If there’s one universal truth amid the pandemic, it’s that we’re all binge watchers now. We’re all consumers of media, of content, of subscriptions — and we do it all online, which means we pay for it all online.
To that end, Luke Evans, director of account management and Peter Mollins, vice president of marketing at Spreedly, said “payments orchestration” can mean the difference between a merchant’s getting those digital goods to end users and allowing them to pay instantly, or losing the sale entirely. Payments 0rchestration, in a nutshell, said Evans, can help the entire payments ecosystem create and benefit from flexible payment stacks.
According to Evans, “instead of needing to have payments expertise in house — and having to build that expertise — payments orchestration allows businesses to outsource” that expertise to another firm, while avoiding the operational challenge of having to work with and integrate several payment and fraud prevention providers. The flexibility is a competitive advantage (and at times, urgently needed), when there are seismic shifts such as has been seen with the pandemic, where consumers have pivoted to the digital goods space.
Turning On A Dime
“Merchants can change on a dime, really, and go out and make an adjustment to how they’re going to conduct eCommerce and accept payments either online or in the physical space,” said Evans.
Digital commerce allows merchants to enter new markets with speed and tap new audiences, but only if they can satisfy localized payment preferences. He noted the example of Rappi, which started in Colombia, moved into Mexico, and then broadened its reach across Latin America. Each time the firm moved into a new country, it needed the flexibility that is the hallmark of payments orchestration to use a different gateway, and to mix and match payment offerings depending on the success and conversion rates on a market-by-market basis, whether payments were being done within a country or across borders.
Noted Mollins: “If I’m a VP of sales for a platform, and I’m trying to sell to a new media company, and that media company is using a gateway I currently don’t support — I could be out of luck for closing that business. But with payments orchestration, I’m able to add the 11th, the 35th, the 51st payment gateway, and be able to bring that new merchant into a choreography of payments.”
Delving into the particular challenges of digital goods firms, Evans noted that business models can vary — from voluminous low-value transactions all the way up to larger purchases, or even different payment plans like buy now pay later (BNPL) or subscriptions. Regardless of the model, real-time payments (RTP) are increasingly gaining traction. Digital goods themselves are delivered instantly to consumers, avoiding payments hiccups in the meantime.
“It’s an instantaneous kind of gratification,” Evans said of digital goods and RTP, “so anything around cart abandonment can be critical. The ability for merchants to take that purchase and make it successful right away is extremely important.”
With faster payments comes the threat of faster fraud, goes the saying. Mollins and Evans pointed to universal tokenization as a cost-effective way to safeguard transactions across a range of payment types and business models. With tokenization vaults in place, they explained, stakeholders can have payment methods available on offer and able to be completed. That way “instant gratification” can take place without consumers having to load credit cards or different payment methods because individuals’ wallets and payment methods are on file.
“A payment orchestration provider, for example, helps merchants lower their PCI compliance scope and costs,” said Evans, thus satisfying regulatory requirements. He noted, too, that the tokens themselves are “evergreen” (and charges to, say, out-of-date cards as well as cancellation risks are avoided).
Looking ahead, the Spreedly executives told PYMNTS, we’re already on a fast trajectory for digital goods to continue to be a growing part of the eCommerce landscape, especially as we all keep working and enjoying leisure time from home.
“People shifting jobs or having to get more education are all digital goods, and it just means more time spent online,” said Evans.