Deep Dive: Reducing eCommerce Platforms’ Merchant Integration Challenges With Payments Orchestration

International expansion can open doors for eCommerce merchants, but moving into new markets is not without its challenges. Doing so requires merchants to not only provide the local payment options that consumers want but also equip their payments stacks with the capabilities needed to meet applicable regulatory standards, cut costs, boost profits and optimize back-end functionality.

Checking all these boxes takes time and resources, and merchants that lack strategies to address these factors proactively risk losing revenue if they try to put these guardrails in place after the fact. There is a widespread need for merchants with international ambitions to find quick, easy and low-cost ways to optimize their payments strategies before they enter new markets. Those that do also can go to market more quickly once they expand.

This month’s Deep Dive explores how investing in payments orchestration layers that leverage application programming interface (API) technology can help international merchants ease the frictions that arise during international expansion, reduce their time to market and position their businesses for long-term growth.

Payments Orchestration as a Launching Pad

Payments orchestration layers that leverage APIs can facilitate faster, smoother payment integrations and make it easier for international eCommerce merchants to add the payments capabilities they need to expand into new markets. One way in which API-driven payments orchestration platforms (POPs) can ease cross-border frictions is by automating compliance operations. The international regulatory ecosystem is highly fragmented, as individual nations have unique know your customer (KYC) and anti-money laundering (AML) standards with which international merchants must comply.

API-supported payments orchestration layers can simplify and streamline this process, however. APIs are designed to facilitate smoother, easier integrations between software components, and merchants can use them to add payments capabilities to their stacks far more quickly and cost-effectively than otherwise would be possible. They also can leverage data extracted from their broader payments systems to automatically implement KYC/AML functions.

This same flexibility can facilitate and streamline many other key payments functions, including intelligent routing and automated anti-fraud operations — and it can help merchants achieve this quickly. Having such a system in place prior to expanding into a new market ultimately can promote a smoother, less friction-laden launch, enabling businesses to accelerate their time to market.

Flexibility, Experimentation and Bargaining Power

The ability to easily integrate new solutions into an existing payments infrastructure also gives international eCommerce merchants opportunities to experiment with innovative payments capabilities with minimal risk. Consider an international eCommerce merchant selling in Brazil that was interested in connecting with local payment gateways such as Mercado Pago or PagSeguro, for example. The merchant in question might be interested in tapping these local payment gateways to drive conversion but might not know whether using one or either of these gateways would yield adequate returns on investment. Fully committing to integrating one or both comes with risks, as it is unclear whether connecting to either gateway would lead to gains or losses.

A payments orchestration layer could reduce such risks by allowing businesses to test the performance of each payment gateway before fully committing to it. A merchant that uses such a tool has the power to connect to Mercado Pago or PagSeguro for a predetermined portion of its overall transaction volume — for example, 5% of all transactions — for a test run. It then can use that platform’s API and data analytics capabilities to assess whether a given payment gateway was able to increase its revenue on a predetermined share of transactions and to what extent. This capability provides merchants with the information they need to make informed decisions about whether committing to a new gateway will benefit their businesses’ bottom lines.

These insights also can give merchants more bargaining power during discussions with potential payment service providers (PSPs). Negotiation is a key part of the process of building and maintaining relationships with PSPs, and the cost of using their services can vary dramatically depending on PSPs’ pricing models and terms. Having the option to test new PSPs’ services and transition quickly and easily among providers gives merchants more leeway in their business dealings, giving them more data and time to feel out whether relationships with certain providers would be advantageous. The alternative would be to jump head-first into relationships with new PSPs while taking on the risk that they may not see an adequate return on investment (ROI).

There likely will never be a one-size-fits-all solution that guarantees cross-border eCommerce success. Partnering with the appropriate POPs and implementing payments orchestration layers, nevertheless, can give merchants the flexibility and freedom they need to build their own from scratch.