Harmonising Payments & Digital Transformation

Harmonising Payments & Digital Transformation

Mark Beresford
September 6, 2021

During the majority of 2021, Edgar, Dunn & Company (EDC) has been tracking around 20 different specialist companies and we have built a comprehensive picture of the different Payment Orchestration Platforms (POPs). The digital payments market and the POP that serve this market has been experiencing rapid growth partly driven by the pandemic and partly because of the continued adoption of Alternative Payment Methods (APMs) such as Buy Now Pay Later (BNPL) payment options. Retailers who wish to expand require access to an expanding range of APMs and payment services to meet customers’ needs. Since the turn of the new millennium, the payments industry has become increasingly fragmented and complex, there is a growing number of payment methods that retailers can accept, and consumers can choose to use. The emergence of local payment schemes and the wide range of channels that retailers can sell their products has meant that as they start operating at scale, finding new consumers in new markets, across multiple channels can prove to be inefficient by operating a single PSP/Payment gateway or acquirer to accept payments. Today, we see a new breed of middleware FinTech companies that are offering Payment Orchestration Platforms (POPs) and solutions to different types of retailers to help simplify the connections to multiple Payment Service Providers (PSPs), payment gateways, fraud prevention technologies, eCommerce platforms and acquirers.

Payment Orchestration

Though payment orchestration is not a new idea, what is different this time is the accelerated drive toward digital transformation and the advantages of cloud computing. So many retailers have been building integrations to new payment providers and payment options and they have effectively been duplicating effort. Skilled development resources have been rapidly running out and retailers are finding that to add a new payment method can take months. Retailers have found that operating without redundancy and tied to the same pricing regime and services can limit growth. Integrating with multiple PSPs and payment gateways can help retailers to avoid dealing with system outages and down-times and can add robustness to the retailer’s payment system to better fit the customers’ payment preferences. Payment orchestration is no longer optional. It has become something available and affordable for all size retailers, whereas in the past it has only been something for very high-volume large retailers. Low code platforms will play a pivotal role in the new wave of Digital Transformation. Cloud Payment Orchestration keeps payments running at peak performance and helps businesses go global at speed and with confidence.

Pandemic Payments

Before the Covid-19 pandemic, retailers had options. Digital transformation was on their minds, but it wasn’t a top priority. They knew that 15% to 25% of their business was digital, and their e-commerce channel was growing. However, it was the other 75% to 85% of their business that had a retailer’s attention, and investment dollars. Then the global pandemic happened, everything changed. The retailer’s business quickly became 90-100% digital. The global supply chain became fractured. People that could be relied upon to come in-store suddenly started shopping online. Pre-Covid-19, things that had a few problems suddenly became business-critical and the gaps began to show. The meteoric growth of e-commerce in 2020 driven by the global pandemic is not expected to end soon. A retailer’s digital e-commerce channel overnight has become their most important channel for growth and the future. The retailers that are thriving, are the ones that were ready and able to change and adapt. Unfortunately, the way that retailers manage, and handle payments has NOT changed; it is decisively stuck 20 years in the past. To ultimately transform, retailers need flexible, scalable, and customisable payment infrastructure.

Early Days

These are the early days of payment orchestration, and the industry is at an educational stage when it comes to adoption. Most retailers do not know that payment orchestration exists as a technology, nor do they understand the huge benefits a POP can have for their businesses. Over the next few years, most B2C companies will be adopting a payment orchestration platform and from that point forward they’ll be able to focus on expanding and growing the connectors (whether payment, risk or other types). This is expected to result in an explosion in checkout options for consumers so they can use their favourite way to pay. Freeing up the payment layer will accelerate payment evolution which is very exciting. Payment Orchestration Platforms are functionally rich and can clearly demonstrate significant benefits for retailers, but an independent assessment is always recommended for any retailer interested in optimising and improving its payment acceptance strategy. If you are interested to know how a Payment Orchestration Platform can help your business to operate more effectively in an increasingly complex payment ecosystem, do not hesitate to contact Mark Beresford at Edgar, Dunn & Company (EDC).

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).

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