TechDogs:-"Finance Done Right Using Payment Orchestration"

Financial Technology

Finance Done Right Using Payment Orchestration

By TechDogs Editorial Team

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Overview

Imagine that you have multiple clients using different payment providers who are paying for the services provided by your company. Managing them can be a nightmare, right? Well, what if you can have an integration platform that can connect the services and simplify the entire process? An integration platform that can easily set up connections to different APIs; draw data from them and orchestrate every payment. 

With integration solutions, connecting APIs is easy but orchestrating payments and taking care of invoices and accounting gets more complex. Worry not, we’ve got a tool that will help you through your payment woes. Presenting, Payment Orchestration! 

It aims to automate payment processes and streamline monetary transactions between multiple stakeholders. These solutions leverage payment processing APIs and automation to simplify the handling of payments and invoices, reducing manual work and accounting errors in the process.

Read on to know about Payment Orchestration in this introductory guide!
TechDogs:-"Finance Done Right Using Payment Orchestration" Make Sure Every Financial Instrument Plays The Right Notes!
Do you remember how Dylan Rhodes – the mastermind behind the four horsemen in the movie series Now You See Me – integrated the powers of all four horsemen? Surely you do! Dylan not only integrated the skills of all Four Horsemen – J. Daniel Atlas, Merritt McKinney, Henley Reeves and Jack Wilder – he also streamlines their acts and made them perform some unbelievable tricks. Payment Orchestration is more or less like Dylan Rhodes. Perplexed? Allow us to elaborate.

Payment Orchestration is a new category of software that aims to automate payment processes and streamline financial transactions between multiple stakeholders. These solutions leverage APIs and automation to simplify the handling of everything from payments to invoices to financial reconciliation.

Want to know what the “Dylan Rhodes” of the financial world AKA Payment Orchestration is? Read about its working, benefits and what the future holds!
 

First Things First: What Is Payment Orchestration?


J. Daniel Atlas once said, “Always be the smartest person in the room.”  

Following his advice, let’s learn what is Payment Orchestration and become the smartest! Payment Orchestration is the process of integrating and managing payment service providers, banks, acquirers and payment gateways on a unified platform. It streamlines front-end and back-end connectivity between a company's website and numerous payment service providers, revolutionizing digital payments.

Moreover, a Payment Orchestration provider brings together merchant/user accounts, acquirers, payment providers, fraud detection services, etc., to originate, validate, route and process transactions involving those parties. Not only this but it can also manage payment flows and payment procedures like reporting, payments, billing and settlement.

The crux is that Payment Orchestration handles total payment processing, from validation to routing to settlement, just like Dylan Rhodes!

Want to know where all this is coming from? Stay tuned to know the evolution of Payment Orchestration in the next section.
 

Evolution Of Payment Orchestration


The history of payment services is almost 12,000 years old which started with the barter system. Don’t worry, we won’t be taking you that far1 Thousands of years after the advent of the barter system, Payment Orchestration was seen as the third model in the payment enablement space. Wondering what the other two were?

Well, the first one is technical PSPs (Payment Service Providers) gateways in the early days of E-commerce (2000-2010). This concept addressed the lack of a strong E-commerce front-end by traditional acquirers by focusing on the technical connection between merchants and acquirers rather than on collection and settlement.

Thus, in the 2010s–2020s, there was a broad shift towards PSPs (such as Stripe and Adyen) that could combine technological enablement with acquiring and alternative payment collecting, as well as several additional services such as fraud management, multi-currency, etc. However, a big question remained unanswered – can a single PSP offer all that is needed to merchants or other companies? Certainly, the answer was no! Especially when we talk about international businesses.

According to the various use cases, the answer until this point has been to integrate with various PSP suppliers. However, there are some drawbacks to this, including expensive technological integration expenses, difficulties reacting to market changes, difficulty resolving payment discrepancies, aggregate reporting and difficulty identifying fraud.

This is something that the third phase, Payment Orchestration, aims to fix. It has grabbed all the limelight and since then is widely being used. In the next section, we talk about the working of Payment Orchestration.
 

How Does Payment Orchestration Work?


TechDogs:-"How Does Payment Orchestration Work?"A Screenshot Of The Architecture Of Payment Orchestration
The deception created by the Four Horsemen was difficult to understand. However; understanding the working of Payment Orchestration is not that tough.

Finding the proper digital path for a transaction to take is one of the most crucial aspects of Payment Orchestration. This begins at the checkout when the customer selects a payment method from a list of alternatives. Depending on the customer's country, risk score and other factors, this list may be pre-filtered. After completing this step, the payment will be routed to the most appropriate payment source.

Once the PSP gets the user information required to process the payment, it is forwarded to the appropriate payment gateway/ acquirer. If the transaction fails, automatic routing fallback may take effect allowing the payment to proceed via a different gateway or acquirer. After this, the clearing or reconciliation phase starts. In this phase, the fund will be exchanged between PSP and the Payment Orchestration platform. Then the exchange of money is complete.

Additionally, the Payment Orchestration tool executes billing and settlement procedures regularly and can initiate automatic transfers to its merchants. Finally, reports can be generated automatically and regularly for a variety of objectives.

A platform’s greatest strength is in its benefits! (Taking some inspiration from the Four Horsemen’s quote here). Read on to know what they are!
 

Benefits Of Payment Orchestration


Every merchant or owner interfaces with Payment Orchestration software at one point or another!

TechDogs:-"Benefits Of Payment Orchestration"A Gif Of Dylan Rhodes Asking Really?
Yes, and here are some of the benefits of Payment Orchestration that show why:
 
  • Increased Efficiencies:

    Retailers can provide their clients with a range of payment alternatives while streamlining the back-end payment process by partnering with numerous PSPs. This results in a quicker and more efficient payment experience for customers and helps to enhance conversions for retailers.

  • Increased Revenue:

    Retailers may boost online sales and expand their profitability by providing a more frictionless payment experience. Retailers can grow their consumer base internationally by accepting a range of payment methods by integrating with multiple solutions. Buy now, pay later and saved card data are examples of value-added services that can be provided to increase consumer conversion rates.

  • Minimize Cost:

    Payment Orchestration solutions can assist merchants in lowering operational expenses by automating the payment process. Additionally, these platforms can assist businesses in negotiating better exchange rates by integrating with multiple payment providers across the globe.

  • Enhance Visibility:

    Real-time data analytics are made available to retailers through Payment Orchestration platforms. It includes data on consumer behavior, payment patterns and fraud activities. This information can be utilized to find new business opportunities and improve the payment experience even more.


There’s always more than what’s on the surface. The future of Payment Orchestration is not a deception, it is bright so let’s learn what it holds in the next few years.
 

Future Of Payment Orchestration


With each iteration, vendors will need to have an architecture that can respond to a wide range of payment complexity ever quicker. The value of these new solutions will be found in their capacity to simplify business integrations and financial processes. Customers want to be able to integrate several acquirers to increase approval rates and to address this demand, we are seeing many Fintech startups sprouting up.

The traditional merchant acquisition model and the current success of payment gateways are both built on transactional charges. Among the many advantages of the future of Payment Orchestration will be better transparency and lower charges as most processes will be automated and third-party processors will be redundant. This new generation of finance has the chance to establish itself at the integration level, allowing access to enterprise apps while reducing the risk of double-charging. If businesses don't want to continue with transactional fee payment, Payment Orchestration will be the way to go!
 

The End


TechDogs:-"The End"A Meme Of Child Laughing And Saying You Made It To The End
The way payments are accepted in the digital age is being redefined by Payment Orchestration. These platforms assist organizations in streamlining the payment experience for customers while lowering operational expenses by integrating with multiple payment providers. By automating the back-end payment process just like Dylan Rhodes seamlessly managed his Four Horsemen! The best part is a Payment Orchestration platform is a useful option for businesses trying to stand out from the competition by offering unique payment experiences for consumers.

Frequently Asked Questions

What Is Payment Orchestration?


Payment Orchestration is a sophisticated software solution designed to automate payment processes and streamline financial transactions across multiple stakeholders. Similar to how Dylan Rhodes in "Now You See Me" integrated the skills of all four horsemen, Payment Orchestration integrates and manages various payment service providers, banks, acquirers, and payment gateways on a unified platform. This orchestration optimizes front-end and back-end connectivity between a company's website and numerous payment service providers, revolutionizing digital payments. It brings together merchant/user accounts, acquirers, payment providers, fraud detection services, and more to facilitate transaction origination, validation, routing, and processing, along with managing payment flows and procedures like reporting, billing, and settlement.

How Does Payment Orchestration Work?


Payment Orchestration works by seamlessly guiding transactions through the digital payment ecosystem, ensuring optimal routing and processing. At the checkout stage, customers select a payment method, which triggers the platform to find the most suitable payment source based on various factors like location and risk assessment. The transaction information is then forwarded to the appropriate payment gateway or acquirer. In case of a transaction failure, automatic routing fallback mechanisms may come into play to reroute the payment. The platform manages the clearing and reconciliation process, facilitating the exchange of funds between payment service providers and merchants. It also handles billing, settlement procedures, and generates reports regularly, providing valuable insights for decision-making.

What Are the Benefits of Payment Orchestration?


Payment Orchestration offers a multitude of benefits for businesses seeking to optimize their payment processes and enhance customer experiences. Firstly, it increases efficiencies by allowing retailers to offer diverse payment options while streamlining backend operations, leading to quicker and more efficient payment experiences and improved conversion rates. Secondly, it boosts revenue by expanding sales opportunities internationally through acceptance of various payment methods and value-added services. Thirdly, it minimizes costs by automating payment processes and negotiating better exchange rates. Lastly, it enhances visibility through real-time data analytics, enabling businesses to gain insights into consumer behavior, payment patterns, and fraud activities, thereby identifying new opportunities for growth and further enhancing the payment experience for customers.

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