Brian Coburn is the CEO of Br-dge, a Payment Orchestration service provider, and Mark Beresford, Head of the Retailer Payments Practice, at Edgar, Dunn & Company (EDC), have recently undertaken a series of zoom calls to discuss what are the best practices in a Payment Orchestration solution. Brian and Mark may be separated by 480 miles, but they have generally found a common ground on what best practice means for Payment Orchestration solutions. As with many aspects with Payments Orchestration, however, there are sometimes, divergence on what some Payment Orchestration solutions should be offering merchants.
Brian Coburn, CEO, Br-dge
Brian is a passionate technologist with two decades of experience devising and delivering innovative solutions within large, multi-national corporate environments. Formerly CIO of Stagecoach Group plc, one of the largest public transport operators in the world, Brian led the digital transformation of the group across its divisions globally.
Best practice of what?
Most readers will understand what best practice means – something that has been generally accepted as superior to any alternatives because it delivers results that are superior to those achieved by others. We have seen, however, since we have been tracking around 20 different specialist companies that claim to be providing Payment Orchestration solutions there is a very diverse understanding of what is in scope and what precisely is best practice. A part of the series of conversations that Brian and Mark have focused on was the definition of Payments Orchestration. We have agreed at this point that there is no standard way of defining a Payment Orchestration solution and there is a challenge even for the best in breed providers because merchants are not able to articulate what they need. Each merchant has a different perspective and a different set of priorities for how their orchestration needs are addressed
A challenge commonly leftover from the ubiquitous digital transformation programmes undertaken in recent years are siloed, fragmented payment processing relationships caused by integrations and procurements carried out on a project-by-project basis. Many of these projects are tactical and fail to consider the bigger picture because the bigger picture in payments is changing all the time. Merchants will find themselves having commercial relationships with more than one payment service provider or acquirer, but these routes are likely not accessible from one retailing channel to another. As we will explore, it is now becoming more essential for merchant businesses to adopt a multi-acquirer approach across channels, to not put all their eggs in the proverbial basket, with the problem of how this is achieved one that Payments Orchestration is ideally placed to solve. The need for a multi-acquirer strategy is in response to many factors, one of which is the need to expand geographically and be able to accept payment methods that local consumers prefer to use, maximise approval rates and minimise cost processing cross-border transactions. With a Payment Orchestration platform deployed across retailing channels, acting as an aggregation point for both the payment methods to be processed and the payment providers that could process them, the opportunity now exists for those disparate commercial relationships to be brought together and utilised by any channel. Once these multiple routes are accessible with each channel, options as to where customer payments are presented for processing become available, controlled by the Payment Orchestration platform. At the most basic level, this includes being able to retry failed payments via a secondary route or should a provider experience an interruption in its processing service.
Agility & Business Resilience
As businesses continue to drive increasing levels of revenues online, and indeed for many where e-commerce is their sole retailing channel, the challenge of staying at pace with the ever-growing number of payment methods consumers expect merchants to accept is only becoming more complicated. Being able to trial new payment methods quickly and easily without the usual impediments of the risk and cost of change, not to mention the time to stand up technology teams or third-party agencies, initiate projects and carry out the desired change with all the incumbent burden that brings on internal resource sounds like a panacea but is one of the key benefits of deploying a Payment Orchestration solution. With the Payment Orchestration platform taking care of the connection to any third-party payment service - new and existing - all accessed via the existing integration made to the platform, consuming new services is done via the orchestration portal. Similarly switching off services can be done just as easily, with the click of a mouse or the cursor dragging an icon across the screen, removing both the time and the risk associated with trying out something new. Additionally, volumes processed by each service can be controlled, so a new supplier can be allocated a small percentage of transactions until they prove their worth and either provided with a greater share or simply turned off – either of which can be done instantly, in real-time. Payments managed by businesspeople rather than technical people. Furthermore, as the challenges of the pandemic have shown, having both a multi-acquirer solution and the agility to switch between them or control in real-time how transactions are routed to providers is a very real requirement. We’ve seen acquirers take a different view over the risk of processing customer payments in certain sectors and have either demanded significant funds be held on deposit, made the costs of processing untenable for the merchant or indeed left the sector altogether. For those already classified as high risk, the potential for an acquirer to give you notice, as they adjust their desire to take your business, is an ever-present existential issue. Via a Payment Orchestration platform, the opportunity to mitigate against those risks, to make your business more resilient, is readily available and should be given serious consideration
Importance of wallets
Brian and Mark are also seeing that one best practice that merchants are keen to pursue is the ability to leverage a consumer’s digital wallet as a syndicated registration or check-in. EDC believes that a Payment Orchestration solution should help facilitate the acceptance of payment wallets. By signing into a merchant using a digital wallet effectively provides an easy option for shoppers to register their personal information with the merchant – including, their name, email address, delivery address, mobile telephone number, and your preferred payment method. All this non-payment information can be shared, with the consumer’s consent, with the merchant – before anything is purchased – via the Payment Orchestration platform. Digital wallets have evolved, and, in some ways, they have had to quickly grow up during the pandemic from being a new kid on the block, into a self-assured payment method plus so much more. Digital wallets not only allow shoppers to securely make payments using any card they have saved in their wallet, or the stored funds in their wallet account. Wallets are rich in non-payment customer information. The more popular pass-through or proxy wallets where the wallet simply acts as a proxy for the customer’s debit or credit card(s) – no topping up required – as we see with Apple Pay, PayPal and Google Pay. This is a brilliant customer acquisition tool for merchants as it effectively redefines the payment checkout. The customer journey used to be – browse the store, select products, become a registered customer, checkout, enter payment method, add delivery details, press buy button. Now it can be – become a registered customer, browse the store, select products, press buy button.
Optimisation through Independence, Intelligence and Insight
By having the opportunity, through orchestration, to take a more strategic view of the elements that make up an effective payment solution, businesses can now bring together a suite of the best of breed services to optimise their processing landscape rather than the siloed, fragmented channel by channel approach commonly seen. Independence is clearly a key consideration in the selection of a Payments Orchestration solution. Brian and Mark feel that the most effective orchestration should sit “on the side of the merchant”, to help them easily gain access to and control the various third-party payment services needed to optimise the processing of customer payments. Where orchestration is delivered from, and by whom, to ensure that agnostic position is maintained for the benefit of the merchant will determine the effectiveness of the solution. Although not fully matured yet, the levels of intelligence being offered by Payment Orchestration already provide a leap forward in capability for merchants. Intelligent routing of customer transactions, in real-time, to maximise first-time success rates, to minimise the cost of processing or satisfy volume commitments in processing contracts. As platforms continue to develop, the use of algorithms and machine learning will evolve, becoming smarter and using artificial intelligence to further optimise the landscape. As payments data is concentrated from multiple sources and retailing channels, new levels of insight can also be offered by a Payments Orchestration solution. For instance, understanding how a customer chooses to pay, perhaps based on product or value, can help drive the checkout experience, increasing conversion rates and customer satisfaction. The opportunity to “surprise and delight” a returning customer by recognising their value, across all the retailing channels they interact with, could be enhanced by using payments data fed from orchestration into back-end customer order and management systems. With a Payments Orchestration engine at the heart of the payments flow, driving resilience both at a transaction level and for the business itself, along with providing greater agility to try out innovations coming forward from Fintech, taking customer payments is no longer a hygiene factor at the end of the sales process. It is something that can differentiate your business, and, with Payments Orchestration in place, help to grow revenues and minimise the cost of payment acceptance. Payment becomes integral to the customer experience.
Buy or build
Large merchants that have in-house technical and payment expertise can build a Payment Orchestration platform themselves. In fact, in the last decade, some merchants have done exactly that. Travel companies, such as large hotel groups, flag carrier airlines that operate across multiple countries, international currency exchange businesses, online gaming platforms, multinational digital content providers – software providers and companies such as Google, Booking.com, Microsoft, Netflix, Spotify, Disney+, Amazon, Ikea, the Hut Group, and many others have all undertaken some form of in-house project to build a Payment Orchestration platform. Although, at the time, they may not have called it Payments Orchestration. Conversely, building a Payment Orchestration platform yourself is not easy or cheap. There are many other merchants that have local and global payment needs that are growing in complexity and a Payment Orchestration solution provided by a third-party specialist company is certainly a feasible alternative.
Next stage of Payments Orchestration
Over the last few weeks, Brian and Mark have discussed and agreed that a definitive set of best practices that a Payment Orchestration solution ought to provide merchants have yet to be written. Mark believes that the specialist third-party providers, of which Br-dge is one of them, are at the start of an evolutionary journey where Payments Orchestration will gradually become smarter, using artificial intelligence, and offer merchants and their customers with an optimal payment experience. If Payments Orchestration was likened to the evolution of the mobile phone, we have certainly moved on from the Motorola, brick-like device, and the Nokia 3310. Today, Payment Orchestration solutions are functionally rich and can clearly demonstrate significant benefits for merchants by deploying independent best-in-breed solutions that are akin to the sophisticated smartphones from Apple and Samsung. Nevertheless, we can expect new developments in the Payments Orchestration market in the future. If you are interested to know how Payments Orchestration can help your business to operate more effectively in an ever-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).