Why is payment orchestration suddenly getting so much attention? The truth is, it’s not a new idea, but what is different is the accelerated drive toward digital transformation and the advantages of cloud computing.
Payment orchestration is no longer optional. Before COVID-19, retailers had options. Digital transformation was back of mind, but it wasn’t a top priority. Retailers knew 15% of their business was digital, and their ecommerce channel was growing. However, it was the other 85% of the business that had a retailer’s attention.
Then the pandemic happened, and everything changed: 15% of a retailer’s business quickly became 90% to 100% of the business. The global supply chain fractured. People turned to online shopping in droves. A retailer’s digital ecommerce channel suddenly became critical for growth. Today, the companies that are thriving are the ones that changed and adapted.
Surprisingly, how retailers manage and handle payments has not changed; it’s decisively stuck 20 years in the past. To ultimately transform, retailers need flexible, scalable and customizable payment infrastructure.
A No-Win Payments Scenario
Astoundingly, every company that sells online is building or has built exactly the same piece of payment software, software that is just enough but nowhere near good enough for true digital transformation. This software is generically called “payment orchestration.” Why? Because it routes clients’ payments to wherever it needs to go.
It starts simply. Retailers want to sell online, so they sign up with a Payment Service Provider (PSP) that processes credit cards. Their developer integrates them into the company site. The realization then hits that new payment methods are required, such as PayPal or Apple Pay. Then local, regional and global payment methods come into play. The retailer, for example, wants to launch into Germany or expand to Asia where customers prefer not to pay with credit cards and want to pay after delivery, do direct debits or pay in installments.
The retailer’s PSP doesn’t do any of this, so they have to find a new or additional PSP. All integrations then become the mandate of the retailer to add to the payment roadmap. Meanwhile, the payment team is frustrated, accounting can’t scale efficiently under the demand to reconcile reports, and the retailer’s developer can’t stick everything together.
Furthermore, the retailer wants to move from a shopping cart solution installed on a server in a data center to a cloud-based solution. Still, they need both systems, as some legacy processes have to run on their hardware. The result? Retailers end up with a compromise solution, full of workarounds, long lead times, excessive maintenance costs and legacy hosting costs.
What’s the solution?
1) The Cloud is the Future
The future of technology is in the cloud. Retailers need a payment orchestration platform that works both today and wherever digital commerce takes them in the future. Shopping carts are going headless and cloud-based, as are stock control, shipping and even warehousing solutions. In the not too distant future, retailers won’t own a single server. Retailers can’t repeat past mistakes with an orchestration platform that locks them into a single provider with a single point of failure. PSPs have highly scalable redundant platforms; bolting a single point of failure on top introduces unnecessary risk. To take on digital transformation, retailers need to choose a platform that works now, will work with their infrastructure in the future, and functions wherever and however it’s deployed.
2) Simplify Compliance and Regulation
Retailers must prepare for compliance and regulation. Adding a local payment method is not as simple as just turning it on. Being able to operate in certain countries entails a load of local and regional compliance requirements around what retailers do and how data is stored. For any retailer with international ecommerce, this is getting harder — with countries and regions setting local rules and regulations that are far more stringent than what most retailers have deployed. When selecting a payment orchestration platform retailers must make sure it keeps them in local compliance, is cloud based and can process data on the edge.
3) Nimbleness Matters
Retailers need to be nimble. The world of payments is getting more complex. New, exciting payment methods have arisen such as wallets, installment payments and QR code checkouts, and there’s more on the way. For example, Open Banking in Europe has been slow in adoption due to implementation complexity. However, its adoption will increase due to rising interchange rates and benefit retailers with free and chargeback-resistant payments.
A retailer’s platform must enable them to pick, test and deploy these new payment types quickly and simply, with a no-code interface and no need for developers to be involved. Deploying these new payment types will cause very little friction to backend accounts and fulfillment teams. A cloud-based payment solution will unify reporting, irrespective of payment type.
4) Scale for Simplicity
Retailers need to select a payment orchestration platform that makes things simpler and then gets out of the way. Imagine being free from the burden of an annual PCI audit. Retailers must choose a platform that holds payment data and won’t lock them into a proprietary tokenization system. They need to select a solution that maintains their payment providers, changes in reporting, and updates security protocols. Basically, retailers need an “integrate once and don’t worry about it again” platform.
5) Identify Growth Opportunities
Payments experts are in short supply. Retailers need a platform that offers support. Retailers are leaving business on the table by not supporting customers’ preferred ways to pay. The platform a retailer chooses should optimize conversion rates at a cart level and at checkout. The right platform advises and recommends how to increase sales and decrease costs as a retailer’s business grows and expands.
So why is now the time for payment orchestration? Retailers needed it before, but now they can’t win without it. Retailers must choose a solution that turns payments into a strategic advantage and enables digital transformation with ease.
John Lunn is Founder and CEO of cloud payment orchestration platform Gr4vy. He is an experienced technology and fintech entrepreneur with 21 years of experience working and investing in financial services, commerce enablement, e-payments, data, security and infrastructure. Lunn worked as the Director of Technology for six years at CyberSource, the world’s first payment service provider, which was sold to Visa for $2Bn in 2010. He then helped found Passmark Security which was sold to RSA Security in 2006. In 2006, Lunn joined PayPal as the fourth employee in the UK (now 2,000+), where as Global Director of Developer and Startup Relations, he built and grew PayPal’s first Developer Relations team. In 2015 he orchestrated the purchase of Braintree by PayPal and joined the team. In 2016, Lunn launched PayPal Ventures, the venture capital arm of PayPal, a $350m fund with backing from the Board. Lunn was Board Observer for Dosh, Arkose, Raise, Acorns, Toss and many others.