The Smartest Payment Stack May Be the Simplest One

Orchestration solves a longstanding challenge in payments. It allows merchants to connect to multiple payment providers through a single layer of infrastructure, dynamically route transactions to maximize approval rates, reduce downtime through automated failover and gain leverage over providers by making it easier to switch among them.

At least, it does conceptually. The reality can often look different. Findings in “The Orchestration Advantage: How Routing Architecture Shapes Payments Performance,” a PYMNTS Intelligence and Spreedly collaboration, reveal that despite widespread investment in payment orchestration, most companies remain trapped by the very infrastructure they hoped would make them more flexible.

As payments infrastructure becomes more sophisticated, many businesses are discovering that incremental upgrades can introduce operational complexity faster than they improve resilience or performance. The result is what might be called a capability trap: a state in which organizations accumulate orchestration features without achieving meaningful gains in authorization rates, transaction completion or customer experience.

More than half of businesses surveyed experience payment disruptions at least monthly, according to the research, and only 47% consistently achieve transaction approval rates above 97%.

Orchestration, the findings reveal, works best when it functions as a complete system.

Payment Orchestration Hits the Limits of Feature Accumulation

The research identifies five capabilities that consistently separate high-performing payment organizations from everyone else: automated routing, frequent routing logic updates, failover redundancy, token control and ease of integrating new payment rails.

Organizations with only one or two core orchestration capabilities perform predictably modestly across them. More surprising is the performance of firms that have implemented three or four capabilities. Rather than sitting halfway between leaders and laggards, they often resemble the laggards.

Companies with one or two orchestration capabilities report transaction completion gains of 2% or more only 7% of the time. Firms with three or four capabilities fare only slightly better, at 10%. By contrast, 78% of companies that have all five core capabilities working together report those gains.

The same pattern appears elsewhere. Companies with three or four capabilities experience higher checkout abandonment rates and generate more payment-related customer complaints than organizations with only one or two capabilities. Payments modernization does not appear to deliver incremental returns. Instead, it exhibits threshold effects, and until a critical mass of capabilities works together, additional features primarily add operational overhead.

The companies achieving the strongest results are no longer focused primarily on acquiring additional functionality. They are focused on reducing friction within existing systems. The report found that 58% of companies surveyed are consolidating providers rather than expanding their networks. Only 35% actively use multiple providers to create pricing competition.

The firms surveyed for the report indicated they want infrastructure that behaves less like a collection of tools and more like a coherent platform.

Read the report: The Orchestration Advantage: How Routing Architecture Shapes Payments Performance

Payments is evolving from a market defined by processing capabilities into one defined by operational mobility. Historically, buyers have compared vendors based on feature breadth. As orchestration solutions mature, they may judge them based on integration quality, portability and adaptability.

The main reason? Only 7% of surveyed companies maintain full control over payment credentials. The remaining 93% rely partially or entirely on providers to manage tokens.

That arrangement creates a form of vendor lock-in that extends beyond commercial agreements.

When providers control tokens, switching payment processors becomes a complex migration project rather than a straightforward configuration change. Organizations face implementation costs, compliance requirements, data migration challenges and extensive testing obligations before they can move transactions elsewhere. In that sense, token portability may emerge as one of the defining infrastructure questions of the next decade of payments.

Another bottleneck is payment rail integration. Adding new payment methods remains surprisingly difficult. More than seven in 10 companies report that introducing a new rail requires significant reintegration work. Only a small minority describe the process as easy. Even organizations with highly mature orchestration stacks struggle to activate new providers quickly. As a result, businesses cannot rapidly test alternative processors, respond to outages or exploit pricing opportunities.

The winners of the next phase of payments competition may not be the companies with the most capabilities. They may be the companies whose capabilities operate as a single system.

At PYMNTS Intelligence, we work with businesses to uncover insights that fuel intelligent, data-driven discussions on changing customer expectations, a more connected economy and the strategic shifts necessary to achieve outcomes. With rigorous research methodologies and unwavering commitment to objective quality, we offer trusted data to grow your business. As our partner, you’ll have access to our diverse team of PhDs, researchers, data analysts, number crunchers, subject matter veterans and editorial experts.