Why all payments orchestration is not the same

Wednesday 15 November 2023 13:03 CET | Editor: Vlad Macovei | Interview

There’s more to great payment orchestration than just a good gateway and some connectors. In this Q&A, Kieran Mongey, Principal Product Evangelist of ACI explores the demand for better orchestration, who wants it and why, and how fixing the capability gap can help merchants get ahead.


Payments orchestration (PO) has become the latest buzzword in payments. Who is using it and what’s feeding demand?

Merchants who turn to PO are often seeking to address multiple internal and external challenges and get to grips with the technical complexities of payment optimisation. They are likely to be larger, enterprise retailers/merchants with multi-country, omnichannel operations looking to reduce complexity in increasingly demanding payment processing and regulated environments. PO is also attractive to merchants with issues aligning and prioritising payments, especially when faced with finite resources, or existing technology that is nearing ‘end-of-life’, or if their commercial strategy calls for a more aggressive approach to managing payments. Whatever the reason, most expect it to reduce costs, improve functionality, increase alternative and local payment availability and improve data consolidation/reporting.  


What are the issues you are seeing in how they are implementing PO?

There is no consistent payments orchestration infrastructure approach. Some retailers have in-house-built orchestration solutions; some use only payment orchestration platform providers; and others take a ‘hybrid’ approach and use both. All too often, payment orchestration platforms are designed to meet their basic short-term needs and can’t accommodate advanced functions like ‘smart’ routing/cost optimisation and improved/faster/lower cost integrations. They may also lack adequate fraud management or the ability to handle omnichannel payments. This leads to a capability gap between ‘what they can do’ and ‘what they really want to do’, which gets wider as their business expands.  


Please explain what you mean by a capability gap and how it impacts merchants.

Most Payments Orchestration Providers can coordinate the basics – i.e. global payment methods, regional coverage, seamless routing, authorization, rules, and business processes. However, when it comes to advanced functionality, they typically fall flat. Smart routing is often lacking, and volume-based transaction fees can hinder cost optimisation. There is likely to be little in the way of configuration management, intelligence, or automation and merchants may experience issues with integration when adding new providers or services. To give you an analogy, it’s a bit like trying to play a symphony with just a string section. You can make music, but it’s impossible to create the same results as a full-on orchestra.  

Why is this a major headache for merchants? 

As more vendors enter the payment market and try to compete on price, there is a danger that merchants will invest in solutions that overpromise and underdeliver. Some PO solutions are little more than ‘pumped up’ gateways. These may not give merchants the performance improvements or flexibility they need and are likely to leave them disappointed and ill-prepared for the future.  Typically, short-term thinking based on cost leads to short-lifecycle platforms that can’t deliver long-term functionality, ultimately leading to a lower ROI. 


So what do merchants really need from a Payments Orchestration Provider? 

The payment environment is undergoing relentless and accelerated change. Customer expectations and behaviours are constantly shifting; payment methods, channels and regulations evolving; and demand for better data, systems, fraud management, and integrations is rising.

Our research indicates that merchants, especially larger ones, need end-to-end PO solutions that help them iterate or transform at pace. They want all the basics plus more standardised performance reporting, inherent intelligence and the ability to match their sector-specific requirements without the added complication of a separate customised orchestration layer. They need easily configurable, highly automated solutions with the flexibility to suit their specific use cases. Importantly, they want their investment to deliver the magic triad of lower cost, better experience, and higher performance.


How does a PO provider such as ACI aim to help merchants get more out of their PO investment?

We never compromise when it comes to payments functionality, security, or performance. Our mission is to deliver a truly holistic PO solution. One that meets the entire lifecycle needs of any organisation’s secure payment requirements, irrespective of whether they’re seeking a transformational rip-and-replace platform, a solution to work in tandem with existing in-house systems, or an iterative platform that powers incremental improvements as their business grows.  Not only that, but our PO solution also has no borders – geographical, channel, or market – and has all the capability and flexibility they need to turn transactions from a cost centre to a profit centre through optimisation, automation, and better routing and data decisioning. This includes a revenue optimiser solution that consolidates and automates back-office functions to improve financial accuracy, track money movement, reduce revenue leakage, and lower operational costs.


What trends are fueling demand for higher performance?

Merchants now think of payment orchestration as a framework for optimising their cost of acceptance, driving revenue growth through improved authorisations, and creating operational efficiencies. This means POPs need to go beyond orchestrating multiple APMs and acquirers. They must be able to route volume across different PSPs, financial instruments (Acquirers, Gateways, APMs, Authentication), and connect to adjacent providers (e.g., fraud prevention platforms) and internal systems (e.g. ERP). Demand for intelligent, data-driven decisions is also increasing. This calls on POPS to route transactions using guardrails that optimise performance but still allow them to hit providers’ volume-based discounts. It also makes fast and simple integration across the business and with multiple payment providers a necessity. 


The pace of change continues to accelerate, how can PO solutions help merchants keep up?

Digital transformation enables merchants to control payment strategy but only through a globally connected payments platform that is functionally rich, agnostic, drives innovation, and is secure. PO platforms that utilise simple code, offer easy interoperability, flexible configuration, and AB testing can deliver continuous innovation and improvement on value-driven KPIs. By shifting from building internal resources to building partnerships with payments experts, merchants can be faster to market with solutions and services that support rapidly evolving consumer check-out expectations.  Making payments more responsive, creates a true differentiator with the ability to increase transaction values, consumer loyalty, and spend.


What do you want to see happen next?

We want to encourage merchants to recognise that all payments orchestration is not the same. That means moving the selection goalposts from ‘will this solution make payments easier’ to ‘will this solution make payments easier AND grow my revenue business?’ This involves taking the benefits conversation from cost reduction, infrastructure, and CX optimisation to improvements in margin, conversion, and retention. Doing this can prevent capability gaps and raise their competitive game. With a holistic orchestration solution, they can move their investment from a quick fix with limited returns to a long-term performance booster that can help power growth. And that’s definitely music to merchants’ ears.

About Kieran Mongey

Kieran Mongey is a payments optimisation specialist, delivering consulting to market leading global brands. Kieran joined ACI Worldwide in 2015 with over 15 years of experience in payments and fraud prevention within the retailers and vendors' space. He has developed expertise in aiding merchants to address broader payments orchestration needs with a strong focus on growth, conversion and cost of ownership initiatives.


About ACI Worldwide

ACI Worldwide is a global leader in mission-critical, real-time payments software. Our proven, secure and scalable software solutions enable leading corporations, Merchants, fintechs and financial disruptors to process and manage digital payments, power omnichannel 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.

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Keywords: payments orchestration, online payments, mobile payments
Categories: Payments & Commerce
Companies: ACI Worldwide
Countries: World
This article is part of category

Payments & Commerce

ACI Worldwide

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