may research different payment orchestration platforms and settle for one that offers tailored fraud tools and solutions.
Considerations for implementing payment orchestration.
One immediate advantage of implementing payment orchestration for all clients is the reduction of operational costs and other implementation-related burdens.
Authorisation and Settlement
The payment orchestration providers have platforms that communicate securely with the chosen payment gateway. The gateway acts as a bridge, securely transmitting the customer’s payment information to the relevant issuing bank or network (like Visa or Mastercard).
The bank or network then performs a series of checks, including verifying account details and ensuring sufficient funds are available. If everything is in order, an authorisation message is sent back to the payment gateway, which relays it to the orchestration platform.
What is the difference between payment gateway and orchestration?
You may have heard the terms ‘payment gateway‘ and ‘payment orchestration,’ but what exactly do they mean, and how are they different? Let’s understand:
| Feature | Payment gateway | Payment orchestration platform |
|---|---|---|
| Core function | Facilitates secure data transfer to a payment processor | Manages and optimises the entire payment process |
| Scope | Acts as a single point of entry for transactions | Oversees multiple gateways and payment providers |
| Payment providers | Typically integrates with a limited number of providers | Connects with a wide range of payment providers for flexibility |
| Routing | Transactions follow a fixed route | Intelligently routes transactions to the most optimal provider (cost, success rate, etc.) |
| Flexibility | Limited ability to add new payment methods or gateways | Easily adaptable to incorporate new payment methods or gateways |
| Data and analytics | Provides basic reporting | Offers centralised, in-depth analytics across multiple payment providers |
| Overall complexity | Simpler to implement and manage | More sophisticated but ultimately streamlines payment operations in the long run |
Benefits of payment orchestration
- Boosted acceptance rates: Smart transaction routing increases the likelihood of payments getting approved.
- Enhanced customer experience: A wider range of payment methods and streamlined payment flows result in happier customers.
- Cost savings: Reduced transaction fees through more efficient processing and negotiating power with multiple PSPs.
- Flexibility: Easily integrate new payment methods or gateways. This ensures adaptability in the fast-changing Indian payment landscape.
- Data-driven insights: Centralised analytics from all your payment providers in one place, fueling better business decisions.