Payments Orchestration Is Not Just for Merchants

Merchant aggregators, marketplaces, platforms — there are many names for these organizations, but there is no doubt that they have risen to the fore in eCommerce. Whether food delivery aggregators, booking software for salons, or marketplace giants such as Amazon or eBay, platforms are increasingly attractive to merchants as channels for gaining maximum exposure to potential customers. Smaller merchants, in particular, can find value in platforms’ services that might not be available as cost-effectively elsewhere, such as marketing, scheduling and — perhaps most essentially — payments.

For the platforms themselves, it’s highly important that they onboard as many merchants as possible to achieve growth and profitability. However, because merchants typically already have relationships with payment service providers (PSPs) that they wish to maintain, platforms run into challenges in accommodating multiple merchants’ diverse PSPs — as well as offering a wide variety of payment gateway options to all their merchant customers. Payments orchestration is a key tool for ensuring that all payments are routed effectively while preserving merchant customers’ preexisting payment provider relationships.

Platforms’ Unique Payment Needs

Platforms are responsible for handling the payments of potentially thousands of merchants, each with their own PSPs to accommodate. This can put immense strain on platforms’ IT teams and infrastructure.

eCommerce marketplaces face an enormous — and growing — variety of payment types.

Consumers are expected to increase their international eCommerce shopping in the near future.

Another recent study predicts that 54% of online shoppers will purchase more from international eCommerce marketplaces over the next year, significantly increasing the geographic complexity of online payments for platforms as different gateways, methods and currencies come into play. In addition, 77% of customers would abandon their carts if their preferred payment methods are unavailable at checkout, signaling a very low tolerance for payments-related setbacks. This further underscores the need for platforms to provide eCommerce merchants with smooth, seamless payment experiences for their end users.

Payments Orchestration: The Value Proposition for Platforms

Marketplaces and other platforms often find themselves in the same situation as merchants, scrambling to offer all the payment options their customers demand. Payments orchestration can be instrumental in relieving this pressure.

Payments orchestration works for platforms in the same way it works for individual merchants. Orchestrators can provide all the necessary payment gateways on the back end for platforms to onboard new merchants rapidly and easily as well as compliantly with multiple regulatory frameworks — thereby relieving platforms of the burden of resolving such issues independently. This enables platforms to scale and enter new markets quickly by providing access, at the flip of a switch, to as many payment gateways and PSPs as merchant customers might want or need.

Failed payments are a core problem that payments orchestration can resolve.

A recent PYMNTS Intelligence study found that 11% of transactions processed by the average eCommerce firm failed in the past year, with 80% of firms citing difficulty in pinpointing the causes of failed payments as a major challenge. Nearly 60% of firms reported an increased staff workload due to failed payments, while 56% said these failures are expensive to track and resolve. A staggering $81 billion was lost to false declines in the United States last year.

Payments orchestration can resolve a root cause of payment declines by automatically retrying and rerouting payments to alternative gateways. Platforms that offer this value-added functionality can help merchants build a better customer experience and thus increase brand affinity by attracting and retaining more loyal end users.

Hospitality platform Olo is tapping payments orchestration to expand restaurant payment capabilities.

One recent example of how payments orchestration is helping platforms diversify their payment capabilities comes from the restaurant sector. Olo’s software-as-a-service (SaaS) program recently integrated Spreedly’s open payments platform to enable seamless payment experiences for guests on behalf of its restaurant partners.

The platform is currently used by more than 700 brands to build digital ordering and payment experiences across 80,000 restaurant locations that process upward of 2 million orders per day. Payments orchestration enables platforms like Olo to build and tailor these guest experiences regardless of the complexity of merchant customers’ different payment processing relationships.

Orchestration Offers Options — Even Outside eCommerce

Payments orchestration is also extremely useful for platforms representing nonprofits, unions, religious organizations and other non-eCommerce entities that need to collect and aggregate dues, donations and other payments.

Orchestration gives you [as a platform] options for the types of merchants you can onboard, the regions you can operate in and the types of payment methods you can offer. The platform then adds value because it can wrap all those things in a consistent experience, so on the consumer-facing side, the checkout experience between merchant A and merchant B is identical, regardless of who the back-end payment processor is.”

Payments orchestration offers flexibility to a wide range of platforms — including those outside eCommerce.

Payments orchestration is applicable to platforms in nearly every industry. In a recent PYMNTS Intelligence interview, Spreedly senior director of product and market strategy Andy McHale noted that the options afforded by payments orchestration are useful to platforms across a vast array of sectors and business models. They may be subscription-based or international in scope. They may have submerchants that bring their own processing relationships with them, or, like eBay, they may embed payments from customers and disbursements to merchants directly into their platforms.

Platforms leveraging payments orchestration may not even be in eCommerce at all. Nonprofits and religious organizations might use platforms to help collect and aggregate donations. For these platforms, payments orchestration routes transactions to the appropriate gateways, with the end consumer’s experience remaining consistent and completely seamless regardless of the payment type or location.

Payments orchestration can be a boon for nonprofit platforms.

In fact, mission-driven organizations are actively seeing the benefits of payments orchestration for platforms, according to Brian Lindsey, former senior product manager for Advanced Solutions International (ASI). The company’s iMIS platform, an engagement management system (EMS) purpose-built for nonprofits — including membership associations, unions, regulatory bodies, and faith-based or fraternal organizations and charities — leverages payments orchestration to help its organizations raise revenues from all over the world.

In the past, Lindsey noted, adding a gateway might take three to six months, but payments orchestration reduced that time to within the space of a month. This ability has been a differentiator for the platform to nonprofits that may lack sufficient IT budgets or expertise to afford these options. Instead, the platform orchestrator handles the heavy payments lift, allowing these organizations to focus on the mission-oriented work they do best.

The Case for Payments Orchestration of Platforms

Online platforms of all kinds — whether for eCommerce merchants looking to maximize sales or for nonprofits and charities managing their donations — can reap numerous benefits from embracing payments orchestration. It can enhance platforms’ appeal to merchant customers by setting the stage for speedy onboarding, offering instant access not only to their customary PSPs but also to a multitude of new providers. It also reduces payment failures and false declines, promising to boost platform participants’ conversions and revenues.

Payments orchestration is also invaluable for platforms seeking to expand globally. It facilitates the provision of international payments in various currencies through their most appropriate regional gateways while ensuring compliance with local regulations. Partnering with PSPs that have a strong presence in target markets can thus ease platforms’ entry into new regions. All these orchestration benefits allow platforms to stay competitive, drive growth and deliver exceptional customer experiences.