Understanding Payment Orchestration

Let me break it down for you:

In the 1990s, with the rise of Ecommerce, the first payment gateways came into existence. However, they lacked today's advanced collection and reconciliation tools.

The 2000s saw integrations between developers and gateways due to limitations in serving all customers through one gateway.

By the 2010s, PSPs transformed, introducing alternative payment methods, fraud prevention, and global payments in local currencies.

The 2020s witnessed a shift, with over 60% of retailers using multiple payment providers and payment orchestration becoming essential for businesses.

What is Payment Orchestration?

Drawing from the world of music, payment orchestration functions similarly to a maestro harmonizing an orchestra.

This system blends multiple payment processes, offering an efficient and streamlined transaction route.

It centralizes various gateways, ensuring a smooth consumer checkout.

Integrated reporting provides a unified data view, and "smart routing" auto-directs transactions through the best route.

Europe's e-commerce data shows that roughly a quarter of Mastercard's payment authentications in early 2021 failed. Smart routing in payment orchestration aims to combat such issues.

Business Research Insights predicts that by 2027, the payment orchestration market will be valued at nearly $5 billion.

Key advantages of payment orchestration include:

1. Cost and Time Efficiency: Merchants can choose lower transaction fees from a range of providers.

2. Increased Conversion: Improved customer experience boosts conversion rates. Factors like smart routing, diverse payment methods, and local currency support play significant roles.

3. Transaction Success: With the rise in digital payments, ensuring transaction success becomes vital. Payment orchestration can notably reduce decline rates.

4. Customer Loyalty: Offering preferred payment methods enhances the buying experience, fostering customer loyalty.

5. Global Expansion: For businesses aiming globally, understanding regional payment preferences is crucial.

6. Rapid Scaling: Merchants can swiftly integrate solutions supporting business growth.

7. Fraud Reduction: A consolidated platform with multiple payment methods aids in fraud prevention.

8. Automatic Reconciliation: This feature minimizes errors, saving internal resources and enhancing efficiency.

9. Real-time Ledgers (RTLs): RTLs provide almost instant financial data visibility, ensuring transactional integrity.

Author

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