COMMENTARY: How Payment Orchestration Can Make Sales POP for Online Sellers

With nearly 1 out of 5 shoppers abandoning their carts due to a long or complicated checkout process, today’s merchants are challenged to close retail sales. Combine this with the fact that many merchants have not updated their payment systems in two years, and the result is an inability to optimize the online customer checkout experience and orchestrate payments, leading to customer cart abandonment and low conversion rates.

A rethink is necessary for merchants when it comes to payment orchestration. Merchants need to embrace both back-end and front-end payment orchestration to transform the customer checkout experience.

Consumers worldwide have their preferred payment methods. Many will abandon a transaction and head elsewhere if met with too much friction at checkout. According to research from GoCardless, the top three reasons consumers choose their preferred payment method are: easiest to use (56%); payment will be taken automatically (42%); and their payment method is commonly accepted by most or all of the businesses from which the consumer makes a purchase (35%).

It’s imperative that merchants provide the right technology and payment-orchestration platforms to meet customer demand. Why? Payment-orchestration platforms (POPs) are known for their ability to assist merchants with improving the checkout experience at the back end. Merchants can cater to ever-evolving customer payment preferences and stay compliant to a range of data and regulatory requirements in local markets without eating into engineering and technology resources.

For merchants without a POP, relying on a single payment provider or juggling multiple providers that are not integrated with each other can also be an easily avoided headache. An orchestration layer—whether outsourced or built in-house—optimizes payment processing at each stage of the payment flow for online transactions, minimizing the number of failed transactions due to technical issues and allowing merchants to save costs.

Just optimizing the customer checkout experience does not always equate to comprehensive personalization, however. In addition to back-end orchestration—which covers transaction routing to optimize for various outcomes, including fraud prevention and better authorization rates, among others—POPs can also orchestrate the front-end checkout experience.

With front-end payment orchestration, a merchant can customize everything a customer sees throughout the checkout. Front-end payment orchestration allows merchants to dynamically filter and order payment methods offered to individual customers at the checkout based on the content of a shopping cart or preferences based on previous transactions.

For example, if a merchant is working with a payment processor through a payment-orchestration platform that prohibits the purchase of certain products, such as alcohol and tobacco, metadata about the contents of the shopping cart can be passed to the POP, which can “hide” that specific processor from the customer at the checkout and push an alternative method forward, keeping both merchant and processor happy and compliant.

Likewise, if a customer has expensive electronic products in his cart, he might be a good candidate for alternative payment methods such as buy now, pay later or open banking. A merchant can set a rule based on transaction value (for example, $1,000 or more) to offer a provider for that method, such as Klarna, Trustly, or Vyne, as “first” in the order of payment methods displayed to the consumer.

With an orchestration layer or platform that optimizes both the front- and back-end, merchants can create a checkout experience that will delight their customers. Positioning semi-personalized payment methods depending on purchases in front of consumers, in addition to plenty of options for the consumer to select, can be as easy as one click.

The platform a merchant chooses should optimize conversion rates at a cart level and at checkout, as well as advise and recommend how to increase sales and decrease costs as a merchant’s business grows and expands.

Merchants can get creative and build flows that offer each customer an individualized checkout experience. They can be in full control of each part of the transaction lifecycle to settle payments faster, reduce fraud and chargebacks, restrict the sale of prohibited goods, optimize processing fees, and reduce the overall cost of transactions. All this while remaining PCI-compliant and in-line with local data and privacy regulations.

In sum, cloud-native POPs can, in one place, replace legacy payment infrastructures and systems and streamline and manage payment methods, services, and transactions.

—John Lunn is the founder and chief executive of Gr4vy Inc., San Mateo, Calif.