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Payments Orchestration Increasing Digital Transaction Success Rates

Looking for straight talk on where things stand? Here you go: “It has been roughly seven months since the pandemic was declared, and consumers show no signs of wanting to return to stores to shop the way they once did. Roughly eight out of every 10 adult U.S. consumers who have gone online to shop and pay for food, groceries and retail products now say they plan to keep doing so after the pandemic has subsided.”

This we learn from PYMNTS November 2020 Payments Orchestration Playbook, done in collaboration with Spreedly, and a good deal more, as companies seek to better manage swelling online transactions, cut processing costs and increase return on investment (ROI) from their payments infrastructure investments to ensure long-term growth.

Today, growth today means access and smart utilization of gateways. But how to achieve it?

The new Playbook answers that, noting, “Today’s merchants are challenged with delivering seamless payment experiences as more consumers embrace digital ways to shop and pay. eCommerce platforms and digital marketplaces are expanding their payment capabilities in response by integrating new payment gateways on their platforms.”

The global payment gateway market is expected to reach nearly $43 billion within five years. Clearly, corporates hear the dulcet tones of adding an orchestration layer in their stack.

Gateways To Higher Transaction Success Rates

A COVID-caused digital exodus swamped many merchants who have since been scurrying to keep pace with eCommerce payments choice and the back-end systems that control them.

It’s resulted in a gush of interest in payments orchestration tools to help retailers optimize operational inefficiencies in payments stacks and reposition for sustainable growth.

“Having more than one gateway can improve payment success rates. It supports expansion into new markets and business models, and it also helps to mitigate any potential points of failure or outages associated with the payments process,” Nishant Agarwal, vice president of engineering at Spreedly, told PYMNTS. “Our team looked at almost four years of payments data to determine the impact on success rates when adding a gateway [by calculating] what the monetary value of optimizing payments orchestration actually was. One company had a success rate of 86 percent using one gateway. A year into using a payments orchestration strategy, it began consistently transacting on a second gateway, increasing its success rate to 93 percent. This company had a weekly average of 121,000 transactions, and the increased success rate resulted in an extra $2 million per week. This is the type of impact that shifts payments [orchestration] from a must-have to a true competitive advantage.”

The numbers are compelling, and starkly illustrate the importance of gateway management.

Intelligent Routing Is Smart Business

Businesses that are reopening, reinventing and recovering all at once know they have a small window now to make the right decisions. Making sure each transaction is routed to an appropriate, available gateway is just smart business now, as these digital tools proliferate.

“Payments orchestration helps optimize digital payments and allows for a proactive approach to payments,” Agarwal said. “Connect once and intelligently route transactions to the right service, or combination of services, to best support you and your payments strategy. [Recent research shows that] of those merchants with [more than] 50 percent of sales occurring online, 69 percent prefer a multiprovider strategy.”

As the new Playbook states, “Working with multiple PSPs through a payments orchestration layer can prove to be significantly beneficial. Doing so can help businesses process transactions at the lowest available price and enjoy more ROI from the gateways they have already integrated,” while boosting bargaining power, and better routing automation.

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