If this is the first time you’re hearing the term ‘Payment Orchestration’, you’re not entirely alone. Payment Orchestration is the newest kid on the FinTech block and you’ve come to the right place to get all the tea!
Until a few years ago, Payment Orchestration wasn’t a thing, at least not in the way we now understand it. A few Big Tech companies (Dropbox, Uber, LinkedIn, Airbnb) had set up orchestration engines in house to improve their customer’s payment experience but it didn’t become a popular service being offered to other businesses up until 2020. Yes, the infamous 2020.
What is Payment Orchestration?
Like a lot of things in FinTech, Payment Orchestration sounds like a complex concept, but it really isn’t. In its most basic form, Payment Orchestration enables businesses to access third party payment service providers without having to integrate each provider individually.
Think of it as an aggregator, a single integration with pre-existing payment providers and other payment services such as fraud detection, auto routing, a retry logic, reporting etc. already enabled. Now businesses can simply plug this Payment Orchestration Engine into their product, mostly via an API, and they get instant access to all the payment services already integrated into the Payment Orchestration platform, typically by clicks and toggles.
Payment Orchestration Platforms are not payment gateways. Don’t think Paystack, Flutterwave, Stripe. No. Those are Payment Service Providers (PSP), they help businesses collect payments from customers, hold the money and handle settlement with the acquirer banks. Payment Orchestration platforms on the other hand give businesses instant access to these Payment Providers. They do the hard work of integrating all the available payment service providers across multiple countries, so businesses do not have to do the grunt work of integrating each payment provider they want manually.
Payment Orchestration aims to simplify the process of integrating payment services into a website or application. For example, an eCommerce website currently accepts payments via debit cards from customers via Paystack but is looking to give customers more options to make payments beyond cards like direct debits, cryptocurrency, wallets and virtual accounts.
The typical process is to have their software engineers identify the best payment service providers that power these multiple payment methods, decide on which ones to integrate and then spend the next couple of weeks or months integrating from scratch. There are a number of problems with this approach:
1. Developer’s focus is shifted from the product’s core offering
eCommerce to work on payments. Except we’re talking about a large organization that has more than a handful of engineers with a team specifically dedicated to payments, chances are the software developers will be taking a break from building the actual product to focus on integrating multiple payment providers or they’ll be working some ungodly hours. Neither is efficient use of time and energy.
2. Time to market is significantly prolonged
We can all agree that payment is central to eCommerce and any FinTech enabled business for that matter. If payment isn’t ready and optimized, the product is most likely not ready to be shipped. Integrating payment services from scratch adds at least one extra month to time to market; delaying product / feature launch.
3. Increased cost
Cost incurred manually integrating multiple Payment Providers can be drastically reduced when businesses opt for a Payment Orchestration Platform.
Payment orchestration makes sense for the above reasons and a couple more:
1. Giving customers smoother checkout experience
Ever tried to make a purchase online but couldn’t because the only accepted payment method was debit cards and you didn’t have your ATM details in that moment? Imagine there were other payment options such as direct debit, virtual account or our beloved cryptocurrency? There would have been absolutely no reason not to complete your purchase.
Payment orchestration makes it super easy for businesses to easily offer multiple payment methods to customers hence reducing drop off at checkout.
2. Cross-border expansion is made easy
Scaling into new countries comes with its unique challenges but with Payment Orchestration, accepting payments will not be one of those. Customers are more comfortable paying via a local Payment Provider, a service they are familiar with, this is where Payment Orchestration comes in.
Payment Orchestration typically aggregates payment services across multiple countries and so when a business is integrated with a Payment Orchestration platform, they get instant access to these payment services in other countries, accepting payment is as easy toggling on a few buttons.
3. Auto Switching technology
One of the most important features of Payment Orchestration Platforms is the auto-switching / routing technology. This works by determining the best Payment Provider to process payments per time and routing customer’s transactions to that Payment Provider. This can also be done based on predefined rules. So, say a business has 3 payment providers processing card Payments, depending on a set of rules such as uptime, speed, transaction charges, transaction amount, region etc., transactions are automatically routed to certain payment providers.
This can also work by routing a customer to a different payment provider if the first payment provider they selected failed to process the payment.
4. Unified data and reporting dashboard
It’s only right to manage your payment stack from one single dashboard. Payment Orchestration platforms provide a single source of truth for all your enabled payment providers, you can see transactions from multiple points in one place and get actionable insights.
5. Business continuity
For businesses that care about business continuity, using a Payment Orchestration is the safest way to ensure that your business remains unfazed by Payment provider downtime or disruptions. It only makes sense to have multiple Payments Providers through which you accept payments if you’re a FinTech enabled business that accepts payment only digitally. Simply using one Payment Provider is too risky.
Payment Orchestration Use Cases
It’s hard to think of any FinTech enabled online business that Payment Orchestration is not suited for. If you accept payments online from customers, clients, partners or anyone for that matter then Bloc is for you. Here are just a few use cases for Payment Orchestration:
1. E-Commerce websites
E-Commerce websites are one of the biggest users of Orchestration platforms. Customers being able to seamlessly complete an online purchase is directly tied to the success of any eCommerce business and as such it becomes imperative that businesses increase the chances of customers successfully making payments and having a seamless checkout experience.
2. FinTech products
FinTech products such as a savings app requires users to fund their wallets and lock funds away. Using a Payment Orchestration Platform can help this savings app offer multiple funding options to their users as opposed to offering only one payment method, debit card via one payment provider, Paystack.
3. Saas Platforms
Software-as-a-service platforms are typically fast paced companies that scale very quickly across multiple regions. It’s important that they are offering the best in class payment methods and are also able to scale payment across the various locations where their product is being used. A Payment Orchestration platform is perfect for accessing payments providers across the globe, providing users with local payment providers that can process payments in their currency. It also helps that the business gets a centralized platform for managing their payment stack.
Payment Orchestration is fairly new in Africa with zero players in Nigeria and we at Bloc, are excited to be pioneering this in Nigeria and Africa by extension.