Managing multiple payment service providers (PSPs) can seem like a necessary step for businesses operating in diverse markets, but it comes with hidden costs that can hinder growth and profitability. Discover how payment orchestration can streamline your operations and boost your bottom line.
The Real Reasons Businesses Use Multiple Payment Providers
In today's fast-paced and globalized market, businesses often find themselves needing to integrate multiple payment service providers (PSPs) to meet a variety of needs. Whether it's due to approval rate issues, expanding to new geographies and currencies, or supporting customer-preferred local payment methods, the reasons for adding more PSPs are numerous.
Additionally, redundancy and failover concerns also push businesses to diversify their payment providers. This ensures that if one provider encounters downtime or issues, transactions can still be processed smoothly, thereby maintaining customer satisfaction and operational efficiency.
Unveiling the Hidden Costs and Inefficiencies
While using multiple PSPs might seem like a strategic move, it brings along several hidden costs and inefficiencies. Technical complexity is a significant challenge, as businesses must build and maintain multiple integrations, keep up with API changes, and manage downtimes. These technical hurdles require constant attention and can drain valuable resources.
Operational overhead is another hidden cost. Manual reconciliation across different providers, more complex accounting, and reporting, as well as settlements, can bog down your finance team. The risk and compliance landscape also becomes more complicated, with an increased PCI DSS scope and a higher burden for fraud and chargeback monitoring. Moreover, suboptimal routing can lead to higher decline rates, and the inability to intelligently retry or optimize transaction routing results in missed revenue opportunities.
Real-World Struggles with DIY Payment Management
Consider a mid-size broker or a gaming company that has expanded rapidly into multiple markets. Initially, adding more PSPs seemed like a straightforward solution to meet different market demands. However, they soon found themselves entangled in a web of technical integrations and manual processes. The finance team was overwhelmed with reconciliation tasks, and the IT department struggled to keep up with API updates and compliance requirements.
This fragmented approach not only drained resources but also led to missed revenue opportunities due to suboptimal transaction routing and higher decline rates. The company's growth was stifled by these inefficiencies, showing the real struggle of managing payments without a streamlined solution.
How Payment Orchestration Simplifies and Optimizes Payments
Payment orchestration offers a streamlined solution to the complexities of managing multiple PSPs. With a single integration, businesses can access multiple providers through one API. This reduces the technical burden and simplifies the management of payment processes.
Smart routing and optimized approval rates are significant benefits of payment orchestration. Automated, rules-based transaction routing ensures that transactions are processed through the best channels, improving conversion rates. A unified reporting and reconciliation system provides a single dashboard for simplified settlements and actionable analytics, reducing operational overhead. Additionally, the compliance burden is minimized, as the PCI DSS scope is reduced and KYC/AML efforts are streamlined. Payment orchestration also enables scalability, allowing businesses to quickly add or remove providers as their needs change.