The e-commerce industry is experiencing a renaissance characterized by innovation and global expansion.
Historically, e-commerce payments have been limited due to fractured systems that required merchants to work with multiple payment service providers (PSPs) and handle regulatory compliance on their own.
Thanks to the rise of Payments Orchestration, we are witnessing a shift away from these types of payment systems and a movement toward a more unified e-commerce payment experience.
This article explores the growing role of Payments Orchestration in the eCommerce industry, including the key benefits payment orchestration offers to merchants and merchant aggregators.
The Rise of Payments Orchestration in 2022
Despite being a relatively new concept within the payments industry, Payments Orchestration has seen a tremendous growth in popularity over the last year.
The report highlights two key factors driving the growth of Payments Orchestration:
- The Rise of Buy Now, Pay Later (BNPL) Platforms: BNPLs are easily one of the hottest payment trends from 2022, enabling merchants and eCommerce platforms to widen their target audiences and land more sales from otherwise hesitant customers. Payments Orchestration facilitates the use of BNPLs (and many other popular local and alternative payment methods (LPMs / APMs)) by offering merchants and merchant aggregators the opportunity to employ payment methods without excessive technical development.
- Increased Retail Acceptance of Digital Payment Solutions: Digital payment solutions are vital for retail merchants striving to expand their horizons and become global entities. Payments Orchestration enables merchants and merchant aggregators to improve payment acceptance rates, increasing the opportunities to use alternative payment methods (APMs) and local payment methods (LPMs) that meet the demands of international customers.
What to Expect from the Payments Orchestration Market in 2023
For the eCommerce industry, the evolution of the orchestration market represents a unique opportunity for merchants and merchant aggregators to differentiate themselves from competitors.
As for PSPs, rather than using Payments Orchestration as a tool for sharpening their competitive edge, orchestration is instead shifting the industry’s attitude more toward collaboration.
In a November 2022 interview with The Paypers, Spreedly’s CEO Justin Benson stated:
“It's still early, but in 2023, we'll see increased communication from some of the larger PSPs about being more open to working with their competitors for the right types of merchants.”
The interview further highlights the growing demand from merchants for a payment process to capture every sale possible, spurring far greater interest in APMs and LPMs as a result. This goes hand-in-hand with the increasing development of government-driven real-time payments, such as Pix in Brazil, which eCommerce merchants can benefit from greatly with the right orchestration partner.
Launched in November 2020, Pix is an instant payment platform managed by the Central Bank of Brazil (BCB). Since its 2020 introduction, Pix now accounts for 11.5% of the total eCommerce transactions in Brazil thanks to its ease of use, security, and transaction speed.
How does this relate to Payments Orchestration, you may wonder.
Consider this: If more countries begin launching centralized payment platforms that are as successful as Pix, merchants and merchant aggregators operating in these countries will need efficient means for connecting to these platforms.
Orchestration facilitates this level of connectivity without burdening merchant businesses with the complex technical and regulatory tasks necessary to accept Pix or other country-specific payments.
How Payment Orchestration Benefits & Impacts eCommerce
One of the biggest impacts and benefits that Payments Orchestration could have on the eCommerce industry in 2023 is the ability to diversify and boost the connectivity of a payment stack.
A December 2022 PYMNTS article reveals that PSPs are having to expand their payment processing beyond traditionally closed payment tech stacks. As a result, new pathways to enter these payment stacks are arising for fintechs— such as payment gateways and fraud prevention providers — leading to greater diversification overall.
The PYMNTS article further emphasizes that:
“ — [Payments Orchestration is] a one-stop shop of technical integration and data sharing that offers the best mix of services to support the merchant’s business strategy. The positive end result is that end users, the customers themselves, enjoy the best possible user experience.”
Payments Orchestration gives eCommerce businesses greater flexibility in their payment strategy, helping with global expansion, preventing loss of sales, and alleviating pain points in the payment process.
Moreover, Payments Orchestration is the key to easily and efficiently enabling the relevant APMs and LPMs that an eCommerce business needs to attract customers in new regions. No matter where in the world a merchant or merchant aggregator is located, orchestration helps ensure the necessary payment methods are available and simple to integrate into an existing payment stack.
As Spreedly’s CEO, Justin Benson, puts it:
“The world is better off when payments are connected.”
Optimize eCommerce Payments Orchestration with Spreedly
The payments and eCommerce industries are becoming more intricately intertwined, driving the need for effective Payments Orchestration solutions for merchants, merchant aggregators, and Fintechs.
At Spreedly, our single API is designed to connect a global payments ecosystem.
Spreedly’s PCI-compliant vault enables eCommerce businesses to easily capture payment methods and utilize a custom mix of the optimal payment services for each business’s unique needs.
On the merchant side, Spreedly helps to remove the developmental burdens associated with compliance and connecting to multiple PSPs. As a result, merchants can achieve much faster growth rates in new regions around the world by establishing the ideal mix of payment services and methods.
For merchant aggregators, Spreedly can reduce the cost of building a compliant system while simultaneously attracting more merchants by offering the payment services they want and need.
Both merchants and merchant aggregators can maximize revenues by leveraging value-added services provided by Spreedly, such as Account Updater, Network Tokenization, and market leading digital wallets like ApplePay and GooglePay.
As for fintechs, Spreedly provides new opportunities to enter into the eCommerce space. Fintech companies can easily integrate their services into the Spreedly API, enabling all merchants and merchant aggregators partnered with Spreedly to utilize these services.
To learn more about how Spreedly can support eCommerce businesses in the era of Payments Orchestration, contact our team today.