Consumers have left the stores and moved online to shop and pay, and businesses have been quick to follow.
Firms around the globe have been expanding their digital shopping and payment options to meet the consumer demand for digital commerce. This rapid expansion has created an unprecedented need for merchants to optimize their payment operations in a way that is cost-effective and has the potential to enhance user experience.
The trouble for businesses is that with this increase in digital transaction volumes comes the need to better manage payments processing. Every time a business adds a new payment service provider (PSP) or currency or expands into a new market, it must optimize its payment flows for cost and efficiency and rethink its payments strategies. The expense of processing payments can add up if a firm’s default payment gateway shuts down, if its authentication success rates fall or if processing times begin to slow, cutting into the bottom line.
PYMNTS interviewed Bronson Tubb, senior vice president of engineering at retail services and enterprise infrastructure provider Omicron Media, to discuss how payments orchestration can make this herculean task more manageable. Omicron Media represents a wide network of services built through mergers and acquisitions. The company inherited various partnerships with gateways and PSPs as it grew its network.
“Payments orchestration has opened up opportunities … to optimize costs or improve authorization rates or any other number of pains and frustrations, and those are all opportunities that did not exist even a couple years ago,” Tubb said.
Maximizing ROI: A Conversation
Omicron Media’s network pools many payment services’ collective capabilities and competencies into Spreedly‘s application programming interface (API)-driven platform, making it easier for firms to manage payments.
“I can use the same set of APIs across many, many integrations — any shopping carts or billing engines — and do it with confidence,” Tubb explained.
This creates a sort of network effect, with Omicron working with its business partners to determine the best approaches to optimizing payment flows and adopting them. Simply plugging into the network is not the end of the integration road, however. It is difficult to predict how adding new payment operations will ultimately impact a business’s financial stability, even with simulations and predictive analytics.
“The amount of success you’ll see [with any investment] is dependent on your book of business and how it performs in practice [because] without perfect information, you can’t perfectly predict [return on investment],” Tubb said.
It is therefore critical for businesses to realize that managing payments operations is not a one-step process but an ongoing conversation. Maximizing ROI requires businesses to continuously assess their payment flows to determine what is working, what is not working and how to improve their processes if they are flawed.
Freeing Finance Teams for More Focused Work
Payments orchestration plays a central role in helping Omicron add new businesses to its network and ensure that these merchants’ payment operations are functioning optimally. The absence of payments orchestration would require firms to expend more time and resources than most businesses’ finance departments could handle. Tubb pointed to a hypothetical example to illustrate this point.
Suppose a business reports higher-than-expected payment processing costs. Its finance team would first need to manually review the company’s reconciliation data to determine which aspect of its payment operations was causing the problem. The company would then need to rethink its payment flows to mitigate that problem and implement those changes manually. This process would have to be repeated every time an abnormality in the firm’s operating costs was detected. A payments orchestration layer that leverages API technology can do this all at once.
“The implementation of a common set of APIs and a common orchestration framework [provides] a better visibility into the actual fee structure [and] allows the finance team, with less effort and less need, to really become experts in the pay structures of every payment arrangement, to reconcile … those [data] and then — to go a step further than that — do their own analysis,” Tubb said.
This relieves the stress on financial teams’ resources, freeing them up to focus on more advanced analysis.
Use of a payments orchestration layer in the technology stack also allows businesses to analyze far more aspects of their payments operations with APIs, providing more opportunities to make enhancements whenever and wherever possible, Tubb explained.
“The [scope of analysis with payment orchestration layers] is more varied, and the implementations of [operations] are far more relaxed, so the existence of productized APIs for [participants in the payments process — from merchants to platforms to gateways –] helps everyone, [the way] a rising tide floats all boats,” he said.
Payments orchestration therefore stands out as a universally beneficial tool that can help businesses of all sizes and from all sectors optimize payment operations based on their own unique wants and needs.