About 18 years ago, Walmart, a pioneer in retailing, coined the term Omnichannel as a form of “assembled commerce” – an expansion of multi-channel retailing. Several years later, when the convergence of offline and online customer journeys was starting to be more evident, with the rise of click & collect as an example, the term Omnichannel made sense. What is still true today is that the meaning of Omnichannel is many things to many different merchants. The same is true for the latest term – “Payments Orchestration”.
In April, Edgar, Dunn & Company (EDC) launched the Introduction to Payments Orchestration PDF and it generated huge interest and debate. Two months later, the one thing that we are certain about is that, from a merchant’s perspective, the meaning of Payments Orchestration, like Omnichannel, will greatly differ from one merchant to another.
Orchestration is about aligning business requests with software applications and coordinating activities, workflows, services and data. We have already seen payment providers using terms such as “dynamic routing” or “smart transaction routing”, which can be bundled into the term “Payments Orchestration”. Since the end of 2020, EDC has been tracking around 18 to 20 different specialist companies that focus on providing Payment Orchestration solutions. This is a tricky task because some are not offering Payment Orchestration in the true sense of its definition. This is further muddled because there is not an official definition of Payments Orchestration.
At EDC, we believe there are four distinct components of any decent Payment Orchestration solution provider:
Let us focus on the customer’s online checkout experience. The checkout component is often the most passionately debated and contemplated part of the customer journey. Many merchants and payment services providers have spent thousands of hours designing and re-designing, followed by A/B testing and even more re-designing the customer checkout. It is a never-ending process that the most innovative of online merchants have their best people looking at.
Payment checkout must help the customer by offering the payment methods that they, regardless of their location, want to use and are able to use – such as domestic payment methods. The checkout experience must be intuitive for the customer. New regulatory requirements for Strong Customer Authentication (SCA) in Europe and the UK was expected to change the e-commerce experience. Payments Orchestration has meant to help to simplify this complexity. As it turned out, we now have a payment Brexit – a ‘Payexit’ where Europe has gone live with SCA and in the UK has not. For the UK, SCA has just been delayed again for another 6 months - the new go-live date is 14th March 2022.
A Payment Orchestration solution ought to be able to manage these complexities in any online checkout. The checkout must improve the chance of the consumer paying – increasing the conversion rate by giving the customer the right choices. A checkout might include card, wallet, bank transfer, crypto or finance options, such as Klarna or AfterPay. Payments Orchestration allows for intelligent presentment of multiple payment options based on the merchant's business rules. In other words, Payments Orchestration should be able to optimise the online customer checkout. Payment optimisation must equally optimise the Cost of Payment Acceptance (CoPA). By working with the EDC team using its 360° Payment Diagnostic, we can help merchants navigate the complex array of payment service providers and payment acceptance strategies and make it simple.
The content of this article does not reflect the official opinion of Edgar, Dunn & Company. The information and views expressed in this publication belong solely to the author(s).