Connected Payments in an Economic Downturn

2022 was a year of two halves. In the first half of the year, merchants were optimizing for top line growth and capturing revenue from buoyant consumers. Buy Now Pay Later and Crypto payments were just two examples of innovations being embraced to capture incremental revenue. Spreedly was busy managing inbound requests from merchants who wanted to expand rapidly into new geographies and business verticals and needed the benefits of Payments Orchestration to achieve their lofty revenue goals. 

Summer 2022 was the beginning of change (some might argue it began as early as April or May). Runaway inflation would result in the US Fed increasing the cost of borrowing money, forcing other Central banks to respond and generally making consumers tighten their wallets. Merchants responded by shifting their attention to the bottom line. While it’s hard to predict 2023, we head into the year with many merchants embracing the “Do More with Less” mantra. 

Fortunately, Payments Orchestration is a powerful tool to help improve the bottom line.

People

Our customers have found value in leaning into Spreedly’s expertise and development teams to build and maintain the myriad of integrations necessary to enable payments worldwide. In many cases, we can operate as a budgeted line item that frees up headcount to be deployed more strategically. We can lighten the load related to PCI compliance, vaulting and tokenization, and integration with payment service providers (PSPs).

During good times, we heard over and over again that good payment people were hard to find. Partnering with Spreedly allowed our merchants to focus on using scarce resources to build the unique features that drive revenue and rely on Spreedly to make all the payment connectivity pieces work. 

Now budgets are tight, and there are fewer open reqs for new employees. Spreedly’s role is still the same, but the rationale is different – we still need to innovate, compete and maintain our unique offering. A payments orchestration layer focused on supporting the latest payment offerings is a critical pillar supporting the overall goals of our merchants.

Benefits From Working with Multiple Payment Providers

Our customers usually adopt Payments Orchestration to diversify the mix of gateways / PSPs available to them and their customers (in the case of merchant aggregators and platforms).

During good times this means growing faster by being in every region with a unique in-country payment provider, sometimes with multiple providers in the same region competing for your business.

When times get more difficult, you rationalize your providers, perhaps even shutting down regions entirely. You then look at your providers and work with those with the highest success rates to ensure every sale is captured. Your pricing is competitive as your PSP understands traditional lock-in is a thing of the past.

Even with multiple providers and the security that comes from diversifying, our customers are diving in on ways to drive down costs further.

• Route payments to maximize success rates and drive down processing costs (in-country processing vs. cross border) 
• Default to PSPs who support network tokens to ensure higher success rates and reduced fees 
• Attack soft declines with intelligent retry capabilities
• Utilize the value-added services an orchestration layer provides to reduce the requirements you place upon your payment provider  

Simply put, Payments Orchestration is a chameleon that can quickly pivot from topline to bottom line whenever applicable.

The Rise of APMs and LPMs

The interest in alternative payment methods (APMs) and local payment methods (LPMs) is accelerating, and we will continue to see that grow in 2023. Similar to the challenges merchants face when typing to integrate and maintain all of the required gateway connections they need to support their business, APMs and LPMs are proving to be a similar effort. 

eCommerce teams don’t just want payments to work. They must ensure that they capture every sale possible, leading to more interest in LPMs. Pix in Brazil, for example, has caught the attention of governments around the globe. 

During good times, support for APMs meant capturing every possible sale. During tougher times, APMs can return margin to the merchant via lower processing fees vs alternatives.

Orchestration has the opportunity to be a valuable resource in meeting the demands created when adopting new payment methods.

Controlling the Payments Stack

During good times, software platforms that onboard merchant customers utilize Spreedly to quickly add new PSP endpoints to win new customers. WIth the changing economic environment, these platforms focus less on capturing new logos at all costs and instead work to provide value added payment services to their merchants. Spreedly works with software platforms to help them deepen their relationship with their merchants through a range of services tackling fraud, APMs, automatic failover and more.

We continue to believe the world is better off when payments is connected. Whether it's supporting a small payments team tasked with doing more, adding more value while cutting costs, or leveraging orchestration to adopt the right mix of LPMs, we believe efficiency and value will become the biggest driver for payments teams. 

Payments Orchestration is designed to maximize your strategic flexibility no matter the economic environment.

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