Let’s start with a very simple explanation of something exceptionally complex: a cross-border payment is a financial transaction between parties* based in different countries at the time of the transaction.
Now, that is the easy part. Enter finance law, regulations and financial technologies, and the plot thickens! At the consumer end, slow speed, high cost, low transparency, and lack of flexibility are barriers to efficient and inclusive cross-border commerce.
The longer the value chain is, the more fees and time are added to a transaction. Multiple banks are usually involved, and an extra fee is added at each payment gateway. Local taxes and exchange rate variations can seriously dampen the enthusiasm for shopping.
If you are not familiar with terms like «payment orchestration», «smart routing», and «real-time transaction data analytics», you need to know that these are keywords in optimising cross-border payments for your business, whether online or offline.
Payment orchestration is a poetic term for managing and streamlining the flow of payments in a complex ecosystem involving multiple payment methods, providers, and channels.
The aim is to coordinate and streamline the numerous stages of the payment lifecycle, from the initiation of a payment to its settlement, while ensuring security, efficiency, and a seamless customer experience.
Businesses must often integrate and manage multiple payment gateways, processors, and acquirers, each with technical requirements, interfaces, and protocols. This fragmented approach can be time-consuming, costly, and error-prone.
To simplify and centralise payment management by acting as a middleware layer between the merchant and the various payment providers, a payment orchestrator, in contrast to other parts of the value chain, reduces complexity and cost.
Furthermore, to consolidate and abstract the integration with multiple payment methods and providers, offering a unified interface and a single point of control for businesses to manage their payments.
Having one sole source and connector for all global payments simplifies the integration process by providing standardised APIs, SDKs, and plugins that enable businesses to connect their systems with various payment providers easily. This reduces the technical complexity and time required for integration and maintenance.
The gateway intelligently routes payment transactions to the most appropriate payment method or provider based on cost, availability, customer preferences, and risk management. It can dynamically select the optimal payment route to maximise transaction success rates and minimise costs.
Payment orchestration platforms aggregate various payment methods and providers into a single interface, allowing businesses to offer their customers a wide range of payment options. This can include credit and debit cards, digital wallets, bank transfers, alternative payment methods (APM), and more.
Your eCommerce business can reap significant awards from offering APMs like AliPay+, WeChat Pay and digital wallets like Apple Pay. Allowing customers to pay with their preferred method is a significant conversion rate booster and growth factor!
The singular payment gateway brings other benefits besides bringing costs down and speeding up, like real-time payment analysis. Not having to reconcile data between disparate systems and various levels of compatibility is a significant business asset.
Precise data on transaction volumes, success rates, revenue, and more can be used to build more informed payment strategies, identify trends, and make the right business decisions.
Besides saving time and costs, you are also reducing fraud risk. Having your business's full transactional data overview allows for faster detection of patterns and abnormalities within systems.
Payment orchestration platforms often include built-in fraud prevention and risk management capabilities. They employ advanced algorithms and machine learning techniques to detect and prevent fraudulent transactions, providing an additional layer of security.
What a payment orchestrator can offer your eCommerce business.
Payment orchestration is more than yet another payments industry buzzword. It accurately depicts a business-crucial feature and process of effectively growing your eCommerce business across channels and borders.
*Footnote: Referring to the card-issuer location.