Payment Orchestration: Will it revolutionise the payments industry?

Recent research by payabl. has looked into whether or not payment orchestration could become a key capability for merchants across varying sectors, and for businesses of all shapes and sizes.

Payment Orchestration: Will it revolutionise payments

The firm’s research has uncovered that while there are beneficial aspects of the technology that could see the landscape of payments and transactions positively changed, there are also a number of potential challenges and risks it could pose to merchants.

Payment orchestration is a technology-driven approach to solving payment complexity.

It essentially involves using digital platforms – such as POLs (Payment Orchestration Layers) and smart AI to connect merchants to several payment solution providers through a single, more efficient integration.

These systems can also automatically decide the best way to route a payment from checkout through to bank settlement–increasing the payment conversion, streamlining the payment journey and, in theory, getting through more transactions and therefore making more money for merchants.

Alongside the streamlined processes and faster transactions, another potential benefit for merchants include subsequent time savings.

For international transactions, payment orchestration is said to even have the potential to simplify complex global payment processes.

This is because a merchant only needs to interact with a single tool that would then allow them to manage the flow of payments through the necessary acquirers, PSPs and networks to facilitate rapid, secure transactions.

How a merchant’s data is  organised by payment orchestration was another notable benefit the technology could theoretically bring to users.

“POLs, using AI enable the optimisation of transaction routing – something we call ‘smart routing’. In addition, POLs can aggregate the data from the multiple payment providers, and so merchants can benefit from less fragmented, more unified reporting – since this enables better payment data analysis that aids in payment strategy formulation,” explains Isavella Frangou, VP Sales and Marketing, paybl.

“Merchants with limited resources for all necessary integrations with multiple providers turn to POL’s to speed up implementation times.”

However, payabl.’s research into payment orchestration also recognised a number of issues that could be encountered through using these technologies that need to be carefully considered.

“Although orchestration does offer  easy access to a multiple solutions, the intelligence behind the layer, really needs the expertise of the merchant themselves and that ‘human element’,” continues Frangou.

“On its own, the technology can’t really be clever enough to predict the routing and rules for the transactions based on the individual needs of each merchant and this is where partnering with a payment provider like payabl. can really help avoid some of the challenges that may arise.”

In addition, the POL a merchant uses must be able to onboard the necessary providers–the solution is pointless if the technology can’t support all the providers a merchant needs to connect to.

There are also questions raised about to what extent providers will want to lose control of the customer journey by integrating with POLs.

This loss of control and visibility may mean that a merchant will miss key changes in their customer behaviours and may lead to a loss of sales.

Solving this issue, to facilitate multiple payment formats, front-end interfaces and accounts would also be a significant technical challenge for payment orchestration platforms.

From a regulatory perspective, the EU’s PSD2 and SCA (strong customer authentication) rules require payments to meet certain authentication criteria from the end customer.

This may happen at multiple points along a purchasing journey, which would then force the customer to complete multiple checks, negating the benefit of a fast user experience.

Lastly, while working with multiple providers can be inefficient, it is something that lowers risk levels.

Whereas, a merchant moving to a single provider for their connection to multiple payment solutions basically puts all their eggs in a single basket.

If that merchant’s particular POL experiences an outage, then the route to those providers is also cut off and the company and customer both lose out.

So is it worth transitioning to a POL? 

Looking forward, it’s likely the technology won’t stop evolving – especially considering that ​​72% of SMEs are using web-based payment platforms and that e-commerce sales are forecast to grow by 56% by 2026.

Ultimately, payabl.’s investigation has uncovered some key points of discussion when considering implementing a payment orchestration layer.

In an ideal world accessing technology that can make managing multiple payment providers easier is desirable, however, merchants should carefully weigh the true benefits and potential drawbacks of adopting such technology in order to manage their payments’ function.

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