Intelligent Dynamic Payment Routing

How enterprise merchants can use dynamic payment flows to increase their payment acceptance rates via smart transaction routing.

The IXOPAY payment routing engine helps businesses reach their payment processing goals, such as transaction cost optimization, increase of acceptance rates, protection against provider downtime or unavailability, and payment load distribution.

What is dynamic payment routing?

Dynamic payment routing is a prominent feature of a multi-provider setup and gives merchants more control of their payments. It allows for the customization of payment flows, flexible load distribution, lower transaction costs, and the use of fall-back routing and cascading in case of provider downtimes. 

To process a transaction, every component of the payment ecosystem must work in tandem. Acquirers, issuers, payment providers, and more must come together to ensure that the payments process is optimized. What looks simple and takes seconds to complete actually requires complex connections with various stakeholders.

Why should businesses use multiple payment providers to process their transactions?

The interruption of payment processing causes declined transactions, checkout abandonment, and a decrease in customer retention. A multi-acquirer setup provides a seamless service that protects your revenue stream by integrating, through just one API, to multiple payment service providers and acquirers. If one service provider is unavailable (e.g. for technical reasons), you can automatically switch to another.

Enterprise merchants with single access to multiple payment integrations to acquirers, psps, gateway etc. can increase payment acceptance rates and lower their processing fees.

A multi-acquirer set-up is best practice for both regional and global merchants. It provides flexibility, independence, and protects payment flows from unexpected outages or other surprises.

A successful eCommerce needs uninterrupted processing of payment transactions. Integrating with multiple payment service providers protects payments. If one of the individual service providers is unavailable (e.g. for technical reasons), you can seamlessly switch to an alternative provider.

Smart transaction routing with IXOPAY
Route transactions to the best service providers

How can merchants optimize their payment paths/routes between multiple payment providers using routing technology?

A Smart Routing Engine optimizes the interplay between multiple payment service providers and payment methods. Payment Routing increases acceptance rates by routing transactions to the most appropriate acquirer, based on geo-location, risk assessment, and platform specific data. It calculates the best possible route across banks and MIDs, configuring rules in real time to track results and adapt possible scenarios depending on client needs.

A payment stack should provide the opportunity to connect to payment methods and payment services providers (PSPs) in multiple countries. To benefit from these connections, payments must be routed to the most appropriate psp and or acquirer. With a Smart Routing Engine, different flow strategies can be implemented for payments based on a set of personalised rules, increasing conversions while simultaneously cutting costs per transaction. 

Criteria that you can select for making payment routing decisions are card data, customer data, geolocation, risk assessment, and platform or application-specific data. Configure rules that enter into effect immediately via an easy, Drag & Drop graphic interface.

Key features of payment routing technology

When connected to multiple payment service providers, payment routing can help protect payments, reduce processing fees, and improve authorization rates. The IXOPAY routing engine is flexible and intuitive and has features such as:

  • Load balancing
  • Cascaded transactions
  • Geographical optimization
  • Risk based routing
  • Fallback routing

1.Transaction Load Balancer: Split and Distribute Payment Volume

Use the IXOPAY Smart Routing Engine to distribute payment volume across your PSPs. Load balancing–when you automatically switch transactions between various payment providers– ensures that the highest performing providers handle the essential parts of your transactions and helps mitigate risk for high-risk merchants. It also stops you from exceeding contractual volumes. Directly compare multiple solutions and use them in parallel.

2. Cascading

Set up cascaded transaction processing to protect the payment flow in the event of technical problems such as an outage, commercial disputes, or other business challenge. If the transaction failed with the first payment service provider, the IXOPAY Smart Routing Engine automatically forwards it to an alternative service provider and so on. This increases the chance of the transaction successfully completing.

3. Geographic Optimization and Cross-border Payments

Geographic criteria are relevant to both selecting the cheapest payment service provider and reducing decline rates. The larger the distance between the card issuer and the acquirer, the higher the processing fees tend to be. It also increases the risk of the transaction being declined. 

For example, the IXOPAY Smart Routing Engine (together with the Fee Management Engine) ensures that credit card transactions are forwarded to a regional payment service provider depending on the country of origin of the card. This reduces the transaction fees and increases conversion rates.

Choose to prioritize the display of local payment methods in the selection of available PSPs, e.g. SOFORT for customers from German-speaking countries, iDeal for Dutch customers, or PostePay for Italian customers. This is another simple and effective way to increase your conversion rate.

4. Risk-based Routing

Use the risk classification of an individual transaction to determine the ideal routing. Improve authorization rates and send transactions to the most relevant providers. Check risk scores based on rules and push transactions to the most appropriate providers, in order to improve chances of authorization. Catch fraudulent transactions and lower fraud rates with transaction risk analysis, which not only checks risk scores but also other account risk factors in order to confirm that no abnormal spending or behavioral patterns of the payer are identified to reduce payment fraud.

5. Transaction Fallback 

The technical availability of your payment service provider is mission-critical, particularly when batch processing transactions (e.g. for recurring services). The payment fallback routing occurs when a transaction cannot be completed in case of failed request (including false positives or payment provider outage/unavailability).

Fallback routing automatically retries transactions in case of errors such as failures, false positive declines, and system errors. It sends the transaction to a secondary payment service provider if the primary one is unavailable. This ensures that transactions are processed, bottlenecks are reduced and your bottom line is protected.

With false positives, instead of aborting the payment process, fallback rules can be set up to ensure business continuity by using a transaction retry. False positives occur when a user attempts to perform a legitimate transaction that is incorrectly classified as fraudulent.

With the IXOPAY routing engine, users benefit from smooth 3DSv2 implementation and full strong customer authentication support, enabling the uninterrupted processing of payments. IXOPAY’s flexibility and connectivity ensures that the best fees and conversion rates are met. To get the full benefits of payment routing and to provide a seamless user, payment data should be stored in IXOPAY’s independent PCI vault, allowing for a seamless customer experience. To protect your payment set up and grow your business, get in touch with our sales team for a platform demo today.

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