It’s time to make payments POP!
No, we’re not talking about adding some color or changing the font. We’re talking about the world of payment orchestration platforms (POPs). These tools are the next leap forward for ecommerce merchants who want to make the shopping process smoother for their customers and increase the efficiency of their operations.
Merchants who orchestrate their payments have created systems that improve payment processing for both the company and the customers. POPs bring together multiple payment methods and channels and come with features to increase payment success rates while lowering sellers’ costs. They give customers more payment options and protect against transaction failures. It’s no wonder sellers are flocking to these tools.
It’s easy for a merchant like you to get started with payment orchestration. The first step is to learn what capabilities a POP offers. Then, ask yourself which ones will benefit your company. This explainer introduces common payment orchestration practices and gives examples of how they’re used in ecommerce today. Read it, and you’ll be ready to make over your payments process for the better.
Payment orchestration platforms send each transaction through the steps that make it most likely to succeed. When the customer makes their purchase, the POP will route it to the most favorable path. Payments that fail may benefit from features like cascading (retrying the payment on different gateways until it succeeds), decline management (automatic transaction retries) or Smart Dunning (AI-driven transaction retries).
The ideal process looks different for each transaction, so POPs have the advantage over tools that optimize for the “average” payment. Plus, they give merchants access to multiple payment service providers and, thus, more potential paths.
Ecommerce merchants should invest in a POP to help shepherd their company toward sustainability and growth. Larger companies tend to benefit more from payment orchestration, but POPs have something for everyone.
Multi-national merchants end up paying hefty fees to process payments that originate from a different region. A POP routes international payments (or those in other currencies) through the compatible gateways and banks with the lowest fees. High-volume sellers have to make contingencies in case eager customers clog a payment gateway. Payment orchestration directs transactions through payment gateways that have the capacity to process them.
For subscription-based businesses, a POP’s multiple payment gateway integrations add convenience by allowing sellers to accept more payment methods in one streamlined checkout process. Merchants who fall under the high-risk umbrella, or those who see a higher number of declined payments, can use a POP to support multiple merchant accounts and prevent one of them from racking up too many declined transactions.
Finally, companies in industries with heavy compliance requirements (think healthcare and financial services) can trust a POP to make sure every payment is processed according to regulations.
Payment orchestration begins after a customer has initiated a purchase but before the transaction is complete. Here are the tools you should use to correct potential issues before they cause a transaction to be declined.
BIN blocking tools make it easy to restrict the type of card transactions you’ll accept. The first four digits of each credit card are its bank identification number, or BIN. They encode information including card brand, card type (for instance, a platinum card or travel card), the issuing bank and the country in which the card was issued. Payment processors use the BIN to route transactions; you can use it to pre-screen your payments.
BINs are standardized: Every card that shares the same first four digits shares the traits listed above. Thus, you can use a BIN blocker to prevent, for instance, American Express payments or cards issued outside the United States. Some merchants also block BINs that are linked to an unusually high level of fraud or chargebacks.
Transactions made on expired credit cards are bound to fail, so stay a step ahead with an account updater. This tool detects when a credit card saved to your system has been closed. It automatically requests updated account information from the card issuer.
Account updaters also make the shopping experience more convenient for buyers. They won’t have to deal with an annoying “your card is expired” popup at checkout or fix their account after receiving a dunning email. The sticky.io Account Updater refreshes payment information for 7 out of 10 expired cards in merchants’ systems. It’s a great tool to prevent involuntary churn.
A payment routing system directs transactions to the best payment gateway as determined by preset rules or machine learning. The more payment methods and currencies a merchant accepts, the more they’ll benefit from payment routing capabilities.
In a manual payment routing setup, merchants create routing rulesets using factors like payment method, geographic location and payment gateway performance. Rules can even be based on statistics like percentage of transactions sent to a specific merchant ID (MID) or percentage of approved transactions per MID.
Intelligent payment routing software uses machine learning to choose a payment gateway. These programs analyze payment data like location, currency, transaction amount, card issuer and more to learn where certain types of payments are most likely to succeed. They direct transactions along the path that’s most likely to result in approval (and that will result in the lowest fees).
A payment iFrame lets merchants embed payment forms in their checkout pages rather than sending customers to another site to complete the transaction. Storefronts with hosted payment gateways use iFrames to mimic the onsite payment gateway experience.
Customers input payment data into the form within the iFrame, and the data is then tokenized and transmitted. Credit card and other sensitive customer data are stored by your payment gateways rather than you. You don’t have to handle any Payment Card Industry Data Security Standard (PCI DSS) compliance on your own with such a setup.
A failed payment isn’t the end of the line. Merchants can use post-authorization payment orchestration tools to turn declined transactions into successful purchases.
Payment cascading, also known as load balancing, routes failed payments through backup payment gateways to increase their chances of success. This service handles soft declines — those caused by errors in the payment processing chain. Of course, you have to have multiple payment processors and MIDs set up and linked to your POP to take advantage of this feature.
The capability is called “cascading” because transactions are passed from gateway to gateway until they succeed, or all options have been exhausted. Some POPs support intelligent cascade profiles, which allow you to specify which gateways to use for certain types of transactions. This feature is mostly used by merchants who see high rates of failed transactions because it takes time to configure.
Increase subscription payment success rates effortlessly by pre-scheduling transaction retires using a Decline Manager. This tool helps you deal with soft declines caused by insufficient funds or exceeded credit card limits. Such transactions can be retried — but will only go through if the conditions that caused the error have changed.
Merchants can pre-set the number of times each failed transaction should be re-attempted and the interval between those attempts. The decline manager will then automate those retries in hopes of converting a transaction into a success.
AI-based tools make it easier than ever to retry payments at the opportune moment. Smart Dunning one-ups the standard decline manager by analyzing multiple payment factors to determine when a retry is most likely to succeed.
There are many tools in this space, but sticky.io’s Smart Dunning looks at 500 payment variables and helps merchants recover up to 50% of failed transactions. Plus, it’s constantly improving as it learns from its successes and failures. Because it recovers more transactions than a traditional decline manager and optimizes for the fewest number of retries per payment, Smart Dunning is a better way to protect your MID health.
You may not see the need for a POP today, but don’t write them off just yet. Setting one up now means you’ll be able to provide a better checkout experience down the line — without having to redo your entire payments tech stack. Whether you expand into new markets or want to accept different payment types, your company will be ready to grow in whatever way will best serve you and your customers.
Only a small percentage of ecommerce platforms today are proper POPs. Some software may bill itself in this vein because it offers one or two features to orchestrate payments. However, just as you wouldn’t trust your money to a bank that didn’t have robust online banking, you shouldn’t trust your payment processing to a platform that can’t orchestrate transactions. Look for a tool that offers all the features listed above to know if you’re on the right track. Both your operations and your customers’ experience will be better for it.