For online merchants, payment processing is the lifeblood of their business. A seamless and efficient checkout experience can mean the difference between a completed sale and an abandoned shopping basket. In today’s ever-evolving eCommerce landscape, dynamic payment orchestration has emerged as a game-changer, optimising transaction paths in real-time and delivering a host of benefits that drive higher conversions and improved customer experiences.
Understanding dynamic payment routing
Dynamic payment routing is a sophisticated approach that intelligently selects the most efficient and cost-effective payment processing options based on a multitude of factors. By leveraging advanced algorithms and real-time data, this technology dynamically routes transactions through the optimal paths, taking into consideration variables such as currency, geographic location, payment method and performance metrics.
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Unlike traditional static payment routing methods, which rely on predetermined rules and fixed pathways, the orchestration of payment routes adapts to the specific circumstances of each transaction, ensuring the best possible performance and maximising the chances of it being completed successfully.
The power of real-time optimisation
One of the key advantages of dynamically orchestrating payments is the ability to optimise transaction paths in real-time. As customers initiate purchases from different locations, using various payment methods and currencies, the routing system instantly analyses the available options and selects the most suitable path for that particular transaction.
Managing payments at this speed means that transactions are always optimised and are processed through the most reliable and cost-effective channels, minimising the risk of declines, chargebacks, and other common payment-related issues. By continuously monitoring and adjusting to changing conditions, dynamic routing provides a level of agility and responsiveness that traditional methods simply cannot match.
Boosting transaction rates and conversions
The impact of payment orchestration on transaction rates and conversions has the potential to transform eCommerce sales. According to research by McKinsey, organisations that use payment orchestration have reported a 20% increase in global sales. By enhancing payment paths and reducing the incidence of unsuccessful transactions, online merchants working with us have experienced significant improvements in their overall transaction success rates, ranging from 85% to 90%.
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By GlobalDataThese impressive figures translate directly into increased revenue and customer satisfaction. With fewer failed transactions and smoother checkout experiences, customers are more likely to complete their purchases, resulting in higher conversion rates and improved customer loyalty in the immediate and longer term.
Boosting the customer experience
Dynamic payment routing also has the effect of enhancing the overall customer experience. According to BR-DGE 62% of customers who receive a failed payment notice abandon their purchase. Another report indicates that around 10% of all dollars spent on online shopping are rejected during payment authorisation. By ensuring seamless and efficient payment processing, customers can enjoy a hassle-free checkout process, reducing frustration and increasing trust in the merchant’s platform.
In addition, dynamic routing can intelligently select payment gateways and acquirers based on their performance metrics, such as response times and uptime. This proactive approach reduces the risk of delays, timeouts, and other issues that can negatively impact the customer experience, fostering a sense of reliability and professionalism about the merchant.
Keeping fraud at bay
Merchants that use payment orchestration benefit from a cut in fraudulent transactions. This is afforded by the algorithms that consolidate payment flows also applying sophisticated fraud detection rules. Because data is analysed in real-time, a centralised view of all transactions across multiple payment methods and channels is achievable, making it easier to identify and prevent fraudulent activities. It also means that merchants are complying with international regulations including PCI DSS.
Adapting to evolving payment landscapes
The payments landscape is constantly evolving, with new payment methods, regulations, and technological advancements emerging regularly. Dynamic payment orchestration allows online merchants to stay ahead of these changes by seamlessly adapting to new payment options and integrating them into their existing systems.
As new payment methods gain popularity or new regulations are introduced, dynamic routing can automatically incorporate these changes into its decision-making processes, ensuring that transactions are always routed through the most appropriate and compliant pathways.
Scalability and flexibility
Another significant advantage of orchestrating payments is scalability and flexibility. As online businesses grow and expand into new markets, their payment processing requirements become more complex. Dynamic routing can easily accommodate these changing needs, scaling effortlessly to handle increased transaction volumes and adapting to new geographic regions and currencies.
The flexibility of dynamic routing also allows online retailers to customise and fine-tune the routing algorithms to align with their specific business objectives and priorities. Whether prioritising cost-effectiveness, speed, or a combination of factors, dynamic routing can be tailored to meet the unique needs of each merchant.
Embracing the future of payment processing
As online commerce continues to evolve and consumer expectations for seamless experiences rise, dynamic payment orchestration has emerged as a critical component for success. By optimising transaction paths, boosting conversion rates, and enhancing the customer experience, this innovative technology is poised to become the standard for payment processing in the digital age.
eCommerce retailers who embrace this approach are not only setting themselves apart from the competition, but future-proofing their businesses, ensuring they can accommodate the latest payment innovations while at the same time delivering the exceptional experiences that modern customers demand.
Philip Plambeck is Managing Director, UK, Computop
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McKinsey & Co Inc