Smart Payment Routing: How It Works

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For most businesses, “going global” means partnering with different PSPs to accommodate varying payment methods, cultures, and regulations throughout the world. However, it may be challenging and time-consuming for product managers, IT teams, and finance departments to handle these connections and the resulting stream of diverse payment flows.

Payment routing and orchestration may reduce many problems. Thus, clever smart routing may help your growing firm penetrate new markets, simplify reconciliation, and improve user experience and conversion rates.

Differences between payment orchestration, dynamic payment routing, and intelligent payment routing

Payment orchestration, dynamic payment routing, and smart payment routing are sometimes used interchangeably, although there are important differences.

You may use the expertise of different PSPs by using intelligent payment routing

In a nutshell, intelligent payment routing allows your system to choose the optimal payment service provider in your network depending on the specific requirements of your local customers. In the case of an e-learning platform, the PSP used in Germany, the United States, and France will all be different.

The smart payment router connects with the customer’s PSP during checkout on the internet. This speeds up payment, improving UX and reducing cart abandonment.

Platforms may utilize this technology to route user-preferred payments to PSPs. The PSP that accepts and processes card payment network transactions at the lowest cost may get a credit card payment.

Dynamic payments ease transaction burdens

Like intelligent payments, dynamic payment routing allows platforms to make more efficient use of their PSPs in relation to the number of transactions.

Take the case of a global e-commerce business that celebrates a national holiday by hosting a deal. The platform may dynamically redirect surplus payment volumes to other PSPs, ensuring that clients’ payments are completed as intended. In addition, platforms may scale this service regularly so that it can fill in at peak transaction times.

When one payment service provider (PSP) goes down, dynamic payments may assist mitigate losses by automatically rerouting refused transactions to the other PSPs.

Payment orchestration lets merchants with numerous PSPs manage these payment flows

Intelligent and dynamic payments are only one part of a company’s overall payment infrastructure.

The primary goal of payment orchestration is to ensure that all of these moving parts function in tandem. This may include a more complicated set of criteria for determining which routes to take, taking into account factors like location and urgency.

Orchestration simplifies and automates interdependency management. With many PSPs, product managers may focus on user experience and other business-related duties instead of relationship management and plumbing.

More importantly, payment orchestration relieves IT teams of the technical complexity of several payment modalities. Instead, organizations may employ user experience (UX) sprints to improve service for all consumers and payment methods.

When should shops start using smart payment routing?

Many organizations don’t need intelligent payment routing, albeit it’s enticing. We recommend using this powerful tool under certain scenarios. Intelligent routing is important if your firm utilizes several PSPs or payment gateway for high-risk business or if your customers have various payment needs. If you sell in one area, deal with one PSP, or operate in a niche where most customers utilize one payment method, you generally don’t require dynamic payment routing.

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