Payment orchestration needs an overhaul
Not so long ago, being a Payment Service Provider (PSP) was a relatively simple affair.
They offered a range of activities within and across their platforms, promoting themselves as “one-stop-shops” – especially for payment features.
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But today, as merchants enter new markets and expand their customer base, it’s increasingly difficult to provide everything merchants need in one place or on just one or two PSPs.
Ideally, merchants should be able to quickly and securely launch their own offers – and the ability to accept payments – on a case-by-case, market-by-market basis. However, the heavy technology work required can be both time and cost intensive, so companies are turning to payment orchestrators to help them do it all.
The increasing complexity of commerce conducted at scale and digitally demands that PSPs, in turn, come together to offer merchants a wide range of choice and functionality – preserving the relationships businesses have with vendors while making it possible to forge new ones, as needed, almost in an à la carte fashion.
High potential partnerships
Like Quickly CEO Justin Benson said Karen Webster of PYMNTS, a partnership that brings together the merchants and vendors that Spreedly works with — where Spreedly acts as the “orchestrator of the orchestration” — can cement payment systems across the world.
Simply put, Orchestrators are organized, centralized, and offered to help merchants stay flexible while optimizing their payouts.
The company is expanding its payment service provider program in 2022. Last month, Spreedly announced that European payments company Worldline would join. The program is linked to Spreedly’s platform to offer gateways and orchestration and PSP payments integrations to more easily integrate merchants and platforms, reducing the process from weeks to days.
In total, Spreedly’s platform currently supports over 120 PSP integrations. When the program launched last year, its preferred partners included PayPal and Stripe. Worldline, for its part, is focused on optimizing payments for merchants, especially those entering emerging markets like Latin America.
The past is prologue. Go way back in the last decade, and as mobile payments really started to take off, merchant businesses were way ahead of infrastructure capabilities, Benson said.
“Payments just weren’t ready,” he added.
All sorts of businesses went global, so to speak, creating opportunities for the Stripes, Adyens, and Braintrees of the world, which provided end-to-end payment functionality that merchants plugged into.
More recently, PSPs have introduced application programming interfaces (APIs) to speed up software integration, complete large-scale acquisitions, and possibly threaten to stunt merchant growth as they reshape their own operations. .
Changing the Payment Optimization Mindset
“The idea of payout optimization is less about single-stack solutions and more about, ‘What am I taking and who to do the optimal payout stack for me?'” Benson said.
In other words, merchants push their suppliers to enter into partnerships, even with competitors, to ensure that they can market a range of services.
For example, Benson said the partnership model gives stakeholders access to Stripe’s radar, provides access to alternative payment methods, and allows them to make inroads in Europe. Most PSPs differentiate themselves around, for example, support for regional acquirers or anti-fraud efforts.
“We want our merchants to be able to access all of these services,” he said, as merchants choose what’s important to them — and Spreedly’s responsibility is to overlay those relationships, even between competitors, marked by flagship tenants like Stripe.
The model is effective for merchants and even large enterprises that have in-house payment teams but may have connectivity issues with Payment Card Industry (PCI) compliance.
See also: Travel sites use payment orchestration to rapidly expand into new markets
As for what’s to come, Benson said Spreedly may well delve into new use cases that are emerging in places like Latin America, including microtransactions and new ways to serve underbanked communities where credit card processing fees are prohibitive.
Benson said the payment process is increasingly front and center regardless of the market as merchants prepare for real-time payments. The company will also be looking to add to the 120+ integrations already in place.
“Merchants will support things they think consumers want to use, like subscription services or restaurant donations or orders,” he said. “When there is evidence that consumers want something, merchants will come knocking for the added value [and Spreedly’s] services.”