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Payment choice is the 2020 mantra, and payment flexibility drives those options. Financial institutions (FIs) and merchants that offer that flexibility have an advantage, as every legitimate transaction that is authorized and every fraudulent that is stopped marks a step toward recovery.
Using multiple payment gateways is one of the most secure known methods of increasing transaction volumes, for example. And it is more urgent now that commerce becomes increasingly digital.
“The migration from traditional retail to e-commerce is putting pressure on retailers to change their payment operations, but building the internal infrastructure to support those systems from scratch can be prohibitively expensive and drain companies’ time and resources. “. according to the new Payment Orchestration Strategy Manual.
Therefore, many are turning to cost-effective payment integrations to enable the experiences their customers crave. One of the main challenges these companies face is successfully transitioning to a digital ecosystem while maintaining the same transaction success rates. “
The PYMNTS Payment Orchestration Playbook for September 2020 looks at the topic of transaction success rates in the context of system updates that make new business models viable at scale.
The ROI of the orchestration
Noting that “many businesses are learning too late that it takes more than simply providing digital products, offering numerous payment methods, and generating sales to build successful e-commerce and digital content businesses,” the September Playbook states that “businesses must also effectively manage the operating systems that bring together these myriad features and functions. “
Tech stacks are using orchestration layers to achieve this, with some eye-opening results. There are challenges to overcome, as always, but the math works well for adopters.
“Maximizing [return on investment] in a multi-vendor strategy means understanding comparative performance, identifying opportunities to increase success or reduce costs, and adjusting deployments to capitalize on opportunities, ”Daniel Wideman, vice president of product at Spreedly, told PYMNTS.
“Doing this at scale across multiple vendors without the benefits of centralized orchestration that has cross-industry data is complex, expensive, and time-consuming. Speed to market, agility and flexibility are put at risk. This is a sacrifice that most are unwilling to make when working in a competitive market or looking to expand, ”Wideman said.
Outsourcing the orchestration task “frees teams from maintaining complex paid integrations,” Wideman added. “Payment orchestration creates the flexibility to easily integrate with the right service for the right customer at the right time.”
The $ 43 billion opportunity that gateways represent
With payment gateway players projecting a compound annual growth rate (CAGR) of 16.4 percent over the next five years, it will be a market worth nearly $ 43 billion by 2025.
So not only is there “gold in the hills”, there is also a way to get to it.
“Layers of payment orchestration using analytical methods based on artificial intelligence and machine learning (ML) can provide even more value by allowing companies to monitor how factors such as transaction success rates, chargebacks and fraud cases change in real time, and how payments should change. be processed to allow for maximum operational efficiency, ”according to the Playbook.
“This technique, called smart routing, makes the payment orchestration layers use all available data to determine which payments are best suited to process through certain payment gateways, resulting in higher transaction success rates. and lower rates ”.
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NEW PYMNTS DATA: STUDY HOW WE BUY – SEPTEMBER 2020
the How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online amid the COVID-19 pandemic. Our research is based on a series of studies conducted since March, in which more than 16,000 consumers were surveyed on how their shopping habits and payment preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and contactless digital methods such as QR codes, contactless cards, and digital wallets, is poised to shape the post-pandemic economy.
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