Digital payments make up the largest segment of the fintech market—worth an impressive $8.5 billion as of 2022, a figure which is expected to nearly double in the next four years.
And as digital payments have become more accessible, so too have the payment solutions available to the market.
Payments Orchestration is one of the biggest innovations in the payments industry. It offers merchants and merchant aggregators (often called platforms) an opportunity to build and enhance the customer experience while simultaneously reducing operational costs and regulatory burdens. It’s a particularly promising innovation when looking to the future of digital payments.
This white paper takes a deep dive into payment orchestration. We put payment orchestration platforms under the microscope to discover how these systems work and how they can benefit a wide variety of organizations.
To provide the best overview of payments orchestration, this paper is divided into six key sections:
1. What is Payment Orchestration?
2. Considerations for Payments Orchestration Implementation
3. How Payments Orchestration Impacts the Customer Experience
4. Utilizing Payments Orchestration for Global Expansion
5. What to Look for in a Payments Orchestration Provider
6. Why You Should Partner with Spreedly for Payments Orchestration
Let’s begin our journey into the wide-open horizon of payments orchestration.
What is Payments Orchestration?
Payments orchestration is an approach that leverages data and connections to multiple payment services in order to deliver the best possible payment experience to customers and the optimal revenue to a merchant. This helps alleviate many standard pains which come with along with accepting payments digitally. Orchestration helps merchants avoid significant regulatory burdens, easily access all necessary payment service providers (PSPs), and improve the customer experience.
- Focus developer resources away from building PCI compliance and multiple gateway connections
- Grow faster by entering new markets with the right mix of payment services
- Maximize revenue by optimizing each transaction for revenue, cost, and customer experience
- Attract more merchant customers by supporting the payment services they demand
By contrast, without a payments stack utilizing orchestration, this same merchant would need to build and maintain connections with many PSPs, local payment methods, and fraud solution providers directly.
Its ease is music to merchants’ ears and balance sheets—and that’s why the payment orchestration platform market size is set to be worth over $3.7 billion a year by 2028, growing at a compound annual rate of 22.4%, according to an August 2022 market report.
The report adds:
“In addition to making it easier to access an unlimited number of payment providers and methods (such as PSPs, acquirers, gateways, processors, and security vendors) through single API integration, a payment orchestration platform also enables the company to expand more quickly into new markets while maintaining the necessary flexibility.”
However, you’ll still have to make the decision—what payment orchestration solution should I go with? Not only are there distinct offerings by many players, but the offerings aren’t exactly the same. To further our understanding of payment orchestration, let’s dig into the different types that fall beneath the orchestration umbrella.
Agnostics vs. Augmented Payment orchestration
In general, payment orchestration can be divided into two main categories: agnostic payment orchestration and augmented payment orchestration.
Agnostic payment orchestration is widely thought to be more beneficial—though both have advantages—because it is easier to optimize payment services across PSPs. It enables merchants and merchant aggregators to remain independent from any single or specific payment organization or provider. Users of agnostic payment orchestration platforms can pick and choose the right tools and services for their needs without the interference of the platform.
Moreover, agnostic payment orchestration offers greater operational flexibility, allowing merchants and aggregators to adjust their systems based on industry trends, regulatory changes, or other considerations.
On the other hand, augmented payment orchestration can be an excellent choice for those who are primarily interested in a core benefit or service offered by one provider. This is a solution offered by a payment company that lets merchant customers process payments outside of its proprietary stack. . The key factor to keep in mind is that augmented platform builders will often prioritize their own competitive interests rather than building a product that is inclusive and accessible to all of your customers.
This can be problematic, especially if you care about providing your clients with the best possible payment solutions, which drives checkouts and increases spend.
Mark Beresford, the Director and Head of Retail Payments Practice at Edgar Dunn, says it best in a recent interview with Spreedly:
“To be a true payment orchestration platform, you've got to be the merchant advocate.”
Solution-centric orchestration is built for specific uses — which makes sense, given that merchants, aggregators, and fintechs all have distinct needs with their payment experiences.
For merchants, maybe those problems are chargebacks and friendly fraud within your payment system. To combat this challenge, you may research different payment orchestration platforms and settle for one that offers tailored fraud tools and solutions.
But the overarching conclusion is that solution-centric orchestration is catered specifically to a certain kind of user, often to solve pervasive problems within the industry.
Both agnostic and augmented payment orchestration platforms can be considered solution-centric. It ultimately depends on what a client is looking for and whether they are more interested in one specific solution or a robust, feature-exhaustive end-to-end payment stack.
- Want to find out more about the different types of payment orchestration? Check out this article: What is Payments Orchestration?
Considerations for Payment Orchestration Implementations
Gaining a greater understanding of payment orchestration is only the first step. To actually benefit from the solutions offered by payment orchestration platforms, you’ll need to dig into how to efficiently and effectively implement them.
A payment orchestration implementation can differ depending on who the implementation is for and the purposes they intend to use it for. For example, a merchant may use a payment orchestration solution to enhance the customer experience and drive customer loyalty. On the other hand, a merchant aggregator may use an orchestration platform to attract more merchants and increase revenue.
One of the immediate advantages of a payment orchestration implementation for all clients is the reduction of operational costs and other implementation-related burdens. According to a July 2022 PYMNTS report, 54% of U.S. merchants and 62% of UK merchants that use payment orchestration report that payment orchestration options helped reduce overall costs.
Rather than having to build out a functioning payment system by implementing multiple payment gateways, a payment orchestration platform enables you to skip building and maintaining the necessary connections to gateways, PSPs, local and alternative payment methods, fraud tools, and other solutions you need. You can focus on selecting the right mix of tools regardless of your organizations needs today and be sure that you can pivot should those needs change. In this way, payment orchestration platforms offer merchants and merchant aggregators the opportunity to establish a reliable payment network without expending resources and wasting time.
With this in mind, let’s look at three key considerations for payment orchestration implementations, as well as a closer examination of orchestration use cases.
Implementation Considerations for Payments Orchestration
Unless you have a robust IT department with deep experience in the payment orchestration industry, you’ll probably find that using an orchestration platform will be a better use of time for your product people, engineers, and other stakeholders.
That said, there won’t be much value to extract from a payment orchestrator without considering these factors:
- Clearly Defining Timing and Impact: To ensure your implementation goes smoothly, you’ll need to consider how much time you can expend on an implementation project. More importantly, you need to consider the people aspect—does your team have the time to facilitate an implementation? And if you do, what would that look like? How much time will it take from senior stakeholders? Many companies have product leaders and engineers to help decide how to build these implementations. Still, you’ll also
need to consider its impact—especially which of your business departments, staff members, and clients will need to be engaged with the changes. Defining the timing and impact of your implementation in this way helps you to set better boundaries and goals with your payment orchestration platform provider.
- Setting Overarching Objectives and Success Indicators: If you are working with a provider that offers tailored payments orchestration solutions, it is essential to set primary and secondary objectives, as well as define success indicators that can measure an implementation’s performance and overall effectiveness. After all, you will be spending money —not just to build these implementations, but for the services an orchestrator is offering. Having a straightforward overview of your main objectives will help you and your orchestration partner to better configure a platform solution.
- Maintaining a Collaborative Attitude: Payment orchestration is all about collaboration and unity. Rather than requiring a million different implementations, an agnostic payment orchestration platform enables you to access all the necessary payment services and solutions from a single software layer. For that reason, you should maintain a collaborative attitude and a willingness to experiment with different approaches to find the one that works best for your particular business or use case.
- Need greater insights on how to implement payment orchestration effectively? Read our article on What You Should Know Before Implementing Payments Orchestration
Use Cases for Payments Orchestration
Let’s look at three of the top use cases for payment orchestration:
- Merchants: For merchants, payment orchestration is helpful for overcoming the technological complexities of building reliable payment infrastructure. By outsourcing that responsibility to a company that handles the heavy lifting, merchants can shift their focus to optimizing customer experiences—that often leads to revenue. The right payment orchestration solution can also enable merchants to customize their payment infrastructure, mixing and matching payment services until they find the ideal combination for their business purposes.
- Merchant Aggregators: Like merchants, merchant aggregators can leverage payment orchestration to maximize revenue. However, in addition, merchant aggregators must also consider how to optimize their services for the benefit of merchant clients. A payment orchestration platform enables merchant aggregators to attract more merchants — both domestically and internationally — by supporting a wider variety of payment services.
- Fintechs: Fintechs certified as financial institutions can be subject to stricter regulatory requirements. Payment orchestration platforms help fintechs overcome this regulatory burden and maintain up-to-date compliance.
How Payment Orchestration Impacts the Customer Experience
Customer centricity resides at the heart of what payment orchestration experts hope to accomplish.
An end-to-end payment stack including orchestration can significantly enhance the customer experience, leading to greater satisfaction and retention rates.
Not only this but an optimized customer experience can also help to attract and onboard new customers.
Payment orchestration platforms and solutions optimize the customer experience in a variety of ways, including by preventing payment declines. This is made possible through integrating a wider range of payment methods and gateways, all of which are accessible through a seamless checkout experience.
A 2022 Spreedly case study reveals that Zebrands — a brand-building platform — was able to reduce false declines by 35% through the use of payment orchestration.
According to Guillermo Villegas, co-founder of Zebrands:
“It was something super good for us to find [Spreedly] and we implemented Spreedly as this orchestration system that will allow us to create these connections to these different payment gateways and processors. And by now our acceptance rates increased and we are just rejecting between 5% to 8% of the transactions. So it was a jump that definitely was impressive for the business.”
Improved acceptance rates are, of course, only one piece of the orchestration puzzle. Like with the specific advantages of different use cases, payment orchestration can have key benefits for customers depending on who the target client for the orchestration solution is.
Let’s now take a closer look at how payment orchestration can enhance the customer experience for merchants, merchant aggregators, and fintechs.
One of the most prominent benefits that payment orchestration offers to merchants (like SeatGeek and Rappi) is the ability to outsource security and compliance activities.
Rather than expending developer resources on regulatory compliance, payment orchestration enables merchants to minimize PCI, 3DS, PSD2, SCA, and other major regulatory burdens.
Key benefits of payment orchestration for improving the customer experience include:
- Single API Simplicity: A strong payment orchestration platform (like Spreedly) should provide you with a single API that can connect you to any payment service. This reduces a merchant’s development burden, eliminating the need to build complex integrations.
- Growth Opportunities in New Markets: Payment orchestration enables merchants to enjoy a global ecosystem of payment services, making it easier to expand into new markets. Easy integration of new and local payment methods positions merchants to enter new markets faster by utilizing the right mix of payment services that match the merchant’s business needs.
- Improved Customer Checkout Experiences: Thanks to the wide variety of payment services a merchant can access via payment orchestration, the customer checkout experience can be vastly improved. This is accomplished through key payment functionality features, such as fraud detection tools that minimize instances of suspicious behavior.
- Maximized Revenue: With payment orchestration, a merchant can enjoy services like smart routing that ensure each payment is routed to the ideal service. As a result, merchants can significantly decrease the occurrence of false declines and improve their authorization rates. By optimizing transactions in this way, merchants can boost revenue and improve the customer experience, all while cutting operational costs.
Check out more advantages of payment orchestration for merchants in our article: How Merchants of Record Orchestrate a Better Customer Experience
For merchant aggregators like Fonteva and Chargebee, payment orchestration enables merchant aggregator development teams to focus more closely on customer needs while reducing business risk.
Along with facilitating a faster onboarding process for an aggregator's clients, payment orchestration also enables faster expansion into new markets and new opportunities for generating revenue.
Payment orchestration helps merchant aggregators improve customer experiences by:
- Reducing Payments Infrastructure Costs: Payment orchestration helps merchant aggregators reduce the developmental resources spent on security and regulatory standards. In turn, development teams can spend more time building differentiation into a merchant aggregator’s business model rather than maintaining each individual payment integration.
- Attracting More Merchant Clients: These days, merchants operate all over the globe, requiring merchant aggregators to provide merchants with the payment methods and services they need for international business. Payment orchestration allows merchants to work with merchant aggregators while still using their preferred payment gateways and other payment services.
- Minimizing Development Effort: Along with reducing the development effort required for security and regulatory compliance, payment orchestration platforms can assist merchant aggregators by providing on-demand access to hundreds of payment services, fintech providers, fraud tools, and other payment integrations.
- Increasing Revenue with Value-Added Services: With the support of a payment orchestration platform, merchant aggregators can maximize revenue through value-added services. For example, through Spreedly’s payment orchestration platform, services like the Account Updater help aggregators keep all customer payment information up to date, enabling merchants to carry out faster checkout processes that make working with an aggregator all the more beneficial.
- Want to know more about enhancing the customer experience as a merchant aggregator? Take a look at our article How Merchant Aggregators Orchestrate a Better Customer Experience
Fintech companies have been up and coming for some time now, making the fintech space more competitive than ever. As a result, fintechs need a payment solution that provides them with the opportunity for international expansion and global growth.
This goes hand-in-hand with the customer experience, as enabling a global-friendly payment system can ultimately benefit a fintech’s clients as well.
Optimized payments are a crucial component of any fintech business model. In turn, payment orchestration offers fintechs the opportunity to fortify and improve their approach to payments.
According to Spreedly’s Strategic Partner Manager Jessie White:
“Fintechs are unique when it comes to payment orchestration, because there is truly no room for error. If a fintech company is going to expand to their user or merchant base, get new funding, or launch in a new market, there really can't be any doubt about their payments' acumen or ability.”
Benefits of payment orchestration for fintechs include:
- Acquiring New Customers: With payment orchestration, fintechs can more easily and efficiently enable more payment methods and services. Additionally, gaining access to a wide range of payment services makes it simple to attract clients from new geographies and differentiate a fintech’s value proposition from competing businesses.
- Boosting Customer Retention: For fintech companies, customer retention is just as crucial as customer attraction. Payment orchestration assists fintechs in boosting customer retention by offering customers the ability to connect to multiple different payment services. Customers can then work within the payment ecosystem they prefer, while also enjoying greater transactional flexibility and global coverage.
- Increasing Revenue via Value-Added Services: Fintechs need to differentiate themselves from their competitors — and the best way to do that is through value-added services. For example, Spreedly’s payment orchestration platform offers value-added services like Smart Routing and Network Tokenization that boost both the efficiency and security of a payment system.
Utilizing Payment Orchestration for Global Expansion
Though we have briefly touched on the subject, one of the top advantages of payment orchestration for all use cases is the opportunity to improve expansion and localization into international markets.
For merchants, merchant aggregators, and fintechs, expanding into new geographies could be crucial in growing their business. That said, global expansion can be tricky — if not near-impossible — without first considering how a payment infrastructure will adapt to the unique payments needs of a given market and its customers.
Payment systems already involve many moving parts and involve several different parties, from PSPs to intermediary banks. Operating globally increases the complexity of these systems, as a business must contend with differing regulatory requirements and payment expectations around the world.
Enter payment orchestration platforms which — among other things — are designed specifically to address and simplify the needs of global expansion.
The Importance of Local Payment Methods
Local payment methods refer to the payment methods that are widely preferred in specific regions.
These can include both globally used payment methods (such as traditional card transactions and alternative payment methods like PayPal) and region-specific payment methods (for instance, in the Netherlands, Dutch people can access a region-specific online banking service called iDEAL).
However, simply offering local payment methods is not enough to succeed in global expansion.
To offer a truly satisfying experience to international customers, companies must focus on integrating localized payment methods. Customers abroad are going to be most interested in companies that have optimized their payment systems to handle local payment method transactions in near-instant timeframes.
This transaction speed consideration is also crucial to ensuring a company has optimal up- time in new markets. A payment system that cannot quickly integrate new payment services may struggle to keep up with the technological demand of a growing system.
Payment orchestration offers a key solution to this problem, enabling a company to integrate and activate new payment methods in mere minutes.
Experimenting in New Target Markets
Expansion into new international markets comes with trial and error.
One essential benefit of payment orchestration for global expansion is the ability to experiment with your platform configurations. Each market is different and will subject a company to the differing customer and industry expectations. This makes the freedom to experiment critically important.
With payment orchestration, a merchant or merchant aggregator (or another fintech business) can access markets at lightning speed and build the necessary connections to achieve greater operational flexibility.
For instance, using a payment orchestration platform, a merchant could adopt a multi-provider approach and partner with local experts all from a singular payment orchestration layer.
Circling back to supporting experimentation, payment orchestration also provides the freedom to mix and match providers, services, and tools to develop the ideal payment infrastructure for specific regions — all without disrupting the payment set-ups that work better in other regions.
What to Look for in a Payment Orchestration Provider
If you are ready to adopt payment orchestration into your business model, your next key step is to determine what qualities to look for in a payment orchestration provider.
A good starting point is to look for an end-to-end payment orchestration platform. Payment orchestration takes its best form as a platform that can serve as a singular technology layer to add to your payment stack. This can help you to simplify the processes of:
- Integrating new payment services and payment methods
- Collect and distribute payment funds
- Perform account reconciliation and other accounting activities
- Maintain exceptional system organization
As for what to look for in a payment orchestration platform, consider these six key capabilities:
- Instant Marketplace Access: To operate a global business, you need access to a marketplace of payment services that can be mixed and matched according to your exact needs. A multi-provider approach is essential for establishing a well-functioning payment infrastructure that can service customers in many different geographic regions. Look for a payment orchestration platform that offers instant access to a payment services marketplace with global solutions.
- Deep Partner Relationships: Having access to a marketplace of hundreds of payment services is great — but to truly benefit from payment orchestration, you need a platform partner that has built deep business partner relationships with payment service providers. With these types of relationships in place, a payment orchestration platform can more easily offer customization and support to each of its clients.
- Market Momentum: Momentum is essential in the payment orchestration space, especially considering how relatively new the payment orchestration market is. When picking a platform partner, look for a company that has gained momentum in the industry. Case studies are an excellent way to assess the momentum of a payment orchestration platform, so seek out a company that offers case study documentation.
- Global Customer Support: The ability to support payments from customers all around the world is crucial. A payment orchestration platform should provide you with the capabilities for enabling local and alternative payment methods, as well as traditional payment methods. Along with looking for a platform that offers such payment methods, you should also seek out a platform that has a proven track record of success with international customers and business partners.
- Exceptional Intelligence Advantage: Advanced data functions have become a necessity within the payments industry — especially for intelligent routing that can reduce the rate of false declines. The payment orchestration platform you choose should offer you exceptional data and intelligence capabilities that can handle high volumes of transactions with ease.
- Expert Support & Resources: Having a platform partner you can fully trust is paramount. When looking for a partner, search for a company that offers not only excellent technology but also ongoing support, access to resources, and professional consultations.
- Need more convincing? Read our article What to Look for in a Payments Orchestration Solution for more insights into choosing the right platform partner.
Why You Should Partner with Spreedly for Payment Orchestration
Spreedly has championed payments orchestration since before the industry put the ‘orchestration’ in payments.
Spreedly’s platform provides growing companies with access to hundreds of different payment services, methods, and tools through a single API. Its API simplifies your platform management, while enabling you to get to bring your product to market with confidence and speed.
Here’s how Spreedly is already helping companies like yours:
Agnostic Payment Orchestration
As a payment orchestration provider, Spreedly takes an entirely agnostic approach.
To offer comprehensive support to our clients, Spreedly ensures that each client has the opportunity to experiment with services, tools, and configurations to discover the combination that works best for them.
At Spreedly, we support virtually any payment service, enabling you to differentiate your business and services from those of your competitors.
Plus, Spreedly’s value-added services are hard to beat.
According to Spreedly’s Senior Product Manager Nur Hayat:
“Spreedly's platform lets you provide payment services like account updater and network tokens to refresh credit cards and keep customers transacting, plus smart routing and failover technology to help avoid downtime, increase top-line revenue and optimize authorization rates.”
Payment Orchestration Implementations
Payment orchestration implementation has never been easier than with Spreedly.
Spreedly’s payment orchestration platform is Level 1 PCI compliant, as well as being on the Visa Global Registry of Service Providers and the MasterCard SDP Compliant Registered Service Provider lists.
These built-in compliance capabilities enable you to reduce both the cost and risk associated with payment orchestration implementations. You can fully outsource compliance burdens to our PCI-compliant vault, as well as leave gateway integration maintenance to our team of experts.
Enhanced Customer Experience & Global Expansion
Payment orchestration platforms can be difficult to configure without the right support.
Thanks to Spreedly’s 120+ payment services, development efforts can be minimized significantly, allowing you to future-proof your orchestration and payment strategy.
Plus, Spreedly offers a variety of value-added services like Account Updater and Network Tokens that help you to boost customer transactions and increase top-line revenue — all while leveraging new opportunities to expand into international geographies.
Get Started with Spreedly’s Payment Orchestration Platform Today!
By partnering with Spreedly, you gain the advantage of a compliant, highly secure payment orchestration platform with hundreds of vital capabilities.
With Spreedly, you can accelerate your growth while also enabling greater operational flexibility. Whether you are expanding into a new region, or are trying to balance a lot of new payment demands, Spreedly’s platform and API ensure you have access to the services and tools you need to optimize up-time in new markets.
Don’t just take us at our word — after creating your Spreedly account, you can upgrade to a production trial and get free API calls to test out before committing.
To implement Spreedly’s payments orchestration platform with speed and confidence, get in touch with our team of experts today.
Interested in more on payments orchestration?
Click here to read our comprehensive guide to payments orchestration!
What are alternative payment methods? From our friends at PPRO
Local Payment Methods – Think Locally To Grow Globally From our friends at Rapyd