For most online merchants, payment processing is of secondary importance and is seen as a necessary evil rather than a priority, but innovative and fast-growing companies today regard payment processing not as a standard service but as a business process crucial to their competitiveness.
However, many online retailers currently still rely on standard solutions from individual payment service providers (PSPs) for complex payment processing. However, as these aim to maximize profit margins, online merchants are faced with a solution that offers little to no scope for customization and cannot be tailored individually to online merchants. In addition, using a single PSP carries risks from its failure as well as potential vendor lock-in.
Driven by these drawbacks, large online retailers such as Otto Group and real.digital have brought payment processing back in-house and established their own PSP. However, this approach is very costly and therefore only makes sense for retailers with annual sales of more than one billion.
With so-called payment orchestration (PO), a new concept has emerged in recent years that addresses the urgent need of merchants for independence and innovative solutions. With payment orchestration, you develop a customized solution that consists of technical and functional building blocks. The PO has a number of advantages, which you can find below.
Access to many PSP
On the Payment Orchestration Platform (POP), merchants work flexibly with various local and international PSPs, depending on cost or performance.
Better negotiation position
The multitude of alternatives and the convenient comparison of offers force providers to be fair and to innovate quickly.
Flexibility
Merchants can enable, parallel or block payment methods as needed
Rapid market entry
Quick entry into new markets is possible at any time. Hereby, new markets can also be tested without great effort.
Aggregated reporting
Graphically prepared and metrics-based reports across all PSPs make transactions across all payment methods comparable.
Cost-neutral operation
Thanks to better negotiating power and more flexible control, a PO solution is about as cost-effective as using an external PSP.
Individual customizations
If necessary, new functions can be developed quickly.
Our whitepaper describes the individual options in detail and explains the aye4fin framework for payment orchestration.
(The document is in German.)
Stefania Andriolo is Consileon’s capital markets expert for securities settlement, payments and regulation. She is convinced that technology will revolutionise financial services by offering solutions today to the problems of tomorrow
Stefania Andriolo
Senior Project Managerin
+49 152 57139042
Stefania.Andriolo@consileon.de
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