As more and more merchants seek expansion into markets abroad in search of new consumers willing to buy, they’re also apt to find a few other things waiting for them in foreign lands, namely, a raft of currency and cultural differences and the challenge of bringing the two together.
According to PayU Global Payments Chief Product Officer Daniel Cohen, this is precisely where payment orchestration steps in to smooth cross-border frustrations and misunderstandings.
“You have a consumer sitting somewhere in the world, and you have your business sitting in another place in the world,” Cohen said in a chat with PYMNTS, noting that both parties are often accustomed to transacting in certain ways.
“So, now we have a shopper from Mars, and a seller from Venus, and we have to make it work successfully,” he said while pointing to the need for sellers from elsewhere to familiarize themselves with local payment preferences and practices.
Despite the progress of cross-border commerce, Cohen cited PayU research that found half of consumers will ditch an online sale if their preferred payment method is absent.
“A major challenge in cross-border is how do you make payment methods that I’m comfortable with available on the checkout,” he said. “Another is obviously foreign exchange.”
Sticking with the “buyers are from Mars, sellers are from Venus” metaphor, he half-joked that, “On the one hand, as a Martian, I want to buy with Mars bucks. As an operator, I want to receive my funds in my operating currency. So, when it comes to cross-border, how do you bridge the risk of currency? Those are two big challenges that we deal with very often in the cross-border world.”
Payment orchestration is proving to be a highly effective technology for harmonizing buyers and sellers in different parts of the world, solving many of the pain points Cohen described.
See also: Payment Optimization Is the Watchword as Commerce Goes Global
Sell Global, Pay Local
The whole process becomes almost medieval without the right tech to facilitate cross-border flows, and Cohen said that’s where PayU and companies like it are making a difference.
“Technology is always going to be the enabler,” he said. “It allows us to achieve things at a faster velocity. When you think about technology, cross-border, and the complexities involved, that’s where you’ll find, for example, orchestration comes into play.”
Cohen said technology orchestration together with payment services pulls together insights into local payment methods, taxation structures and other factors.
“With orchestration, I can help you by enabling different payment methods that are unique to the local geography that you want to sell into,” he said. “With the right orchestration in place, that technology can help reduce costs, make the whole thing more efficient, and that’s really the end goal for technology in this cross-border game.”
Getting into some specifics, he explained that not all payment partners could facilitate frictionless cross-border transactions in all territories, so payment service provider (PSP) choice plays a key role in making it work.
“Orchestration in a cross-border setting allows the experience to be a lot more local,” he said. “It allows the merchant to enable more payment methods. No one PSP supports all the different payment methods.”
Using a popular example, he said, “Not all PSPs offer buy now, pay later schemes. By having that orchestration layer … I can then help you route that transaction and enable the buy now, pay thing through other PSPs.”
Read also: Chief Product Officers Turning to Digital Payments, Localization to Boost Conversion
Driving Higher Approval Rates
Payment orchestration isn’t just good for facilitating cross-border transactions. Even domestic payments can run into barriers, and orchestration platforms are effective there as well.
Cohen pointed out that issues arise around acquiring and making it more efficient from a cost perspective by playing “the multi-acquiring game,” routing card transactions to local acquirers.
Talking up the competitive edge merchants can gain, he said: “Orchestration levels the playing field. Whether the transaction is global or local, the data visibility and insight that you have from the orchestration layer … can give the added competitive insight into your global payments and local payments and how your customers are using them, how efficient they are, etc.”
That’s especially useful to smaller cross-border sellers who may be working with a single PSP. That may limit acquirers, which in turn can lower approvals. Here again, orchestration plays beautifully by adding more acquirers to the mix, improving the chances for conversion.
Cohen said that when “we can orchestrate between those PSPs, we definitely see an uptick in the approval rates. For example, if the acquirer is the issuer, instead of going through an acquirer that is not issuing the cards … we’re processing a card and we have connections to the acquirer that happens to be the issuer as well. That saves a lot of money.”
For big merchants, it’s much the same but on a larger scale. For those operators, he said: “I think the primary value there is that they have a second line of orchestration. Assuming they’re doing bits and pieces of orchestration on their own, they still have a second fallback line of orchestration, and it enables that global visibility of data, that consistent data, that single point of integration.”
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