The New System That Makes Payment Methods Powerful

There is one conversation taking place in the payment industry now: how to face the global growth of e-commerce.

The answer lies in the boom of payment methods across countries: By Now Pay Later (BNPL), electronic transfers, and neo-bank credits, but this is not enough. No matter what kind of payment method is the most popular, it needs to be more assertive, fast, and optimized. 

Companies not only need solutions and platforms for payments tailored to their specific market needs but something that helps to organize and to coordinate all the solutions and all the tools provided to many companies and startups, and instantly. 

This is the origin of payment orchestration. The concept is part of the development of the payment market and has been  top of mind for the industry for many years, but now, it is becoming the new trend for e-commerce companies that need to sell faster. 

But what is it exactly? How does it work? Payment orchestration is a software as a service platform that is accessed through an API to facilitate the integration and handling of multiple payment providers, such as acquirers, banks, payment gateways, and fraud prevention providers.

What advantages does this bring? Well, the main reason for implementing payment orchestration in a global company is the connection to multiple payment providers, which helps them to connect with local businesses organically and faster. 

In the last decade, the e-commerce landscape has evolved from a straightforward concept to a complex ecosystem involving multiple devices, partners, and channels. In 2021, global retail e-commerce sales amounted to approximately US$5.2 trillion. 

This figure is forecasted to grow by 56% in the coming years, driven by three major geographies: China, Europe, and the US. 

However, as markets mature, the amount of competition serving these requests rises, along with the complexity of bringing these solutions to market. 

The expectations grow if we consider the requirements for product customization, mobile optimized searches, quick checkout processes, and hassle-free delivery, which are growing rapidly as customers increasingly look for convenience.. 

All this complexity can lead to failure and an online payment failure leads to lost sales. These kinds of failures are the result of failures in the payment flow, or in the technological performance of the operation.

This works like a domino effect: failed transactions push customers to question the reliability of a business and finally abandon shopping carts.

Whatever the reason for a failed transaction, complexity in the payment system usually plays a role. In addition to non-payment, there is a growing list of payment challenges and complexities that electronic commerce companies have experienced in the past few years.

One example is security enhancements. Online businesses widely implement additional security layers, such as 3D-Secure (3DS), even outside Europe. However, for all their back-end benefits, these layers lengthen the payment and validation process, further impacting the already-fragile conversion rates for e-commerce sales. 

Another example of the complexity of payment methods is the growth of Alternative Payment Methods. These include digital wallets, fintech’s loans and the BNPL credit solutions.

A third and final example is the large and constantly evolving number of acquirers/gateways. E-commerce requires a focus on optimizing the payment ecosystem. That way, businesses can control the whole payment value chain while creating seamless customer payment experiences. 

Faced with this mix of conditions, payment orchestration, implemented correctly, is basic in enabling businesses to benefit from the best possible payment solution in each market/country they operate in and for each payment method. 

At Nuvei, we have found that businesses that utilize single payment orchestration platforms can integrate with multiple PSPs, payment gateways, and acquirers while centralizing and reducing the overall complexity of their payment setup. 

The payment orchestration platforms can also help businesses avoid system outages and downtime, adding robustness to their payment system to fit their customers’ payment preferences better. Another of the advantages of payment orchestration is to allow businesses to access a comprehensive dashboard of KPIs (Key Performance Indicators) across all their transactions in one centralized and secure location.

This efficiency is also good for the market and the payments industry in general, since it allows healthy competition between payment providers while preventing businesses from being exposed to monopolistic practices.

The optimization of time and reduction of errors allows adding more payment methods to online businesses, in addition to generating real-time data that allows a better knowledge of a market with better competition and greater transparency. That is why discussions around payment orchestration in the industry are increasingly recurrent. 

That is also why this is the new sensation.