What is payments orchestration?

Payments orchestration is still a relatively new concept in South Africa. However, in a payments ecosystem that’s changing fast, it's unlikely to stay under the radar for long. Search trends data show that worldwide interest in payments orchestration began to take off in late 2020, in line with the recent boom in payments technology. Since then, it has grown steadily.

Payments orchestration has become popular in markets such as the US and UK, where enterprises have found themselves contending with an increasingly complex payments stack and the need to integrate new payment methods quickly as they emerge. South Africa and the rest of the African continent won’t be far behind, and getting to grips with payments orchestration early will help companies to stay ahead of their peers, increase their revenue and expand into new geographies much more quickly.

What is a payments orchestration platform?

A payments orchestration platform allows companies to integrate, manage and monitor all of their different payment methods, providers, banks and more in one place - across geographies and departments. It also allows finance teams to automate and perform necessary payment-related activities, such as sending invoices, sending payouts and accessing standardised reports.

Payments orchestration platforms sit as an API layer connecting various payment gateways, payment processors, banks and the rest of the payments ecosystem. They coordinate all the different players while allowing the enterprise to view and control the entire stack from a single frontend. Once up and running, it’s also easy for businesses to add additional methods and gateways - including across markets.

This presents a few benefits for companies. First, they can offer more payment options with fewer development resources and admin burden. Second, customers can enjoy a more seamless, flexible payments experience. Finally, they can offer a clear overview of how the different aspects of a payments stack are performing.

People often confuse payments orchestration with payments optimisation - which refers to the actions taken at the point of transaction to maximise acceptance rates. But optimisation is just a part of what orchestration offers.

Implementing an orchestration platform will allow finance teams to improve the performance of the payments stack, and ultimately, make payments faster, easier and more flexible for all involved.

How do payments orchestration platforms work?

Payments orchestration platforms essentially consist of two parts: the backend and the frontend. The backend connects to all of the different banks, processors, payment gateways and any other relevant players, while the frontend aggregates and displays all of this data in a single, clean interface. Here’s what it looks like in action:

1. Imagine a customer is buying something online. They add a product to their virtual basket and go to the checkout page. Here, they are presented with a range of payment options, depending on what the e-commerce platform supports. They choose one and click ‘place order’.
2. Once they do this, the payment gateway passes their payment details to the payments orchestration provider.
3. The payments orchestration provider then analyses the size and location of their transaction and automatically routes their payment to the processor best-suited for them. If the processor is down or declines the payment, the orchestration platform will reroute the payment to a list of backup processors until it is authorised.
4. Once a processor has approved the payment, the transaction continues through the typical four-party model. The processor then contacts the acquiring bank, which verifies the transaction with the issuing bank, and so on.
5. On the orchestration platform, the business can then track that payment until it settles and easily reconcile it.

The payments orchestration platform enables companies to optimise their payments authorisation and success rates, while also ensuring maximum security for their customers and enabling simplified accounting and reporting on the backend. 

How can payments orchestration help enterprises in South Africa?

Optimising e-commerce experiences

A robust payments orchestration platform allows companies to improve more or less every aspect of their payments experiences, with all the benefits that implies. You can read more on how to optimise e-commerce checkout experiences here. In this blog, we highlight four actions companies can take to:

1. Simplify the checkout flow, reducing the steps to payment
2. Offer the payment methods customers expect
3. Reassure customers transactions are secure
4. Offer a seamless return and refund experience

By allowing enterprises to aggregate and manage the different parts of the payments stack and integrate them seamlessly, payments orchestration platforms significantly reduce admin burden and simplify payments operations. This is also true for businesses operating multiple departments and divisions.

What’s more, our research shows that making these changes can lead to significant benefits for enterprises:

• 85% of customers say security is a key factor that influences where they shop
• 56% of respondents say easy and reliable refunds are a factor in where they choose to shop
• 46% of respondents would be more likely to use an e-commerce site that had an easier payment process.

The e-commerce market has grown quickly in South Africa and is expected to be worth more than R400 billion annually by 2025. This is something companies should not ignore, but the benefits aren’t limited to e-commerce.

Adapting to new geographies and technologies

Integrating and maintaining various payment methods often requires a significant amount of engineering resources. Payments orchestration platforms can make it easier.

By offering API connections to manage multiple payment methods and providers from a single integration, payments orchestration platforms make integrating new methods as simple as a few clicks. Once they're integrated, all methods feed live data into a single user interface, making ongoing management easy.

This is especially pertinent for companies that operate in South Africa and across the continent.

As covered in our blog, South Africa’s payments ecosystem has been characterised by rapid change, from the growth of e-commerce, to the adoption of digital wallets, to contactless and mobile payments. And things aren’t likely to slow down from here.

Further, many enterprises operate beyond South Africa into other African countries, where, as McKinsey’s research notes, adoption of payments technology varies widely, and regulations differ.

As well, payments orchestration platforms are often able to offer the correct security and regulatory compliance automatically, even when transacting across borders. This gives companies a distinct advantage by allowing them to move into new regions quickly.

Improved conversion

When it comes to payments, the less customers have to think about it, the better. In order to maximise conversion, companies need to make sure they are offering customers the flexibility they need and doing so with the least possible amount of friction.

By automatically routing payments to different processors, or presenting different options to particular customers based on specific scenarios, orchestration platforms enable merchants to ensure they are getting the best possible acceptance rates and reducing costs. Better acceptance rates means higher conversions, which means more revenue.

This also improves over time, as enterprises are able to monitor live performance data on various payment methods to identify areas for improvement.

Streamlined operations

Payments orchestration platforms allow companies to do more with less, from standardising reporting across payment methods for easy auditing, to cutting costs overall.

Research from payments technology intelligence company PYMNTS last year found that more than half of US merchants reported reduced costs as a result of using payments orchestration, while 62% of UK merchants found the same.

These savings come from a variety of sources, from less time spent by engineers to build and maintain integrations, to less money spent on security and regulatory compliance, to less accounting resources needed to conduct audits and reconcile transactions. Some orchestration providers are even able to negotiate bulk rates with payments service providers, passing the savings on to their users.

What should you look for when choosing a payments orchestration provider?

As awareness of payments orchestration has risen, more and more providers have been adopting these solutions, leading to the emergence of different types of platforms. These include ‘agnostic’, which maximises choice and flexibility for the user; ‘augmented’, which is a traditional payment stack with optional add-on functionality; and ‘solution-focused’, which is built for a very specific use case - for example, maximising information security.

This can make it confusing for even seasoned enterprises looking to make the switch. Luckily, there are a few things you can look out for when choosing a payments orchestration platform:

Flexibility: new payment methods should be fast and simple to integrate and maintain, allowing you to offer multiple payment methods with built-in redundancies. Every payment stack is different, so customisability is key here.

Optimisation: A payments orchestration platform that doesn’t improve payment acceptance rates is not worth the name. Functionality allowing you to automatically optimise your payment flows to increase revenue is an absolute necessity.

This also means transparency. Enterprises should be able to see live data feeds on their payment stack, clearly displayed in a single user interface.

Security and compliance: Customers need to know that their money and their data are secure. Using data security best practices such as tokenisation can lead to a 26% reduction in fraud. So make sure your platform is up to date with PCI DSS Level 1 certifications and any other relevant protocols.

Leveraging Stitch for payments orchestration

Stitch has built a robust and highly customisable payments orchestration and reconciliation platform, PayOS. Beyond enabling enterprises to plug in any method or provider, across geographies, to enable smart routing and payments optimisation, the platform can be configured as a comprehensive collections engine, enabling automated billing, invoicing, recon, payouts and more.

Because we never lock clients in, PayOS users can also bring existing contracts with other service providers, to ensure they’re always getting the best possible options and offering the best payment experience to their customers.