What Is Payment Orchestration?

The Payment Orchestration for Global Commerce indicates that the global market for payment orchestration platforms (POPs) is expected to grow by 20 percent each year from 2021 to 2026. For any business that needs to offer multiple payment options for customers worldwide, payment orchestration is a valuable service. If you’re new to this payment topic, keep reading to learn what payment orchestration is, the benefits of using this service, and how it works for businesses.  

Payment orchestration refers to integrating and managing the entire payment process, including payment authorization, transaction routing, and settlement. This process involves connecting to different payment service providers (PSPs), acquirers, and banks on a single, unified software layer. A payment orchestration platform is a type of software used to manage the online payment process for eCommerce businesses. Indeed, these services help optimize and simplify merchants’ typically complex payment process. Thus, a significant benefit of payment orchestration is efficiently managing your payment stack within one platform, rather than handling possibly dozens of integrations with different PSPs.

Multi-Provider Support and PSP Management

According to Edgar and Dunn, 57% of merchants globally use multiple payment processors. Payment orchestration offers centralized management of PSPs through a single API reducing the need for development time spent on payments, as they maintain integrations with a vast number of PSPs across the globe. Merchants also benefit by having one point of contact for any issues. 

Smart Transaction Routing

Payment orchestration offers smart routing or failover handling, automatically routing transactions to the most reliable provider. If a payment provider goes down, the transaction is passed to a backup provider. Likewise, transactions are processed using the most cost-effective processor or gateway, allowing for reduced interchange fees. 

Fraud Management

Payment orchestration platforms often include real-time monitoring of transactions to detect fraud before loss occurs. Fraud management can also include chargeback management and advanced security protocols like 3D-Secure and point-to-point encryption. 

Reporting and Analytics 

The ability to format and consume payment data across multiple PSPs gives merchants insight into payment performance metrics and customer behavior. Analyzing this data can inform decisions around future expansions, marketing efforts, and even product offerings. For example, if a company sees high adoption rates of digital wallets in a specific market, it may prioritize partnerships with processors specializing in these methods. 

Tokenization and Vaulting

Tokenization and vaulting are both data security techniques used to protect sensitive payment information. Tokenization replaces sensitive card data, like credit card numbers, with unique tokens that have no intrinsic value outside of the transaction. This means that even if the token is intercepted, it cannot be used in other contexts or by unauthorized entities. Tokens are usually mapped back to the original data through a secure database called a "token vault."

Vaulting refers to securely storing sensitive data (like card details) in a dedicated, secure database, known as a vault. This vault is generally maintained by a third party, isolating sensitive data from the merchant’s system, which reduces the scope of compliance requirements, especially under PCI DSS.

Both methods help reduce exposure to fraud and limit PCI compliance obligations by minimizing the amount of sensitive data stored directly within a merchant’s system.

Card Lifecycle Management

The lifecycle of a card refers to the time a card is issued by the cardholder's bank until the time the card expires. Payment orchestration platforms offer services like card account updater and network tokens to maintain the continuity of card-on-file transactions that are typical to subscription businesses. These services work to minimize the interruptions caused by lost or expired credit cards by automatically updating card numbers with little effort on the merchant's part. 

Payment Reconciliation

Payment reconciliation services simplify the complex process of aligning transaction data across multiple payment providers. By automatically consolidating and comparing data from various sources, these platforms enable merchants to match settlements, fees, and transaction statuses with ease. This automation reduces manual labor and minimizes discrepancies, streamlining accounting and financial reporting. Reconciliation through payment orchestration enhances financial visibility, ensuring that all payments are accounted for and supporting better cash flow management for businesses operating at scale.

Whether you are looking for a custom-built or all-in-one solution, there are several benefits to consider when choosing a payment orchestration provider. Take a look at the top benefits below to help you make an informed decision for your business. 

By using a payment orchestration layer, merchants can work with multiple local and global PSPs via a single integration. For example, a business that needs to offer an alternative payment method can easily connect with a PSP offering these customer payment preferences. This process is much easier than a merchant having to connect with third-party providers through different accounts or platforms. As a result, payment orchestration can streamline the integration process, saving businesses time and money to grow and reach new customers. 

A major advantage of payment orchestration platforms is that they give merchants access to a wide range of payment methods. As business needs change, they can easily add alternative payment methods for their ecommerce website via a single API connection. This is ideal for companies with customers worldwide with diverse payment preferences, such as credit or debit cards, mobile wallets, or “Buy Now, Pay Later.”

Businesses must find new ways to scale and adapt to the evolving payment industry. With payment orchestration, merchants will find it easier to achieve sustainable growth. For example, connecting to several payment service providers and payment methods via a single integration is significantly faster than connecting with each provider separately. With a wide range of payment options, merchants will create a positive checkout experience that leads to repeat, loyal customers. Indeed, this payment service allows business owners to accept region-specific payment types for domestic and international transactions easily. As a result, using a POP can help expand a merchant’s customer base globally. 

A Baymard 2024 study found that 22 percent of U.S. adults abandoned their cart because the checkout process was too difficult or time-consuming. Payment orchestration platforms can help prevent cart abandonment by creating a streamlined checkout experience for customers. One way to simplify checkouts is to offer multiple payment options and providers so customers can select their preferred purchasing method. By giving customers the freedom to choose how to pay, they will be less likely to leave an ecommerce site without completing a purchase. After all, customers do not want to waste time retrying their payment or using a new method. This service can reduce customer experience and lead to customers questioning a site’s trustworthiness. Indeed, better checkout flows will increase conversion rates, which means more profits for merchants.  

While it may make sense to use a single PSP for new businesses, growing organizations will likely need to connect to multiple providers as they expand. Unfortunately, the cost of implementing and maintaining these connections can quickly add up, but a payment orchestration platform can decrease payment processing costs. Specifically, POPs can do this by incurring fewer setup fees for using several integrations, avoiding hidden fees that some providers charge for automated transaction routing, and routing transactions to processors with the lowest costs.  

Any business knows how quickly things can get out of hand regarding tracking data analytics. Aside from simplifying the payment process, payment orchestration platforms provide a central location to track and report on payment data. This data encompasses every PSP and payment gateway baked into the merchant’s payment stack. Businesses can easily view, access, and share this data – securely and compliantly – with relevant entities, such as financial organizations or fraud detection companies. With quick access to everything, merchants can determine how to improve their business operations with real-time analytic reports. 

Payment service providers must meet PCI compliance and other security requirements for digital payments, including payment orchestration platforms. Luckily, POPs are typically built on PCI-compliant vaults. In turn, this will reduce compliance scope for businesses. Additionally, payment orchestration providers stay up-to-date on the latest security rules to assist merchants in maintaining compliance with any PSP they use. To secure and protect customers’ payment information, POPs may also offer tokenization and fraud prevention services.  

Businesses that accept online payments depend on payments being successfully processed. Indeed, this ensures that payments are received for their products or services, so they can continue to grow. A key benefit of using payment orchestration is finding the best payment route to send digital transactions. One example would be sending payments to several payment processors, which can result in more favorable processing fees and help reduce false declines and, thus, a loss of revenue. Indeed, sending transactions to ideal payment providers can increase the number of authorized payments and conversions. 

1. The customer adds a product or service to their cart on an e-commerce site. They select their preferred payment method from the merchant’s list of options at the checkout page.
2. Once the customer places the order, their payment details are sent to a payment gateway.
3. The gateway encrypts the cardholder’s payment information and then sends it to the acquiring bank and payment processor to secure this data.
4. Once received, the acquiring and issuing banks communicate to verify and authorize the pending transaction.
5. Typically, the acquiring bank will send the authorization response code to the payment gateway and the merchant. However, payment orchestration platforms use a different approach. If a payment fails, pending transactions are automatically routed to an additional payment processor to decrease the number of false declines.
6. If sending the transaction to the alternative payment processor works, the payment is approved, the customer doesn’t get frustrated with failed payments, and the merchant gets paid. It’s a win-win situation for all parties.

Additionally, POPs can manage payment settlements and billing, and create real-time payment reports within a single dashboard. Indeed, this makes it convenient for merchants to handle the entire payment process without leaving the platform.  

When choosing a payment orchestration platform, it’s important to consider your corporate strategy and business goals. For example, does your business operate in multiple countries or accept various currencies? These factors and more are critical considerations as you navigate the selection process. 

Payment Connectivity

International merchants or those that plan to expand globally in the future should consider providers that offer integrations with respected payment service providers in the geographical areas where they do business. The more integrations that are already built will significantly reduce your development time and increase speed to market.

Plan for Growth

Prepare for both immediate and long-term growth by identifying payment methods to support now and those that may be needed later as customer preferences shift. Consider future payment channels, like payments via chat or social media, that could enhance convenience and accessibility as your business evolves.

Personalized Customer Experiences

Assess how the provider can personalize the shopping experience by offering customized payment options and relevant promotions. Can they analyze past transactions to recommend products? Do they enable returning customers to use their most recent payment method easily?

Security and Compliance

Security shouldn’t come at the cost of a smooth user experience. Make sure the provider uses methods like 3-D Secure and tokenization to boost security without adding steps that might inconvenience customers, like manually entering card details or performing extra authentication.

Additionally, the vendor you choose should offer methods to reduce PCI scope. By reducing or eliminating payment data stored on your network, you significantly reduce the burden of complying with PCI standards and the risk of data loss. Look for options like tokenization and hosted payment pages that shift the liability of compliance to the vendor. 

Training and Support

Training and support are critical when selecting a payment orchestration provider, as they ensure your team can effectively manage and optimize the payment platform. A robust training program helps your staff understand the features and capabilities of the system, speeding up the onboarding process and reducing potential errors. Ensure you understand what resources are available, including online training and documentation and access to personalized training with customer success representatives. Reliable support services are equally important, as they provide quick solutions to technical issues, minimizing downtime and preventing disruptions to customer transactions. Ask about support hours, the level of support engineers, and SLA terms.

Pricing Structure

Cost is a significant consideration when selecting a payment orchestration provider. A detailed cost analysis will help you avoid hidden fees, as well as an understanding of the various pricing structures. Understand the differences between bundled service pricing and individual service pricing models. Bundled pricing can offer simplicity but may not be cost-effective for all businesses.

Calculate the total cost per transaction across the entire payment journey. Include direct costs as well as indirect costs, such as customer support and dispute resolution. Lastly, consider the costs of expanding into new markets. Understand the fees associated with different payment methods and currencies, which can significantly impact profitability.

Online shopping offers convenience, product diversity, and cost savings, and according to recent statistics, it is definitely here to stay. In 2024, the global number of online buyers reached 2.71 billion, reflecting a 2.7% annual growth. This figure is expected to rise further, reaching 2.77 billion online shoppers worldwide by 2025. Whether you own a small, medium, or enterprise business, it’s imperative to use payment technology to optimize your online payment process.

As illustrated in this article, payment orchestration is a robust service that can streamline your payment flows. Instead of wasting time and money connecting to different PSPs separately, paying their fees, and managing various compliance regulations, you can handle the entire payment process from start to finish on a payment orchestration platform. 

Further, POPs help you increase the number of approved payments by automatically routing transactions to the best payment providers. For customers, payment orchestration can help provide a more frictionless, streamlined checkout experience that leads to repeat sales.  

While payment orchestration has numerous benefits, your organization may require a custom payment solution that is not readily available with most POPs. In this case, consider partnering with a reputable tokenization provider that offers payment orchestration and data protection all-in-one. Leading providers like IXOPAY offer the flexibility and freedom to route cardholder data via a single point of integration to connect to any combination of processors and gateways. A tokenization platform can help maintain PCI compliance, maximize payment acceptance rates, and secure payment data. Specifically, this is done through tokenization, which involves replacing the sensitive data with randomly generated, unique tokens that do not contain any of the original data. If a breach occurs, cybercriminals will only find tokens that have no real value on their own.