Introduction

In today’s digital economy, businesses face the challenge of managing a multitude of payment service providers, currencies, and payment methods. This complexity can lead to inefficiencies, higher costs, and lost revenue opportunities. Enter the Payment Orchestration Layer (POL)—a solution designed to streamline and optimize the entire payment process. This blog will delve into what a POL is, its benefits, and the key considerations for businesses looking to implement it.

Sensepass and the Power of Choice:

While traditional POLs offer significant advantages, Sensepass takes it a step further. Our orchestration layer solution not only acts as a powerful consolidation tool for various payment service providers (PSPs) but also seamlessly connects to over 100 digital wallets including popular choices like Venmo, PayPal, Amazon Pay. Additionally, we integrate with Buy Now, Pay Later (BNPL) providers like Klarna, Zip, Sezzle, Affirm, Splitit, Afterpay, WeChat Pay, Ali Pay, and even cryptocurrency options like Bitcoin. This comprehensive connection allows merchants to bypass traditional credit card rails for in-store, in-person transactions. By converting these transactions into e-commerce transactions, Sensepass empowers businesses to potentially save 30-60% on credit card processing fees.

This revised introduction highlights Sensepass’s unique strengths within the POL landscape. It emphasizes the extensive digital wallet and BNPL provider connections, along with the cost-saving potential through e-commerce transaction conversion.

What is a Payment Orchestration Layer?

A Payment Orchestration Layer (POL) is a unified software platform that integrates multiple payment service providers (PSPs) and manages the entire payment lifecycle. This includes transaction routing, payment processing, risk management, and settlement. By consolidating these functions into a single layer, businesses can efficiently manage payments, reduce dependencies, and enhance their payment infrastructure’s scalability and flexibility​​.

Challenges Addressed by Payment Orchestration

Meeting Customer Expectations: Today’s customers demand quick, seamless, and secure payment experiences. A POL ensures a smooth checkout process by harmonizing different payment methods and improving transaction success rates​​.

Regulatory Compliance: Navigating the complex landscape of global payment regulations can be daunting. A POL helps businesses comply with various standards like PCI DSS, PSD2, and GDPR by centralizing and standardizing compliance processes​​.

Complex Dependencies: Managing multiple PSPs can create operational silos and inefficiencies. A POL eliminates these issues by providing a single point of integration for all payment processes​​.

Benefits of a Payment Orchestration Layer

Improved Scalability and Easier Integration: A POL simplifies the expansion into new markets by integrating new payment providers and currencies seamlessly. This flexible architecture allows businesses to scale rapidly without being bogged down by complex integrations​.

Smart, Dynamic Routing: By intelligently routing transactions through the most efficient PSPs, a POL increases payment acceptance rates and reduces checkout abandonment. This dynamic routing capability ensures that transactions are processed through the optimal path, whether for lower fees or higher success rates​.

Streamlined Customer Experience: A POL harmonizes the checkout flow by offering a broad range of payment options, tailored to the customer’s preferences and regional norms. This results in a more satisfying and seamless customer experience​.

Better Merchant Experience: For merchants, a POL simplifies payment processes, including handling refunds, billing, and settlement. This leads to improved operational efficiency and lower administrative burdens​​.

Lower Costs: By optimizing payment routing and reducing reliance on single vendors, a POL helps businesses save on processing fees and reduce vendor lock-in. This cost efficiency translates directly into improved bottom-line performance​​.

Data Analytics and Reporting: A POL provides comprehensive analytics and reporting tools, enabling businesses to monitor performance, identify trends, and make data-driven decisions to optimize their payment processes​ ​.

Security and Risk Prevention: Enhanced fraud detection and risk management are critical components of a POL. These systems ensure that transactions are secure and comply with relevant regulations, minimizing the risk of fraud and data breaches​.

The Orchestrated Payment Process

The orchestrated payment process encompasses several key steps: selection, routing, processing, approval, clearing, and settlement. By managing these steps through a unified platform, a POL ensures efficiency and accuracy at every stage of the payment lifecycle​ ​.

Choosing Between As-a-Service and In-House Solutions

As-a-Service Solutions: These solutions offer convenience and rapid deployment with support for various payment partners. However, they may limit customization and future integrations​​.

In-House Solutions: Building an in-house POL provides full control, customization, and potential long-term cost savings. This approach requires significant investment in development and expertise but offers the highest level of flexibility and integration capabilities​.

 

Global Payment Orchestration Platform Market Value Growth

  • Market Value: The global payment orchestration platform market was valued at USD 848.6 million in 2022 and is projected to grow at a compound annual growth rate (CAGR) of 19.5%, reaching approximately USD 4.83 billion by 2032.

 

  • CAGR Comparison: Another report indicates an even higher growth rate, with the market expected to grow at a CAGR of 24.7% from 2023 to 2030, reaching USD 1.13 billion by 2022.

CAGR_Comparison_2020-2022_vs_2023-

Key Statistics

  • Digital Payment Transactions: Digital payment transactions surpassed USD 1 trillion in 2023, highlighting the increasing need for efficient payment solutions like payment orchestration.
  • Business Impact: Businesses that implemented payment orchestration have reported increased transaction acceptance rates, directly translating to higher revenues. Intelligent routing through the most cost-effective PSPs can significantly boost acceptance rates, particularly in high-volume industries like e-commerce and travel.
  • Cost Savings: Payment orchestration can lead to substantial cost savings by reducing payment processing fees through smart, dynamic routing.
  • B2C Segment: The B2C segment, particularly in retail and e-commerce, held over 35% market share in 2022, driven by the need for efficient payment operations and enhanced fraud protection.
  • North American Market: The North American market is particularly strong due to high R&D activities and a well-established payment infrastructure, with a notable increase in mobile device adoption and e-commerce transactions.

 

These statistics underscore the crucial role of payment orchestration in modernizing payment processes, reducing costs, improving acceptance rates, and ensuring regulatory compliance. As businesses continue to expand globally and adapt to digital commerce trends, the adoption of payment orchestration platforms is set to rise significantly.

Conclusion

Implementing a Payment Orchestration Layer can transform your payment processing infrastructure, offering numerous benefits from cost savings to enhanced customer and merchant experiences. As the market for payment orchestration platforms grows, businesses that adopt these solutions will be well-positioned to thrive in the competitive digital landscape.