Service orchestration: connecting the dots in payments

According to a recent report from Vantage Market Research, digital payments are expected to grow more than 15% per year from now until 2028 despite the challenging economic times ahead.

Service orchestration can help firms optimise payments and checkout processes

The rate of change tied to this growth is increasing equally as quickly, which is partially due to a surge in P2P commerce that is primarily serviced by various local payment methods, including the globally diverse set of buy now, pay later (BNPL) offerings.

This increase in payment solutions and services has resulted in payment stacks not being so straightforward anymore. Instead, they are loaded with an increasing number of functionalities, components and third-party provider connections as well as, at times, disparate internal systems. All of which make them less efficient at processing payments and more challenging to manage.

This translates into missed revenue opportunities and competitive disadvantages that are difficult to overcome due to stretched human and technical resources and budgets.

So how can the industry put its house of payments in order? One highly effective way is with service orchestration.

What is service orchestration?

Service orchestration unites previously disparate products from multiple providers, such as payment methods, multiple platforms and risk management applications, allowing them to be managed via one user interface. It does so by unifying all the independent components of a transaction under a single control layer, enabling end-to-end management and automation of payments processing, harmonising the checkout flow.

An effective service orchestration engine is a business-oriented platform designed to respond to ever-changing business needs. It helps manage the financial and operational aspects of payments acceptance, from checkout through to the settlement of funds into a merchant’s bank account.

This removes the complication of monitoring the performance of multiple, manually integrated and siloed products and platforms. It also automatically aggregates and processes crucial data streams, providing both payment service providers (PSPs) and merchants with valuable, real-time analytics.

What are the benefits?

Risk is always relative but not having an orchestration engine is a bigger risk than having one. The benefits of orchestration largely come from it being a central hub for payments that lends greater control over the entire payments process. This can be seen across a number of key areas, such as business strategy, data and cost centres.

On the business strategy front, omnichannel commerce will continue to lead for merchants, especially as online and in-store commerce continue to merge. Here, PSPs have to ensure that payments function, often having multiple platforms to manage payments across stores and digital realms, making efficient execution of omnichannel offerings difficult. An orchestration layer can eliminate this complexity and accelerate omnichannel strategies because it unifies channels.

Similarly, transaction data, instead of being spread over multiple platforms, is centralised across a single layer. This makes data analytics significantly easier and more robust, leading to actionable data insights across channels. With data centralised, detecting fraud also becomes significantly easier and more efficient.

Orchestration can also greatly reduce costs. These cost benefits mainly stem from not having to maintain payments infrastructure technology and avoiding costly IT development trajectories, as payments are managed from a single system rather than multiple ones.

Another IT process that orchestration simplifies is configuration. Many orchestration offerings are no-code, allowing PSPs to activate and configure products without resorting to complex coding. This further frees up tech teams and allows them to focus on innovating their platform instead of spending hours integrating third-party solutions. In the case that new providers do need to be brought on board, orchestration allows them to be easily added, tested and replaced as needed.

Orchestration: increasing conversion

In short, what orchestration does is it optimises payments and checkout processes. Another key issue it also helps with is something that’s at the top of almost everyone in the payments industry’s list of priorities: increasing conversion.

Having the right payment methods is an essential part of the conversion equation, but behind this lie many technical processes that can increase conversion. The most obvious ones are balancing security so as to not turn away legitimate transactions and reducing failed payments via smart routing to alternative providers – these represent the tip of the iceberg when it comes to orchestration.

This ability to efficiently increase conversion will become even more important to the success of both payments companies and their merchant clients in the digital age, where the speed of commerce requires payment solutions to be easy to manage, quick to deploy and scale and able to take on new requirements at speed.