What Is A Payment Orchestration Platform?

Payment orchestration is a comprehensive software layer that connects merchants with multiple payment service providers (PSPs), acquirers, and payment methods.

Unlike traditional payment gateways, which simply act as a bridge to process transactions, payment orchestration platforms intelligently manage every aspect of payment processing—from authorization to routing, settlement, and even security.

How Does Payment Orchestration Work?

A payment orchestration platform acts as a middle layer between a business’s various payment channels and the payment providers, allowing dynamic management of transactions. 

Here’s a breakdown of how payment orchestration works, using common channels and providers to illustrate the process:

Step 1: Accepting Payments Through Multiple Channels

Payment orchestration platforms integrate with various payment channels, such as:

• E-commerce checkout for online stores

• Mobile apps for app-based purchases

• IVR (Interactive Voice Response) Payment Service for phone payments

• Agent-assisted virtual terminals (VT) for over-the-phone or manual transactions

• Pay-by-link for payment links sent via SMS or email

This multi-channel integration ensures that businesses can handle transactions seamlessly across different customer touchpoints.

Step 2: Routing Transactions Through Gateways and Providers

Once a payment request is made, the orchestration platform intelligently routes the transaction. The platform is typically integrated with multiple gateways and acquirers, such as Cardstream, Adyen, TrueLayer, and others, allowing it to dynamically select the most suitable option. Factors considered for routing include:

• Transaction success rates: Routes with higher success rates are prioritized to reduce the likelihood of failed payments.

• Processing costs: Certain gateways or acquirers offer better rates for specific transaction types, helping businesses save on fees.

• Payment type and region: The platform can select providers that specialize in certain payment methods (e.g., Apple Pay, direct debit) or cater to specific regions (e.g., US or EU).

Step 3: Using Direct Integrations for Faster Processing

Some orchestration platforms, like the example in the image provided, have direct connections with payment service providers, enabling faster and more streamlined transactions. 

These direct integrations reduce dependencies on third-party gateways and allow for customized routing and transaction handling.

Step 4: Implementing Security Measures and Compliance

Security is a top priority in payment orchestration. Advanced security features like:

• Fraud detection: Tools that monitor transactions for suspicious activity in real-time.

• Data encryption: Ensures sensitive information is secure during the payment process.

• Compliance checks: Supports regulatory requirements like PCI-DSS and PSD2, helping businesses remain compliant and avoid penalties.

This layer of security not only protects customer data but also boosts trust and reliability, which is essential for online businesses.

How Is Payment Orchestration Implemented?

Implementing a payment orchestration platform involves a few critical steps to ensure seamless integration with existing systems and processes.

Here’s how businesses typically go about implementing a payment orchestration solution:

• Selecting the Right Payment Orchestration Platform

• Integrating Payment Channels

• Configuring Routing and Optimization Rules

• Testing and Monitoring

The Need For A Payment Orchestration Layer

A payment orchestration layer is a centralized platform that connects a business to multiple payment service providers (PSPs), payment methods, and financial services. 

Unlike a single payment gateway, an orchestration layer acts as an umbrella that consolidates various payment providers into one unified system.

It handles everything from transaction routing to reconciliation, and from fraud detection to payment method management.

This flexibility allows businesses to offer a seamless, efficient payment experience to their customers, regardless of geography, payment method, or transaction type.

1. Multi-PSP Connectivity and Fallback Options:

One of the biggest reasons merchants adopt a payment orchestration layer is to connect with multiple PSPs.

Relying on a single PSP can be limiting and risky. If a primary provider experiences downtime or doesn’t support certain payment methods, businesses can face disruptions

2. Optimizing Costs with Intelligent Transaction Routing:

A payment orchestration layer can intelligently route transactions to the most cost-effective PSP, which can lead to significant savings.

For instance, if one provider charges lower fees for credit card transactions, the orchestration layer can prioritize this provider for those transactions. 

This cost-saving capability is especially valuable for businesses processing large volumes of payments.

3. Centralized Reconciliation and Settlement Reporting:

For businesses working with multiple PSPs, reconciling payments manually is not only tedious but also prone to error. Payment orchestration platforms provide centralized reconciliation and settlement reporting, automating these processes and ensuring accuracy. 

This feature is precious for businesses with high transaction volumes or those that operate in multiple regions.

4. Enhanced Security and Fraud Detection

A payment orchestration layer consolidates security measures across multiple PSPs, providing a single point of control to manage fraud detection and data encryption. 

This means businesses can enforce consistent security policies regardless of the payment method or provider, helping them stay compliant with regulations like PCI-DSS and PSD2.

[READ MORE: Demystifying Payment Orchestration: Streamlining Transactions for Seamless Financial Operations]

What Are The Key Factors Driving Growth In The Payment Orchestration Platform Market?

As digital payments evolve at lightning speed, businesses across industries are facing new challenges in managing payment transactions smoothly, securely, and efficiently. 

To keep up, many are turning to payment orchestration platforms, which serve as a centralized hub for routing, processing, and managing various payment methods.

The demand for these platforms is rising rapidly, but what’s fueling this growth? 

• Understanding the Complexity of the Payment Ecosystem

The payment ecosystem is more complex than ever, and payment orchestration platforms help businesses navigate this intricacy.

Payment gateways act as the interface between the merchant and the financial institution, securely transmitting sensitive data like credit card details.

They ensure compliance with security standards such as PCI DSS, protecting customer data during transactions.

• Deployment Flexibility, Cloud-Based vs. On-Premise Solutions:

Another significant driver of the payment orchestration platform market is deployment flexibility.

Different businesses have unique needs, and payment orchestration platforms cater to this by offering both cloud-based and on-premise deployment options.

• Serving a Diverse End-User Landscape: 

Payment orchestration platforms play a major role in various industries like retail, e-commerce, hospitality, and healthcare.

Payment orchestration platforms can effectively handle diverse payment needs in all of these industries meanwhile also ensuring secured payments. 

• Supporting Multiple Payment Channels: 

Businesses today need to support a variety of transaction types, from online to in-store to mobile payments.

Payment orchestration platforms make this easy by providing a single solution that supports all types of transactions.

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What Challenges Are Impacting The Payment Orchestration Platform Market?

As digital payments continue to reshape the way businesses operate, payment orchestration platforms have emerged as a key solution for managing and optimizing complex payment ecosystems. 

However, despite their benefits, the adoption and growth of payment orchestration platforms come with several challenges

1. The Challenge: Increasingly Sophisticated Cyber Threats

One of the biggest challenges for payment orchestration platforms is the ever-evolving landscape of payment security threats. As digital payments grow, so do cybercriminals’ efforts to exploit vulnerabilities in payment systems.

The Impact: Advanced Security Features and Constant Monitoring

To stay ahead of cyber threats, payment orchestration platforms must continuously invest in robust security technologies.

This includes end-to-end encryption, tokenization, multi-factor authentication, and real-time monitoring to detect and prevent fraudulent activities.

2. The Challenge: Varied and Evolving Regulatory Frameworks

The regulatory landscape for digital payments is complex and constantly changing. With regional regulations like the GDPR in Europe, PCI DSS in the US, and numerous other standards worldwide, payment orchestration platforms must comply with an extensive range of rules. The challenge lies in adapting to these varied requirements.

The Impact: Proactive Compliance and Collaboration

Staying compliant with a diverse array of regulations requires payment orchestration providers to adopt a proactive approach. This includes continuously monitoring regulatory changes, collaborating with regulatory bodies, and integrating compliance checks into their platform’s functionality.

3. The Challenge: Bridging the Gap with Legacy Systems

Many businesses operate on legacy systems that were not designed to handle today’s diverse and complex payment ecosystem. Integrating payment orchestration platforms with these outdated systems can be a complex, time-consuming task.

The Impact: Effective Integration Strategies and Middleware Solutions

To address integration challenges, payment orchestration providers must offer flexible integration solutions that can work alongside legacy systems. Middleware solutions, API connectors, and strategic partnerships with system integrators can help smooth the integration process.

4. The Challenge: Rapid Evolution of Payment Technologies

The digital payments landscape is incredibly dynamic, with emerging technologies like blockchain, cryptocurrencies, and new payment methods such as Buy Now, Pay Later (BNPL) and digital wallets revolutionizing the market.

The Impact: Investment in R&D and Strategic Partnerships

To keep pace with evolving trends, payment orchestration platforms need to invest in research and development to continuously enhance their offerings.

By adopting a flexible platform architecture, payment orchestration providers can more easily incorporate new payment methods and integrate with emerging technologies. 

FAQ's

What is meant by payment orchestration?

Payment orchestration is a process that centralizes and optimizes the management of multiple payment service providers (PSPs) through a single platform.

This payment orchestration layer streamlines payment processing by routing transactions, managing fraud, and integrating various payment methods (like credit cards, mobile wallets, and BNPL options) to provide a seamless customer experience.

Businesses use payment orchestration to reduce costs, improve payment success rates, and scale efficiently across different regions and currencies.

What is the difference between PSP and payment orchestration?

The main difference between a Payment Service Provider (PSP) and payment orchestration lies in functionality and control. A PSP is a third-party service that enables businesses to accept various payment methods through a single provider.

In contrast, a payment orchestration platform connects and manages multiple PSPs, giving businesses greater flexibility, intelligent routing, and optimized payment processing.

With payment orchestration, companies can reduce costs, minimize failed transactions, and ensure a smoother, more reliable payment experience for customers by seamlessly switching between providers as needed.

Is API gateway an orchestrator?

No, an API gateway is not the same as an orchestrator. While an API gateway manages and directs API requests, ensuring secure and efficient communication between clients and backend services, an orchestrator coordinates complex workflows across multiple services or systems.

In the context of payments, a payment orchestration platform goes beyond API gateway functions by intelligently routing transactions, managing multiple payment providers, and optimizing payment flows. An API gateway handles communication, while an orchestrator manages end-to-end processes.

What are some top payment orchestration platforms?

Some of the top payment orchestration platforms include Checkout.com, Adyen, Stripe, Braintree and Toucan payments. These platforms streamline and optimize payment processing by integrating multiple payment gateways, methods, and fraud protection tools into a single interface.

With advanced transaction routing, multi-currency support, and customizable payment options, these leading platforms help businesses improve payment success rates, reduce costs, and enhance customer experience in both e-commerce and in-store environments.

What is transaction orchestration?

Transaction orchestration is the process of managing and optimizing the flow of financial transactions across multiple payment gateways, processors, and banks to ensure seamless, secure, and cost-effective payment processing.

By intelligently routing each transaction based on factors like cost, success rates, and currency requirements, transaction orchestration helps businesses increase conversion rates, reduce failed transactions, and enhance the overall customer payment experience.

What is the difference between payment orchestration vs payment gateway?

The difference between payment orchestration and a payment gateway lies in scope and functionality. A payment gateway is a service that securely processes payments by connecting a merchant's platform with banks or card networks.

In contrast, payment orchestration is a comprehensive layer that manages multiple payment gateways, routes transactions intelligently, and supports multiple payment methods to optimize costs and increase transaction success rates.

Payment orchestration provides businesses with greater flexibility, control, and scalability compared to a single payment gateway.