Optimising conversion is one of the three main ways in which payment orchestration offers value to merchants, alongside business growth and reducing the cost of doing business. There are many approaches to positively influence conversion with the use of a true payment orchestration platform. For example, by adopting a multi-acquiring strategy, merchants can pass traffic to the best acquirer based on approval rates and the commercial structure of the cost per payment. If a transaction is declined, you can automatically resend it to a new acquirer or indeed the same acquirer to retry. Working in this manner bolsters resilience and uptime.
Having the ability to reflow transactions either with or without 3DS authentication based on robust profiling and taking full advantage of SCA exemptions in the EU can make a big difference to conversion rates.
The ability to use alternative payment methods is another area that improves conversion. Depending on the market demands, offering the right payment mix is key. Using multiple fraud decisioning models helps to improve fraud declines. Focusing on identifying the good transactions instead of the bad ones minimises lost conversions. Any merchant should ask themselves what just 1% conversion uplift would mean to their bottom line. The numbers really add up to make payment orchestration a key strategic element to doing business.
Statistically, over 80% of fraud can be related to key data points – card and email history, where first-time purchases have the highest risk of fraud and decline. Under PSD2, SCA data profiling is critical. If a customer has a purchasing history that can be accessed and used in profiling, then exemptions (TRA Low Risk exemption 02) can and should be applied to enable a frictionless checkout and a better payment experience for trustworthy regular customers. Also, using tokens is an excellent form of authentication, and it greatly reduces the risk of fraud.
Effective fraud tools must adopt a multi-layered approach to fraud management, combining incremental machine learning, advanced customer profiling, and smart routing of third-party services.
Behavioural profiling and adaptive machine learning are critical. Machine learning models create complex and sophisticated consumer profiles and score accordingly the risk of the transaction – this must be used as a critical data point in fraud decisioning and a way to enhance conversion rates.
What does a multilayered approach to payments security mean when it comes to cross-border payments, and how can payments orchestration enable smoother compliance with PCI standards?
Both multi-layered fraud control and payment security are crucial because no single tool or technique can capture fraud – or withstand fraudsters – as effectively as several techniques working together. Multi-layered should include machine and incremental learning models that detect patterns of fraudulent behaviour and play a critical role in reducing false positives and chargebacks. Incremental learning models ‘think for themselves’ and make small adjustments on an ongoing basis, which means they maintain performance, unlike traditional ML. Third-party data enhancement such as device or consumer validation data is essential to sort good customers from bad and enhance conversion. A multi-layered approach will also include business and fraud analytics tools, intuitive order review tools with case management, resilience to manage volumes, rich positive profiling data, and the use of global consortium fraud databases. The combination of this rich data adds value by informing decisions that optimise approval rates and can be adapted quickly (flexible) to evolve as fraud trends evolve.
Applying a multi-acquiring strategy is an integral part of payment orchestration and should focus first on approval rates per payment method and by acquirer. Understanding where and when to get the best approval rates is the first step in optimising your payments setup overall. Secondly, you need to know the best commercials available to you per transaction. Knowing where to get the best value per transaction processed means you can optimise the cost of doing business. This is known as least-cost routing. Armed with this data, merchants can ensure optimisation while also ensuring a truly resilient setup, with no downtime.
Ultimately, using multiple acquirers puts control and power into the hands of merchants – as opposed to being handcuffed to limited functionality and control within a single acquirer gateway, they have the flexibility to execute their own payments strategy and implement payments and flows in line with customer expectations and customer journeys, improving conversion, driving growth, and reducing the cost of doing business.
This editorial piece was first published in The Paypers' Cross-Border Payments and Ecommerce Report 2022–2023, which taps into the fast-growing cross-border market and provides a comprehensive overview of trends and developments that are pivotal in this space, being the ultimate source of information for ecommerce businesses interested in expanding globally.
Basant Singh is a highly experienced payments industry executive with more than 20 years of experience spanning payments, fintech, and consulting services. He leads ACI Worldwide’s Merchant and Payments Intelligence solutions portfolio, which encompasses a Payment Orchestration Platform to offer ecommerce, omnichannel payments, merchant fraud, and alternative payments. He has global business experience with merchant acquiring spanning direct and indirect channels, financial institution alliances, customer segments, and verticals.
ACI Worldwide is the global leader in mission-critical, real-time payments software. Our proven, secure, and scalable software solutions enable leading corporations, fintechs, financial disruptors, and merchants to process and manage digital payments, power omni-commerce payments, present and process bill payments, and manage fraud and risk. We combine our global footprint with a local presence to drive the real-time digital transformation of payments and commerce. ACI’s Payment Orchestration Platform for the merchant segment, with vast connections to payment providers around the world, such as acquirers, APMs, wallets, crypto acceptance, etc., enables merchants to optimise their payment conversion at a much lower cost.
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