Retailers and merchant aggregators are increasingly valuing independence and the flexibility to use whichever payment service is best for their needs, Spreedly CEO Justin Benson writes in the PYMNTS eBook “Baseline 2022: What the Next Six Months Holds.”
Despite shifts in the macro-economic environment, digital commerce companies remain as dependent on global markets as ever. Operating in multiple markets globally means that these businesses can distribute risk across geographies and maximize revenue. But it also means exposure to the geopolitical crises and economic trends that impact these markets.
This makes excessive reliance on a single provider across markets a challenge. Not simply because of risk of disruption due to a failed provider — as providers get shaken out in uncertain market conditions. But also because of a disruption to a provider’s ability to offer service in a given market due to changes in regulation or business climate. The most effective response to an increasingly complex and uncertain environment can be retrenchment, or it can be adding flexibility. This flexibility can be found by leveraging a diverse mix of payment services that can be leveraged as needed to support shifts in different markets.
Adoption of payments orchestration has accelerated in the past five years, as merchants and aggregators recognize the need to be able to model their payments stacks to be able to pivot quickly. But as a market develops, conflicting definitions inevitably start to emerge. As we reach the mid-way point of 2022, we are starting to see a shift in the way the industry defines payments orchestration and a strong preference for agnostic payments orchestration.
Merchants and merchant aggregators that value independence and the flexibility to use whichever payment service is best for their needs will typically lean into an agnostic orchestration solution. It’s independent because the platform supports numerous PSPs, fraud tools, and other services, while remaining agnostic about which services the user leverages.
Why does independence matter? It’s important because it allows a user to select the right mix of services from across the entire ecosystem. They aren’t forced into a walled garden of solutions that are approved by the orchestrator. Instead, a company can experiment with new vendors, or change up their mix if they are unhappy with the service provided by a particular vendor.
Independence is also helpful because it provides a significant source of data and insight for companies. Agnostic orchestrators can, by their nature, gather authorization rates, latency times and other intelligence across payment services globally. That insight helps companies better choose which payment services they want to work with.
Spreedly has conducted analysis across hundreds of millions of transactions. We see that the most popular gateway for a given currency seldom is the best performing gateway. And the best performing gateway for a given currency is often not even in the top five for other major currencies. That’s why agnosticism matters — choice leads to better results for digital businesses.
True democratization of payments provides an invaluable tool for organizations unable to predict the next macroeconomic trend, market shift, or disruption. Strategically building in payments flexibility by leveraging a diverse mix of payment services and orchestration will no longer be an option — but the de facto standard for payments teams.