Payments Orchestration Turns Global Payments Pain Into Merchant Gain

Payments orchestration can feel a bit like a new thing to the market in the last few years, but it actually isn’t.

Airlines and large global retailers have been doing some variation of payments orchestration for quite some time, although those efforts were always in-house construction projects tailored to the specific needs of the firms building them.

What is different today isn’t that orchestration has become part of the payments ecosystem globally, CellPoint Digital Senior Vice President and Head of Product Stephane Druet told PYMNTS. Payments orchestration has been around for a while, but the variation that has been gaining prominence in the last two or three years is different in two key regards.

First, he said, the requirements of building payments orchestration capacity in-house has rapidly started outstripping the technological capabilities of its historical users, creating an opportunity for orchestration players like CellPoint to step in and start offering the capability at a higher level via a Software-as-a-Service (SaaS) model to global businesses. Second, the demand for orchestration capability has exploded across businesses of all types and sizes looking venture out onto the global stage.

CellPoint started with airlines, where the need for payments as a SaaS offering was the most obvious and acute, Druet said. But the need has expanded in recent years, and in particular the last year, as firms have gone global and learned that cross-border transactions are a whole lot harder than their domestic counterparts.

“Now we see a lot of requests from multiple other verticals because payments orchestration is really solving problems for all merchants,” he said. “That includes international retailers, online education businesses, streaming services, gaming platforms — all these businesses are realizing if they want to grow internationally, they need to basically embrace a comprehensive payment solution that can grow internationally at scale.”

That’s because three-quarters of consumers prefer to pay with their most familiar local method, he said. That’s why it is critical for businesses to localize the permanent ecosystem and reduce the volume of cross-border transactions and the incremental costs that come along with them — making those payments less expensive, less complex and more likely to go through easily.

A payment orchestration partnership, he explained, allows firms stepping onto the global stage of transactions the ability to integrate the various payment service providers and acquirers, thus making them more able to orchestrate the end-to-end process for all transactions, including checkout, processing, acceptance, reconciliation and reporting.

And merchants have really begun to accept that “they cannot increase their acceptance rates if they’re not offering multiple routing options transactions,” he said. The pandemic didn’t start the push to payments orchestration, but it certainly accelerated the demand for it as more merchants found themselves pursuing digital commerce on the global stage and quickly found how it is nearly impossible to optimize a payment strategy globally with a single payment gateway.

“Cross-border merchants realize now that they need a patchwork of several payment gateways and acquirers to cover all their specific regions and countries; a single provider just cannot give them the reach they need at a reasonable cost,” Druet explained.

And beyond that elevated success rate for transactions, orchestration also has the side benefit of offering a more secure and data-conscious method for making sure to maximize the approval of transactions. Payments solutions must be payment card industry (PCI) compliant, and a good orchestration platform darts from that base and moves to adding on more features, like all critical data going through the application programming interface (API) for transaction processing or reconciliation needs to be properly encrypted via the magic of tokenization before it can be transmitted or stored.

At the end of the day, he said, orchestration just fixes transacting for merchants and consumers in ways that have never been possible. The checkout experience of the customer dramatically improves, and conversion goes up, but that is still just the tip of the iceberg in terms of the advantages that orchestration brings to the table. Merchants pick up the ability to manage their own payment ecosystems and enjoy a much easier and faster process to develop the optimum payment systems and adapt them as time goes on and methods continue to proliferate. Beyond that, orchestration cleans up back-end finance processes like reconciliation and chargeback management.

“Payment orchestration brings a much more complex payment ecosystem into play, but it makes it easier for the merchant to operate them,” Druet said. “So, the entire process to collect, aggregate and analyze data across all the markets, all the channels, all the currencies will be greatly simplified because everything is within the platform. That provides a 360-view of all the data, whatever the sources and in real time.”