Payments Orchestration: What Comes Next?

Samantha Gordon

April 25, 2024

Samantha Gordon

Over the last few months, our team at Glenbrook has started to unpack one of the buzziest – and often least-defined – terms in payments: orchestration. As we define it, Orchestration Platforms facilitate a merchant’s multi-acquirer setup, in addition to providing services across the areas of transaction optimization, smart routing, and connections to multiple providers (acquirers, non-card payment methods, and related services such as risk solutions) through a single integration. While each of these individual functions is not unique to Orchestration Platform providers, Orchestration Platforms are unique in their ability to provide all of these offerings in a streamlined manner. At Glenbrook, we draw a distinction between orchestration with a little “o” (the activities), versus Orchestration with a capital “O” (meaning the providers and service offerings that encompass the defined elements). 

As we define it, Payments Orchestration solutions have four pillars:

1. The ability to route payments between multiple processors in the same domestic market – while remaining out of PCI scope – offers the merchant optionality, processor performance benchmarking, and redundancy that prevents business interruptions caused by outages. 


2. Access to multiple providers and payment types through a single API integration point reduces the effort to add new payment methods or even geographies – thus reducing the resources, cost, and time to bring new features to market. 


3. Transaction optimization (for example, BIN-level performance decisions for routing between different acquirers or using PAN instead of Network Tokens) helps merchants maximize their revenue. It also creates a stronger end-user experience for their customers by reducing the number of declined and failed payments. 


4. Finally, smart routing can be deployed in various ways to service the merchant’s key outcomes, whether it is maximizing auth rates or (in the example of PINless debit routing in the U.S.) optimizing costs.

The true benefit of Orchestration, however, is more than the sum of its parts. The promise of Orchestration is that the four functional pillars of the framework work not only alongside but also to amplify one another, thus enabling a merchant to employ best-of-breed point solutions at every step across the payments value chain – optimized at the transaction level – without adding the technical or operational complexity of supporting numerous integrations. 

Orchestration providers have certainly come a long way, and can enable powerful capabilities and benefits for the merchants that employ them. This also opens up possibilities for where Orchestration (and even orchestration) can go next. Here are some of the possibilities that we’ve been thinking about:

1. Feature-rich, integrated reporting and reconciliation across providers

While Orchestration Platforms offer reporting, few have invested deeply enough in this capability to serve as a fully-functional “command central” for all performance and financial reporting. However, reporting and reconciliation – particularly when it comes from several providers – are known pain points for merchants, which the Orchestration Platform maintaining all of these connections is in an ideal position to alleviate. Maintaining the level of detail available from direct PSP reporting while making this data easy for the merchant to understand and customize is certainly tricky. However, absorbing the role of the merchant’s data provider would make Orchestration solutions extremely sticky and difficult to dislodge.

2. Risk provider + PSP routing for transaction optimization

“Risk Orchestration” is a term we’ve started hearing more and more. However, the capability to marry smart routing between both risk platforms and PSPs has not emerged yet in the market. As it stands today, Orchestration Platforms’ smart routing capabilities can help a merchant identify which PSP to send a transaction to for the highest likelihood of success. But what if this went a step further, and supported smart routing between different combinations of PSPs and the risk platforms evaluating a transaction? Managing the complexity of optimizing transaction routing between all combinations of PSPs A and B, and Risk Providers 1 and 2, is a level of optimization that most (if not all) merchants would have a difficult time building on their own, and could provide a unique value-add that Orchestration Platforms could offer sophisticated merchants.

3. Orchestration for platforms and marketplaces

Embedded payments are a revenue-driver; just ask Shopify, which famously derives over 70% of its annual revenue from their payments solution (Shopify Payments) [1]. Across industries, platforms like Mindbody, Toast, and others include payments as a service that they offer to their customers.  Marketplaces – a type of platform – are growing, too; a report from Stripe estimates that 59% of global online sales will come from online marketplaces by 2027 [2]. Platforms and marketplaces could certainly benefit from the multi-acquirer management, smart routing, and transaction optimization services that Orchestration Platforms provide. However, the two-sided element of Platforms creates a wrinkle: each seller must be screened by a specific PSP in order to receive payouts (while keeping the Platform out of the flow of funds), which means that additional logic would be required on the Orchestration Platform’s part to keep pay-ins and pay-outs running through the same PSP. While few Orchestration Platforms offer services that solve for this complexity, the growing volume running through Platform businesses certainly presents an opportunity.

4. Smart routing getting even smarter

In today’s market, the prevailing approach among Orchestration Platforms has been to advise merchants on routing decisions, rather than making these decisions on merchants’ behalf.  Orchestration Platforms present merchants with the data needed to make smart decisions about where and how to route their transactions, but it is still the merchant that needs to execute on that decision. There are good reasons for this approach; in addition to maintaining the Orchestration Platforms’ position of neutrality between PSP partners, merchants also remain in the driver’s seat with regard to their transaction routing. This also can create a level of comfort for merchants, particularly sophisticated ones that would be loath to give up control of their transaction routing decisions to a third party. However, for smaller merchants that use Orchestration Platforms as a way to outsource Payments Ops resources and capabilities, more specific and actionable recommendations may be necessary. We’re unlikely to see a “black box” approach to Orchestration gain much traction with today’s market dynamics. However, how can Orchestration Platforms begin to close the gap for their merchants by using sophisticated analysis and models to make recommendations for smart routing optimizations, which are simple for merchants to implement and measure?

5. “Both/and” architecture

Conventionally, the value proposition of an Orchestration Platform is a substitute for a merchant’s existing (or future) payments stack. But is this always the case? As Orchestration Platforms begin working more frequently with those enterprise merchants that want to maintain control of their payments environment, it’s not hard to imagine a hybrid model developing where Orchestration Platforms serve as a supplement – rather than replacement – alongside the merchant’s existing integrations, reporting, and routing processes. Will we see this adoption dynamic more in the market, where merchants maintain a hybrid Payments environment with both Orchestration Platforms and their native payments stack?

6. More Orchestration (not just orchestration)

Our framework draws a distinction between little “o” orchestration activities, and capital “O” Orchestration Platforms that provide these services. In practice, however, this binary is not quite as distinct; many PSPs offer services that look a lot like Orchestration (although often without the first pillar of capabilities: support for a multi-acquirer environment). As the market for Orchestration develops, and PSPs continue to compete on performance (rather than strictly on price), it would not be surprising to see the lines between these two service providers begin to blur. In the near future, to what extent will we see traditional acquirers incorporating white-labeled orchestration services powered by Orchestration Platforms (similar to their white-labeled risk offerings)?

As Payments Orchestration continues to develop, we’ll keep watching closely. Until then, if your organization could use some help in deciding if, and which, Payments Orchestration Platform is right for you, we’re here to talk.

[1] Shopify
[2] Stripe

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