What is a payment orchestration platform?
A payment orchestration platform (POP) is a software-based system that enables banks, credit card companies, and payment service providers to manage various payment transactions. It is designed to provide a single view of all transactions processed through its platform. Through payment orchestration, businesses can simplify the digital payment process by making it easier to integrate their various payment services.
A payment orchestration platform handles all the necessary steps in processing a credit or debit card transaction, from validation to settlement. It is designed to work seamlessly with various payment providers and merchant accounts.
Global payment orchestration market
The global payment orchestration market was valued at around $927.0 million in 2021. It is expected to expand at a compound annual growth rate of24.5 percent over the next few years. The increasing number of e-commerce platforms is expected to drive the market's growth. But rising security concerns related to the payment process is also expected to drive demand for payment orchestration platforms.
Payment orchestration market size
The global payment orchestration market is valued at $1.13 billion in 2022 and expected to reach around $6.52 billion by 2030.
Payment orchestration vs payment gateway
The payment orchestration platform acts as acentral hub for the entire payment process, which includes authorization, settlement, and transaction routing. It enables merchants to improve operational efficiency by gathering all the necessary payment points into a single platform.
Meanwhile, apayment gateway is software that connects multiple applications or databases. There are various payment gateways, such as web servers, integrations, and databases. Its main function is to connect financial institutions and payment providers.
How merchants can adapt to the changing payment landscape with POP
Merchants need to continuouslyimprove their payment infrastructure to effectively adapt to the changes brought about by the rapid emergence and evolution of new payment technologies. This can be done through innovations that can help them improve their customer experience.
A good payment orchestration platform can help businesses improve their operational efficiency and provide a more seamless and efficient checkout experience. It can also help them increase their sales by supporting different payment methods. With the help of an efficient payment orchestration platform, businesses can lower their operational costs and improve their bottom lines. It can also help them manage their multiple payment accounts and store and manage their data.
How the landscape of payment is changing
The rising number of people shopping online has led to an increase in the use of new payment methods. In the UK, one-third of all shoppers use digital or mobile wallets to pay for their purchases. The rise of alternative payment methods has also increased the number of people shopping online. These transactions have generated $65 billion in global revenues.
The evolution of new payment technologies has created a huge shift in how consumers shop online. As a result, online retailers must look for ways to remain relevant and provide a more engaging customer experience. One of the most critical factors they must consider when implementing payment orchestration is the availability of more flexible payment options.
How fintech is changing financial services
Fintech has greatly impacted the financial services industry by transforming traditional financial services and making them more innovative. Fintech companies started as small tech-driven start-ups and have since become prominent forces in the financial world. These companies have created a wide range of innovative products and services that have made it easier for people to access and manage their financial assets.
Unlike traditional financial institutions, fintech companies can provide payment orchestration services at a lower cost. This is because they use technology to automate the various processes involved in the processing of payments.
Digital and fintech payment landscape
Due to the continuous evolution of the financial services industry, innovations and advancements are constantly being developed by fintech companies. These include blockchain technology, artificial intelligence, and robotic process automation.
The most exciting advancement fintech companies are currently working on is the development of blockchain technology. This type of technology allows for secure and verifiable transactions through a decentralized ledger.
2. AI and machine learning
Machine learning and artificial intelligence are also being widely used by fintech companies to develop new ways to improve the efficiency and risk management of their financial operations. These technologies can be used to help prevent fraud and other financial irregularities.
3. Robotic process automation
Robotic process automation is a type of technology used by fintech companies to automate certain tasks and processes, such as customer service and data entry. It can help them reduce operational costs and improve their customer service experience.
The impact of PSD2 on payments
New global trends and technological innovation affecting the payments industry threaten the ability of traditional financial services to provide effective and secure services. These changes are also forcing the development of new payment methods that are more convenient for consumers.
What is PSD2
The second Payment Services Directive (PSD2) is part of a global trend involving bank regulation focused on innovation, security, and competition. It requires financial institutions to provide other payment service providers with access to their customers' account data.
Key payment challenges merchants face
Small-business owners often wear multiple hats. If you are the head of a small company, you are likely responsible for various aspects of the business, such as sales, marketing, and technology. Although it is generally easier to handle certain aspects of payments, such as credit and debit cards, it is still important to have a strategy in place for the other more complex ones such as ensuring data security, running multi-channel payments, and integrating payment software.
1. Ensuring data security
Running a business involves constantly facing different obstacles. When it comes to payments, most small-business owners consider protecting their customers' data and preventing fraud to be the biggest challenges they face. A secure payment processing solution is important for small businesses as they typically do not have the necessary control over how their data is handled.
2. Running multi-channel payments
Most business owners need help with the issue of what payment methods to offer their customers. If you want to give your customers the option of using different payment methods but do not want to deal with multiple vendors, then a multi-channel payment system might benefit you.
A multi-channel payment solution can also help you process in-store transactions. Although cash use may have declined, allowing people to use cash is still important if your vendor also accepts electronic payments.
Another challenge small businesses face when it comes to selling to customers outside of their home country is the issue of opening bank accounts in different currencies. You can accept credit card payments in different currencies with a multi-channel payment solution.
3. Integrating payment software
Getting all of your financial records synchronized is a little challenging for small businesses. With an integrated payment solution, you can easily manage all of the details related to your transactions. Before the rise of online and electronic payments, bookkeeping was a bit more complex. Before, all your transactions had to be recorded in various forms of paper, such as spreadsheets and journals.
Today, with the help of payment solutions, managing all your transactions is much easier. With a well-organised database, you can easily see how your business is doing and make reports. Having all your payment data in one place can also help you keep track of your transactions.
The benefits of payment orchestration
With the help of payment orchestration, businesses can get a streamlined and more cost-effective payment processing solution. It can also help them prepare for the future by giving them access to more lucrative products.
1. Payment orchestration enhances security
Due to the increasing number of merchants accepting payments, the complexity of the payment system is becoming more prevalent. This is why a payment solution must have the necessary features to protect your customers' information. With the help of payment orchestration, merchants can combat fraud and improve their transaction processing security.
The annual credit card fraud losses are expected to reach almost $50 billion by 2030. The United States continues to be a significant contributor to global card fraud, having accounted for 36% of this illicit activity in 2020, while only 22% of the volume of transactions is handled by the country.
2. Payment orchestration increases revenue
Through payment orchestration, businesses can increase their revenue by providing customers with the best possible service. Point-of-sale transactions, including gift cards, in-lane bill pay, and general-purpose reloadable cards, are integral to any merchant's payment environment. These transactions can be daunting to keep track of without the help of payment orchestration.
3. Payment orchestration scales businesses easier
With the help of payment orchestration, businesses can now get the necessary features and faster speed to market. This can help them improve their customer experience and reach more potential customers.
4. Payment orchestration centralizes reports
Getting all your payment data in one place can be very beneficial, but it can take time to implement effective strategies and analyse the data. With the help of payment orchestration, businesses can now get a comprehensive view of their transactions.