A connected economy moves money by placing interoperability at the center, tapping technology that enables more transactions to clear quickly and securely in any market. But many firms continue using single gateways, and in 2022, that’s a problem.
Discussing the impacts of companies moving from a single provider to a multi-provider payments strategy, Joseph Meuse, senior director of product management at Spreedly, told PYMNTS that problems do beset successful businesses, and those that have proactively planned for disruptions in other areas of the business need to apply similar thinking to payments.
“If you are a business that is payment-centric, you need to make sure that you’re able to keep your payments running smoothly 24/7, and that you have [failover] capabilities at a minimum to do that, or ideally a strategy that [also distributes and scales] your operational processes ” to reduce occurrences of payments failure, Meuse said.
He added that a multi-processor strategy can help give companies scale on their busiest days.
“You want to be able to have strategies in place, not just for that failover capability, but for spreading your business across multiple paths so that they all can sort of work at peak performance,” he said.
Staying in compliance is getting more difficult, and problems do occur more frequently in this dynamic environment. Although they tend to be resolved more quickly when companies build redundancy in, even being unavailable for 15 minutes can damage customer relationships — perhaps irreparably.
“Customers will go elsewhere,” he said. “You might miss that sale opportunity. Of course, with more and more activity happening online and with more and more things being interconnected, there’s more opportunity for things to go wrong, and we do see that happening out there.”
Another consideration often revolves around a company’s growth plans. Not all gateways deliver or perform equally in all markets. Being able to quickly and efficiently adopt new gateways is critical to companies that are expanding into new markets.
Meuse said he experienced this before joining Spreedly as he evaluated the company as a potential partner. His former company had strategic plans that required it to scale up quickly and move into new markets that a single payment provider couldn’t offer.
“We, of course, didn’t want to have to incrementally invest in every one of those geographies,” he said. “There was great attraction in having a [flexible provider] that can open those doors to you with a much smaller level of investment,” he said. “There’s the growth perspective of why the strategy is helpful, and then there’s also the assurance you get of having redundancy built in.”
See also: Visa’s Cybersource Joins Spreedly Payments Program
Orchestration Conducts the Flow
All companies experience gateway failures, but it’s younger and smaller businesses that may not have the experience and wherewithal to understand both the problem and the solution when failures do occur. This is where a multi-processor strategy makes a huge difference.
Meuse told PYMNTS that companies are constantly looking for potential points of failure and trying to plan for them proactively. And smaller companies might not have experienced it yet, he said, but they will as they continue to grow.
As companies gain sophistication in their payments processing strategies and systems — and grow as a result — “larger companies, companies that have either [regulatory] oversight or [mature] compliance organizations have typically given this some thought,” he said.
Making multi-provider payments an investment priority is a mindset companies must adopt in a world where digital payments are becoming the de facto standard and require either serious time and resources internally, or expert partners to handle routing, compliance and more.
“You need to understand this in your design and your architecture from the beginning,” Meuse said. “It can be complex to go back and have to refactor that type of solution in.”
New payment gateways are opening all the time, he said. And each of them has different integration requirements that need constant maintenance. If companies opt to integrate those gateways internally, they need to bake pre-allocated investments into their expansion plans.
Alternatively, when choosing to partner with a payment orchestration platform, “you want to make sure that your vendor management program is prepared to handle that,” Meuse said.
“You’re going to have new agreements that you need to monitor and renew on a recurring basis,” he said. “You’re going to want to observe the results that you’re getting” and make sure that all your service providers are performing as you expected them to.
Read also: Payments Orchestration Playbook
Partnering for the Whole Package
Payment Card Industry Security Standards Council (PCI SSC) compliance is another key area to focus on when selecting payment service providers, as missteps with data can lead to hot water with regulators, or worse, data breaches.
Outsourcing it is a smart move for companies inexperienced with data security as it’s one less thing to worry about, but companies still need to have oversight on all of the vendors they work with to ensure they’re compliant, Meuse told PYMNTS.
“I would argue they are the same tasks you need to do for all types of vendors,” be it your hosting provider or your telecom vendor, he said. “It’s certainly not burdensome, and it is worth the effort, but it is not a zero-cost undertaking.”
The benefits of a multi-gateway solution apply even more so to merchant aggregators, whose clients bring their own payment service providers (PSPs) and gateway preferences with them. There are better, more effective ways of managing those demands.
Businesses are going to get a whole bunch of customer requirements related to PSPs and gateways, Meuse said. “You don’t want to lose those opportunities for a sale, but by the same token, continuously adding new processor connections is an expensive undertaking. That’s where an orchestration solution comes in, because it gives you that very broad set of capabilities right out of the gate.”
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