Payments Orchestration

Your Guide to Intelligent Payment Routing for Optimized Payments

Optimize payment success and reduce costs with intelligent routing solutions

Written by
Donna Miller
Publication Date
April 2, 2024
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At the most crucial point in a transaction, a payment failure can cause serious problems for both your business and the customer trying to make a payment. 

Managing a payment infrastructure demands significant time, developmental effort, and technological resources. With so much going into the management and maintenance of this infrastructure, it is vital to ensure your payment system functions properly and efficiently.

Intelligent payment routing offers you a promising opportunity increase transaction success rates and breathe new life into your payment lifecycles. 

Let’s define intelligent payment routing and discuss the essential role it can play in your payment system. 

What is Intelligent Payment Routing & How Does It Work?

Intelligent payment routing refers to the sophisticated process of optimizing payment processing.

Performing intelligent payment routing — also called smart routing — requires a dynamic selection of payment gateways based on predefined criteria, such as currency or geographic location. 

The advantages of intelligent payment routing are far-reaching, helping to improve transaction successs rates, reduce processing fees, enhance security, and streamline your overall operations. 

Intelligent payment routing relies on advanced technologies and algorithms to analyze each individual transaction and select the best payment gateway or processor for each specific transaction. This process often accounts for factors like card type, banking providers, and historical transaction data to make informed routing decisions in real-time. 

From a technical standpoint, the process of intelligent payment routing typically involves five main steps: 

  1. Transaction Initiation: When a customer initiates a payment, your payment system receives the transaction request along with relevant details such as payment method, currency, and location.
  2. Routing Decision: An intelligent payment routing system can automatically analyze the transaction details and apply predefined rules to determine the optimal payment channel. 
  3. Dynamic Routing: Based on the routing decision, the transaction is dynamically routed to the selected payment gateway or processor, sometimes routing transactions through multiple channels to maximize transaction success rates and minimize processing fees.
  4. Transaction Processing: Once routed to a gateway or payment processor, the transaction undergoes authorization, authentication, and settlement processes as per standard payment protocols. The payment processor communicates with the issuing bank and card networks to complete the transaction securely and efficiently.
  5. Feedback & Optimization: Intelligent payment routing systems continuously monitor transaction performance and gather feedback to refine routing algorithms and improve decision-making over time. This iterative process ensures that routing decisions remain adaptive and optimized for changing market conditions and customer preferences.

The Business Advantages of Intelligent Payment Routing

Intelligent payment routing offers several business benefits that can significantly impact your business’s revenue, customer experience, and efficiency.

Let’s take a look at the top seven benefits of intelligent payment routing: 

  • Optimized Transaction Costs: By dynamically selecting the most cost-effective payment gateways and processors for each transaction, intelligent payment routing helps you minimize processing fees and transaction costs. This optimization directly contributes to improved profit margins and financial performance.
  • Increased Transaction Success Rates: Intelligent routing algorithms leverage data analytics and machine learning to identify the most reliable and efficient payment routes. As a result, you experience higher transaction success rates, reducing instances of declined payments and cart abandonment, and maximizing revenue potential.
  • Enhanced Global Reach: With intelligent payment routing, you can efficiently process transactions in multiple currencies and regions. By selecting payment gateways and processors optimized for specific geographic areas, you business can expand its global reach, attract international customers, and capitalize on cross-border sales opportunities.
  • Improved Fraud Detection and Prevention: Intelligent payment routing systems incorporate advanced fraud detection to identify and mitigate fraudulent transactions in real-time. By dynamically routing transactions through secure and trusted payment channels, you can minimize the risk of payment fraud and chargebacks, safeguarding their financial assets and reputation.
  • Streamlined Operations: Intelligent payment routing automates the process of selecting and routing transactions, reducing manual intervention and streamlining operational workflows. This automation saves you crucial time and resources that can be reallocated toward core business activities and strategic initiatives.
  • Enhanced Customer Experience: By ensuring seamless and secure payment processing, intelligent payment routing contributes to a positive customer experience. Customers benefit from faster transaction processing, reduced payment failures, and increased payment options, leading to higher satisfaction and loyalty.
  • Data-Driven Insights: Intelligent payment routing systems generate valuable transaction data and insights that merchants can leverage to optimize their business strategies. By analyzing transaction patterns, customer behaviors, and payment performance metrics, your business gains actionable insights to refine pricing strategies, marketing campaigns, and operational processes.

Expanding Your Business with Global Intelligent Payment Routing

Intelligent payment routing enables businesses to expand their operations globally by facilitating efficient and seamless transaction processing across diverse geographic regions. 

By leveraging intelligent routing algorithms and data-driven decision-making, your business can overcome key challenges associated with cross-border payments, unlocking new growth opportunities and gaining access to new markets and customers.

From a global expansion perspective, intelligent payment routing allows you to optimize transaction processing for different currencies and payment methods prevalent in various regions. This method of payment routing allows you to select the most cost-effective and reliable payment channels, ultimately minimizing currency conversion fees and maximizing transaction success rates. 

Additionally, intelligent payment routing enhances transaction security and compliance with regional regulations, mitigating the risk of fraud and chargebacks. This efficient approach to payment risk management instills confidence in customers, fostering trust and encouraging future purchases.

Gain the Power of Smart Routing with Spreedly

At Spreedly, our payment orchestration platform builds intelligence into the payment routing process.

Our smart routing capabilities not only select the optimal channels for each transaction but can also re-route transactions when your preferred gateways are unavailable. We leverage customizable routing logic based on your preferred payment methods and tools.

Spreedly’s smart routing can aid in increasing your acceptance rates, lowering operational costs, and developing an effective payment architecture that operates across multiple regions. 

Along with providing the technologies and expertise you need to leverage smart routing, Spreedly also provides the secure payment environment you need to achieve compliance. Spreedly maintains Level 1 PCI compliance to ensure all of our clients’ regulatory needs are met. 

Chat with the Spreedly team today to find out how smart routing can benefit you.

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