With Digital Transformation Complete, Payment Orchestration Is Next

Kristian Gjerding, CEO of CellPoint Digital, explains why payments orchestration is so critical to a modern payments ecosystem –and how it could help firms recover after the economic devastation of the pandemic. Read his expert insights in The Connected Economy’s Power Source – CEO Edition.            

If payments are the engine that is powering digital transformation, then payment orchestration is how global enterprises can keep that engine running at peak performance. The widespread adoption of payment orchestration platforms across many industries is what we view as the most impactful development on the horizon for the payments space. As discussed in a previous PYMNTS article, it could even help companies recover faster from the current crisis.

What is payment orchestration? And why is it so critical to a modern payments ecosystem? Put simply, payment orchestration is the act of unifying all components of a transaction under a single control layer, enabling end-to-end management and automation of payments processing. For cross-border merchants, this means integrating the right mix of regional and global payment partners (PSPs, acquiring banks) to facilitate intelligent transaction routing, optimize acceptance rates and minimize cost. It also means automating back-end processes like settlement, reconciliation and voucher management.

But perhaps the most critical aspect of payment orchestration is its ability to improve the consumer journey at every touchpoint. By simplifying the payment process with features like embedded checkout, integrated biometric validation and less intrusive fraud rules, a payment orchestration platform can remove many of the roadblocks consumers encounter before completing a transaction. And by offering them a flexible and dynamic choice of payment method, payment orchestration platforms also help meet customer expectations and maximize conversions.

Payment orchestration also improves overall payment ecosystem resilience. By connecting to multiple PSPs/acquirers, there’s a failover process for transactions. If a payment fails, the system automatically reroutes it to a second or third alternative route to secure a higher transaction success rate. That reduces per-payment costs to the merchant and maximizes sales. It also satisfies the customer, who was able to complete their transaction using their preferred payment method without a decline or refusal that was out of their control.

This combination of acceptance maximization and cost reduction makes payment orchestration a high-ROI proposition. The automation of back-office functions further enhances the value of this solution. As a result, digital payment costs can be reduced by upwards of 20 percent, again depending on the individual merchant’s existing circumstances. So not only does adopting payment orchestration make sense for companies planning for the future of digital payments, but it also has a real, immediate bottom-line impact as well.

But unlike other initiatives that provide a temporary boost in profitability or revenue generation, payment orchestration allows companies to prepare for and adapt to whatever the payments landscape might present. Payment orchestration is futureproofed, enabling a scalable, resilient and cost-effective solution to end-to-end payment processing, providing a fast time to market for new payment methods and platforms as they become more relevant to a company’s customer base or target market. It’s flexible enough to integrate new acquirers or back-end processes as they become necessary. And it provides the cohesion and simplicity consumers demand from their payments experience – and is critical for commercial success.