Open for Business: Unlocking the Power of Open Payments

Consumers now have a vast array of payment options at their disposal, with new methods emerging rapidly and preferences evolving just as quickly. Merchants and merchant aggregators also have no lack of choice when it comes to payment service providers, gateways, fraud tools, etc., to integrate with to support their payments stacks. Merchants lacking the ability to accommodate these shifts risk losing ground to competitors that can.

Open payments platforms could be the key to managing this diversity of payment options and preferences, offering access to a broad spectrum of transaction tools through a single platform. By adopting such platforms, merchants and aggregators can connect with the right mix of providers for their needs and improve the performance of their payments. Moreover, this approach allows them to achieve these benefits with minimal investment and faster time to market.

Merchants Require Open Payments for Rapid Scaling

Open payments platforms are fast becoming a necessity for merchants as customer payment preferences diversify. Unifying payment protocols through a single API allows merchants to use the right mix of tools without having to build separate integrations for each.

Open payments platforms enable merchants to meet customer payment preferences.

Once simple, one-on-one transactions between customers and merchants, payments have quickly progressed into a complicated process involving both parties’ banks as well as third-party FinTechs and payment companies acting as facilitators. Despite this complexity, customers still expect their payments to be as seamless as ever, which often leaves merchants and aggregators unprepared to meet these demands.

Open payments platforms allow merchants to seamlessly connect to any number of services, not just for payments but also for services to help manage their payment operations and back-office teams. This, in turn, enables merchants to scale their payment offerings and provide every customer with access to their preferred transaction methods while improving transaction success rates and lowering costs.

Open payments platforms

Customers expect their transactions to be smooth and intuitive, regardless of payment type.

Restaurants are serving up open payments benefits to their customers.

Olo, a leading restaurant digital ordering and delivery platform, recently adopted Spreedly as its open payments solution. This integration enables customers to use mobile wallets and other third-party payment options at restaurant brands on Olo’s platform. For Olo, partnering with Spreedly simplifies the development of new digital offerings because payment options are managed through the open payments platform, which eliminates the need for complex integrations. The collaboration serves as a prime example of open payments’ ability to facilitate rapid scalability and growth for aggregators.

Open Payments Improve Authorization Rates

One of the most frustrating experiences for customers and merchants alike is a declined payment, especially when it stems from a failed back-end connection that is challenging to resolve. Adopting an open payments platform can alleviate this friction and dramatically improve authorization rates.

Customers will abandon purchases if payments fail.

FlexPay’s collaboration with Spreedly addresses authorization rates.

The expanded partnership between payments company FlexPay and Spreedly aims to improve authorization rates by recovering failed transactions and reducing involuntary churn for subscription customers. In subscription-based businesses, a single failed transaction can quickly spiral into lost business if the subscriber is unaware that their subscription is not renewing. This collaboration will allow Spreedly customers to access FlexPay’s Advanced Vault, a solution designed to increase transaction success rates, lower payment vault management costs and enhance the customer experience.

Payments Orchestrators Become Open Payments Platforms to Facilitate eCommerce

Open payments platforms represent the next level of payments orchestration, providing firms with all the back-end efficiencies they need to optimize eCommerce.

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[Open payments are] an evolution of payments orchestration. As eCommerce has evolved over the last 10 to 15 years, consumer expectations have grown around how seamless their embedded payments experiences are. The best payment experience is one that a customer doesn’t even notice.

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Open payments platforms can help improve digital commerce firms’ operational efficiencies.

In a recent interview with PYMNTS Intelligence, Spreedly Senior Director of Product and Market Strategy Andy McHale explained that open payments platforms represent the next step along a continuum from payments orchestration. These platforms offer a more flexible, secure and efficient approach to managing transactions by seamlessly connecting and facilitating merchants’ payment flows. This flexibility is especially advantageous for subscription services, streaming content providers and marketplaces, enabling them to adapt and scale their operations with ease.

The evolution of payments orchestration to open payments, McHale continued, is driven by the need for solutions that not only handle payments but also offer support tools for merchants and enhance the overall payment flow. While orchestration focuses on facilitating transactions from point A to point B, open payments platforms aim to integrate additional value-added services and provide a more seamless experience for consumers and merchants alike. For example, open payments platforms provide enhanced security and fraud protection capabilities by integrating tools for payment card industry (PCI) compliance, tokenization and secure payment method management. This not only minimizes merchants’ exposure to sensitive data but also connects them to third-party fraud prevention vendors.

McHale advised that most firms would benefit from taking a “crawl, walk, run” approach to integrating open payments capabilities. Even small integrations can have a significant impact.

“You can start small and grow into other things,” he said. “And you don’t have to go get another integration to add the next piece; you can do it through the existing platform. [Often,] it’s a low-code, perhaps a toggle, or something very simple to add to a workflow. If a merchant starts as a U.S. business and wants to expand to another region, they can very easily add a second provider through their existing platform.”

McHale noted that as these platforms continue to evolve, they will likely play a crucial role in optimizing authorization rates, reducing loss rates and accelerating time to market for businesses expanding into new regions.

Harnessing the Benefits of Open Payments

Open payments platforms provide merchants and aggregators with a flexible and scalable infrastructure that can quickly adapt to changing business needs. Connecting to multiple banks and payment services through a single, unified API, these platforms enable merchants and aggregators to expand their payment offerings rapidly, without the complexity of managing numerous separate integrations.

One critical benefit of adopting open payments platforms is improved authorization rates. With advanced routing capabilities and access to multiple payment processors, merchants and aggregators can optimize transaction flows and increase the likelihood of successful authorizations. By utilizing real-time data, these platforms can intelligently route transactions to the most suitable processor, thereby reducing decline rates and maximizing revenue.

Open payments platforms also enhance eCommerce efficiency by featuring robust fraud prevention tools, real-time reporting and automated reconciliation processes. This streamlines operations and reduces manual workloads while supporting various payment methods and currencies, eliminating the need for multiple integrations or complex setups.

Furthermore, built-in compliance and security features help merchants and aggregators meet regulatory requirements and protect sensitive customer data. This reduces the burden of developing and maintaining a comprehensive security infrastructure.

By embracing these technologies, merchants and aggregators can focus on growing their businesses and delivering superior services, rather than getting bogged down in complex payment infrastructure management.