In today’s fast-paced digital business landscape, companies often grapple with numerous challenges related to payment operations. These challenges are supported by statistics and industry insights, shedding light on the critical role of payment efficiency:
Many companies use 5 to 6 services for one payment, showing the complexity of the payment ecosystem. The challenges highlight the need for payment orchestration to streamline processes, optimize efficiency, and improve customer experience.
This article explores payment orchestration, its mechanics, and its role as a key tool for businesses to boost payment efficiency. We will also offer insights on using payment orchestration to instantly improve payment operations.
How does payment orchestration work?
Payment orchestration unites stakeholders in one platform, the Payment Orchestration Platform (POP), a crucial concept to grasp. This platform acts as a central control panel for all your payment needs.
To gain a deeper understanding of how it operates, let’s explore the different facets it can manage:
- Smart Routing: Payment orchestration ensures that funds are efficiently directed to their intended recipients. Payment orchestration routes payments by considering success rates, costs, and customer preferences, selecting the best path. As a result, you optimize payment success rates while minimizing costs.
- Invoicing and settlement: It ensures that all payments are accurately invoiced and that all parties involved are compensated according to agreements. This streamlines financial management by automating these processes, reducing the potential for human errors, and speeding up payment cycles.
- Payments: Payment orchestration manages the process, securely directing funds to recipients in compliance with regulations.
- Analytics: It tracks payment performance, gathering crucial data on each transaction. This includes information such as payment success rates, processing times, associated costs, and more. This data allows for in-depth analysis to identify trends, potential issues, and optimization opportunities.
Consolidating functions on one platform offers a complete data view and enhances reporting capabilities. It aids in informed payment operation decisions, factoring in processors, methods, security, and target markets.
Why is Payment Orchestration Necessary?
In today’s dynamic payment landscape, businesses encounter complexity and fragmentation. They must grapple with multiple payment service providers, each demanding unique integrations and processes. Payment orchestration emerges as the solution to this challenge, offering a unified approach to streamline and optimize payments.
This necessity arises from several factors:
- Payment methods and technologies are continually evolving. To stay competitive, businesses need to swiftly integrate these options. Payment orchestration simplifies this process, allowing merchants to seamlessly adopt and adapt to the latest payment trends.
- Staying ahead in the market requires offering a seamless and diverse payment experience. Payment orchestration ensures that businesses can provide the convenience customers demand, preventing them from turning to competitors with superior payment processes.
- A critical aspect of payment orchestration is improving the customer experience. By reducing friction in payments, offering a variety of options, and ensuring smooth checkouts, businesses can boost customer satisfaction and loyalty.
- With ever-evolving regulations and security threats, maintaining payment security and compliance is paramount. Payment orchestration offers a central platform for meeting industry standards and protecting payment data, reducing breach risks and building customer trust.
- Payment orchestration is vital for navigating complex payment landscapes, adopting new methods, competitiveness, customer satisfaction, and ensuring security in digital commerce.
Payment Orchestration mechanism
Step 1: Payment method selection
As a customer makes an online purchase and reaches the payment step, they select their preferred method from available options. These methods can include credit cards, e-wallets, bank transfers, and more.
The customer’s payment information, such as the credit card number, is collected, and then the orchestrator transforms it into secure tokens through the process of “tokenization”. These tokens, unique references to payment information, can be shared among PSPs on the platform as needed, maintaining security.
After tokenization encrypts payment information, the orchestrator, acting like a payment travel planner, determines the best route for each transaction. It takes into account several factors, such as currency, the customer’s geographical location, currency conversion rates, and other relevant information.
Step 4: Transmission to payment service providers (PSPs)
The orchestrator sends the tokenized payments to the selected Payment Service Providers (PSPs). The PSP is the entity that actually processes the payment.
Step 5: Authentication and authorization
The PSP receives the tokenized payments and initiates the authentication and authorization process. This involves verifying the validity of the payment, ensuring the customer has sufficient funds, and obtaining approval from the card-issuing bank.
Step 6: Payment error handling
If a payment attempt fails with the first PSP, the orchestrator retains the authentication data and associated tokens. It quickly plans a new route, redirecting the payment to another PSP with a higher success probability.
Step 7: Receipt of approval
Once payment authorization is received, the acquirer (merchant’s bank or financial institution) sends an authorization code to both the PSP and the merchant. This means the payment is approved, and the transaction can be finalized.
Step 8: Transaction completion
The merchant receives payment approval confirmation and completes the transaction. Concurrently, the customer views successful payment confirmation. The customer’s funds will then be transferred from their account to the merchant’s account by the issuer of the payment method.
In summary, orchestrated payment, a sophisticated process, optimally manages online payments. It ensures seamless customer experiences, boosts revenue, and minimizes sales losses. It utilizes tokenization, intelligent routing, and error management to achieve these goals.
NORBr Stack – Connect. Streamline. Optimize.
Now that you have a solid understanding of how payment orchestration optimizes the payment process, let’s turn our attention to a powerful solution that takes these principles to the next level: NORBr Stack.
This payment orchestration platform is designed to address the challenges we’ve discussed and more. Let’s explore how NORBr Stack revolutionizes payment management and delivers substantial benefits:
- Enhanced global connectivity: NORBr Stack streamlines development, reducing costs by 90%. This empowers e-commerce businesses to focus on growth and innovation. With access to over 500 payment methods, NORBr Stack offers extensive coverage, enabling businesses to cater to diverse customer preferences worldwide. Global connectivity is essential for expanding international reach and maintaining flexibility in managing diverse payment options.
- Efficiency through automation: By automating payment flows, NORBr Stack helps e-commerce businesses achieve substantial savings on operational expenses. The platform intelligently routes transactions through distribution channels with the best deals, enhancing cost control. Furthermore, NORBr Stack streamlines financial and accounting reconciliation through automation, thereby ensuring smooth and transparent operations.
- Enhanced agility: NORBr Stack empowers companies with the ability to make quick adjustments to payment methods and partners without the need for technical expertise. Its no-code approach allows businesses to regain control of their roadmap, adapt rapidly to market trends, and make daily adjustments based on precise analytics. This agility is crucial for risk management and payment strategy optimization.
- Optimized payment experience: NORBr Stack offers an intelligent unified payment system that significantly reduces cart abandonment and enhances the customer experience. Customers benefit from a smooth and personalized payment process, strengthening loyalty and increasing conversion rates. Risk management is also facilitated through an optimized payment process.
- Exploration of aggregated data: With over 200 data points per order and more than 60 search filters, NORBr Stack provides a comprehensive view of transactions. Companies can identify precise business patterns, track key metrics, and make data-driven decisions. This data exploration capability is essential for informed decisions regarding CRM and risk management.
- Boosting repeat customer revenue: NORBr Stack offers universal tokenization, enabling customer recognition across different payment platforms. One-click and recurring payments, along with secure data handling, boost customer loyalty and ensure compliance with international regulations.
- Security and Compliance: NORBr Stack prioritizes payment data security and has successfully obtained PCI-DSS version 4.0 certification, meeting the industry’s strictest security standards. This certification guarantees the protection of sensitive customer data and compliance with online payment sector requirements, reducing the risk of data breaches and maintaining a high level of security.
Empower your payments with the efficiency of NORBr Stack
NORBr Stack, part of the NORBr suite including Infra and Insights, helps e-commerce and retailers streamline payments, boost customer experience, and profitability.
In summary, NORBr Stack offers a vital tool to simplify and optimize payment operations, key for higher revenue, cost efficiency, and enhanced customer experience in the evolving online commerce era.