It seems that, for those of us in business, there’s always a hot new acronym or fancy tech solution that we need to come to grips with on the flip of a dime. Whether it’s a newfangled way to stand out in search engines, or collaboration tools that make complex remote work feel like we’re back in the office, it’s a lot to stay on top of. Especially with all the other day-to-day business processes, we have to deal with.
Now, there’s another one you might have heard of: POP or Payment Orchestration Platform.
At first glance, that can sound a little intimidating, and believe me, it’s not a simple concept to wrap your head around. At least, not once you dig beneath the surface.
However, POP is changing the way we do business and it’s a major advantage. If you aren’t familiar with it, I’ve put together this comprehensive guide to cover what it is, how it works, and how you can start leveraging it.
I know it’s yet another weird acronym to deal with but trust me. It’s totally worth it.
Let’s get started.
What is POP?
POP, or Payment Orchestration Platform, is a software-based business solution that streamlines your transactions and simplifies them.
This is a lot more complicated than it sounds when you get under the hood and see how everything works, but I’ll get to that shortly. For now, it essentially takes all of your various transaction points, such as different banks, payment methods, etc, unifies them on one platform, and then tells the money coming in and out where to go. It’s sort of like a middleman for your payments, but instead of just being another hurdle to deal with, it simplifies the whole ordeal and frees you up to focus on more important matters.
This might not seem like an absolute
necessity, but Payment Orchestration Platforms are becoming a key part of the
overall business economy, and adopting one now is a great way to get ahead of
How Payment Orchestration Platforms Work
This is where things get a little more complicated, but I’ll try to word it in a way that’s a little less of a headache to deal with.
Payment Orchestration Platforms are essentially streamlining solutions. Instead of having to have several different PSPs interact and exchange data for transactions, the platform takes all of that information, directs it, and offers a few other services, as well. This creates a payment platform that is more secure, reliable, and of course, user-friendly.
This is done in layers.
First, all of your potential storefronts and transaction sources are connected to the POP’s API. So, let’s say you have an eCommerce store, a physical storefront, and maybe an app that all brings in revenue and have to process various types of transactions. Those would get connected to the POP solution.
Then, as transactions are made with those income streams, the transactions are run through a processing layer. This is where the POP begins organizing the routing, reporting, billing, settling, and clearing phases of the transaction.
There are two other layers that work in tandem with the processing layer. First, there’s the payment acquirer and supplier layer. When a transaction is made, the payment needs to be sent from the payee’s payment method (their bank, credit company, etc) to the final recipient (again, this is another bank, digital wallet, etc). The POP will automatically direct the payments between those two entities to facilitate a complete payment. The neat thing about a POP is that these things don’t need to be handled in separate layers. When you don’t use a POP, transaction times are longer and less reliable, and each transaction is handled between the entities working on their own payment platforms. The POP consolidates all of your various payment platforms into one spot and automatically manages the routing and various processing needs of each transaction.
There is a third layer that is a major benefit of using a Payment Orchestration Platform, though.
There are tech solutions for everything in business. Security programs that encrypt transaction data, fraud prevention solutions, and tons of other things we all rely on to make sure we don’t get scammed, and our customers can trust us. You probably use several of them already. Well, the third layer of a POP is designed to automatically integrate those solutions into every process instead of forcing them to be implemented across separate payment formats. This greatly increases the security and reliability of your payment platform for you and your customers.
One of the ways I like to look at this is like one of the password consolidation solutions you probably use already for your personal life. The same way that allows you to plug all your passwords into one piece of software and simply use that to log into anything you need, this handles your business transactions; it’s a little different, but as far as your user experience goes, you should feel familiar with it.
Why You Need a Payment Orchestration Platform in 2022
You might be tempted to just stick with what you’re used to. I understand it. With all the seemingly random things being tossed at businesses, it’s overwhelming to keep adjusting things. However, this is actually a necessity if you want to remain competitive, and it can even have some major legal repercussions under the right circumstances.
Us business owners have always had to deal with regulations and requirements, but the last few years have led to some big changes in regulations. This is largely due to how many fancy payment options have surfaced. What was once a matter of check, cash, or credit card payments now includes digital wallets, various direct payment options with online banking, cryptocurrency, and more. All of those things have helped usher in a new online economy, but they’ve complicated things quite a bit, as well.
With new regulations in place to ensure proper reporting, consumer safety, and more, it is becoming increasingly difficult for our traditional payment platforms to keep up. It’s just part of having systems that handle everything individually on massive networks; there’s more room to mess up. It’s kind of like when you’re trying to get the kids ready for school, respond to work emails, prepare yourself for your day, and the million other things you have to do each morning. If you don’t find a way to streamline it, you’re probably showing up to work looking like a mess, and the kids probably forgot their bagged lunches. Except, with business transactions, getting overwhelmed like that leads to fines.
Since a Payment Orchestration Platform pulls all your various transaction funnels into one centralized API and handles all the gritty details automatically, it can meet business regulations much more effectively, and you can adapt the system to meet new regulations far easier.
As business operators, this is absolutely key for all of us. Getting into regulatory trouble is a lot worse than having a quarter with lower sales than usual, losing a great employee to a competitor, or any of the other problems that tend to be part of the business world. It can be hard to recoup once the IRS or regulatory authorities get involved.
However, this isn’t the only reason I recommend hopping on the POP bandwagon. There are plenty of other benefits I’ll talk about soon.
How Payment Orchestration Platforms Came to be
Before we get into the various benefits POP offers, I want to talk a little bit about the origins of POP solutions. They’re not old school, but they’re not exactly brand new, either. Payment Orchestration Platforms have actually been around for several years.
Initially, POP was just a big business thing. While the internet was first starting to become the massive economic pillar it is today, big businesses were starting to feel the pain that comes with mass transactions happening all at once across a multitude of payment methods.
See, while small businesses didn’t have to worry much, and eCommerce wasn’t nearly as popular as it is now, big businesses had to operate on extensive server networks dedicated solely to processing transactions. The backend for any given big business in 2010 was pretty complicated, and it was starting to experience some issues with regulatory compliance, customer experience, and the company’s own ability to reliably maintain its transaction data; we all know how many problems that can cause.
So, some of the industry’s leaders started looking for a solution.
Rather than continuously upgrading their server networks and postponing the inevitable, they started building extremely complicated backends that could consolidate their payment processes into one easy network. This was done on a per-company basis for a while, and then it started to pick up steam and trigger the development of dedicated B2B solutions.
However, these backend APIs weren’t called “Payment Orchestration Platforms” yet, and they were in no way available to the average small business or eCommerce side hustle. After all, could you imagine how much it would cost to get your own custom backend developed in this economy? It was better to just stick with traditional methods, and on a smaller scale, that wasn’t really a problem, yet.
Unfortunately, it is becoming a problem even for smaller businesses. With the internet booming and online sales making up much of the global consumer economy, even brand-new eCommerce businesses are seeing skyrocketing sales. When there are more sales, there are more transactions, and that makes it more complicated. That’s not even including all the new payment methods that have been developed and how they impact the transaction process.
Luckily, the same methods big businesses began using years ago have become available for widespread adoption. It’s no longer tech that’s only accessible to the kings of the business world.
Platforms such as Azure make it incredibly easy for the smallest businesses to integrate a POP into their business model, and they’re fairly affordable. In fact, they can be a lot cheaper than traditional setups, in some cases.
So, that’s where the concept started, but let’s take a look at what the modern variant has to offer.
Benefits of Payment Orchestration Platforms
I’ve already touched on some of the key benefits of POP, but there is an extensive list of benefits that have just as big of an impact on your business even if they’re not quite as extravagant as helping with regulation compliance.
Here is an in-depth look at the benefits that we feel really sell POP as a beneficial business solution product instead of just a necessity.
Every year, the number of online transactions grows considerably. If your business operates online, even remotely, I highly recommend a POP solution to handle the transactions you’ll be taking on.
Payment Orchestration Platforms are simply far more scalable than traditional PSPs, and as your business quickly grows from making a mere 100 sales per month to thousands every day, you’ll want a scalable software solution that handles all those transactions seamlessly. Anything less, and there will be some huge consequences that most small business owners just can’t get past.
2: Customer Experience
Customers can be a picky lot. We all know that. It’s not enough to make every transaction as fast as possible. Although, many of today’s consumers do appreciate speed. But you cannot blame their lot as a lot of riff raff payment processors exist too for whom speed is not an essential. Or take the exorbitant prices of a Paypal – cross border prices go upto 5.8% which is in itself a killer – imagining forced to sticking around with this shitty option for over TWO decades!
You have to consider the customers who want to place an order immediately, but maybe don’t want the payment to process (or shipping to start) until after they get paid in a few days, those who aren’t comfortable with their bank transactions going across borders, those who only want their transactions processed at widely known and respected banks, crypto users, and more. You can do that with traditional methods, but it’s far more complicated.
A POP takes care of those issues. When your customers need special requirements to be met, the POP can direct the transaction accordingly without you having to do much of anything on your own.
3: Easy Integration of New PSPs and Payment Methods
As the world of business evolves, we’ll all have to adopt new PSPs and payment methods to keep our customers happy. If we don’t, we can easily fall behind. Just look at all the businesses that have started accepting crypto directly, or how many physical stores let you pay with a digital wallet or UPI (Unified Payments Interface) on your phone instead of your credit card. Just look at the fallout some of the store owners who wouldn’t adopt Apple Pay had to deal with. Sure, it didn’t ruin their businesses, but in more urban environments, it did cost them more money than implementing it would have cost.
With a Payment Orchestration Platform, it’s easy to integrate new payment methods and PSPs into your business model. I can’t stress enough how important this is to stay ahead of the curve and give your customers what they want. As I said, you either get new payment methods adopted fast, or you start missing out on sales from those who have started using them.
4: Customer Retention
The last few benefits all add up to one thing: Customer retention.
Customer retention is the name of the game in business. It’s not enough to get tens of thousands of customers who make one purchase each. Every business needs a solid base of repeat customers who keep the business running.
Now, most business owners tend to think they do that with marketing and making their brands stick out, but that’s just how you get their attention. Their experience and whether or not you meet their needs is what keeps them coming back more than any memorable ad or extravagant sale.
A POP might not singlehandedly boost your customer retention, but paired with good service and products, it does make a huge difference. Customers will remember whether or not the transaction process was a pain in the rear to deal with.
5: Higher Security
Earlier on, I talked about a unique layer of any effective POP; the layer that allows you to implement your third-party software solutions across all of your PSPs and transactions simultaneously.
Well, I’m covering it again, because it’s one of the most important aspects of good pop.
If you’re investing in software solutions that focus on encryption, fraud protection, data vault storage, or anything else, you can plug those right into your Payment Orchestration Platform with ease.
This is beneficial for companies AND customers.
Obviously, on our end, we don’t have to worry about thieving weirdos ripping us off left and right. That’s always a plus when you consider just how prevalent data attacks are in the modern era, and how sneaky some “customers” can be. However, customers experience major benefits, too.
Not only can they trust that their transaction will go through smoothly and that we’re trustworthy business professionals, but their data is safe from any breaches that might occur on our end, too.
Think about all the times companies have been under fire because their customers lost their credit card information due to a security breach. Do you really want your business to be impacted by that? We sure don’t. It can be crippling for large businesses, and it can put smaller businesses down for good pretty easily. With a POP and a few third-party protection services, you can avoid that whole mess.
When you keep your customers safe, you add to your customer retention, too. Especially with online sales that many consumers are still cautious about.
6: Smarter Routing Paths
Routing is a huge part of dealing with multiple PSPs at once. With a traditional payment model, you’d either be stuck with limited routing options, or you’d have to jump through a lot of hoops to set up new ones.
POP gets rid of that with smart routing.
Smart routing is a programmable routing option that lets you set parameters, and your POP will automatically route transactions via those parameters.
For example, let’s say you want to provide your customers with as little latency as possible. When they make a transaction, you want the money out of their account and into yours immediately. You can set up your POP to make that happen.
Let’s say you want to let the pop do the work and let it find the most optimal PSP for individual transactions to best match the needs of each customer. You can make it do that, too.
With a POP, you can even set it up to identify high-risk customers looking to make payments and funnel their transactions through a low-risk PSP to protect yourself a bit, too. We do this regularly on our system. It is built to intelligently choose with smart in-house AI modules.
However, one of the best advantages of smart routing is that failed payments aren’t the end of the road. That’s a major problem, and it’s not always the customer’s fault. Sure, they might try to pay when they don’t have enough funds, but there can also be PSP issues that trigger a failed transaction. Bad connections, too much redirecting, and various other problems can cause failed transactions that annoy customers and make them go elsewhere.
With a POP, you can set up the system to automatically redirect the transaction to a different PSP if the first option fails, and it can do it almost instantaneously.
For us, all of these routing options make a system that helps protect our business, helps retain customers, and generally makes everything easier. I’m sure you’ll feel the same shortly after adopting one for your own business.
7: Seller Benefits
I know your customers are what keep your business alive, but there’s no shame in wanting some benefits for yourself. Luckily, there are several benefits that you can enjoy all by yourself.
First, a POP helps you lower your costs, and we all know how good it feels to finally cut back on some of that overhead that eats up profit.
It does this because every transaction costs your business money. Banks and PSPs don’t operate for free, after all. Well, a POP can choose the most affordable PSP for a transaction during the routing phase. For example, if one PSP is going to charge you a dollar to process a particular transaction, but another is going to process the same transaction for a fraction of that, the POP can use smart routing algorithms to choose the lower-cost PSP; of course, it will also take the transaction’s other parameters into account.
Secondly, transactions in general will be streamlined. If you’ve been operating on a traditional system with your PSPs, you know how annoying refunds can be. You have to manually go back, deal with that particular PSP’s refund format, and trigger it yourself to make your customer happy and meet the PSP’s requirements. A POP will handle that for you in the background. It can even handle the automatic triggering of payment plans if you offer any payment methods that allow that.
Finally, your data recording and reporting will be far easier. All of your transactions are recorded by the API. So, you know that you have access to that data at any time, and if it becomes a problem, later on, you can easily get into the POP’s dashboard and resolve it with cold, hard numbers. As a bonus, this makes reporting your earnings internally and officially a breeze. It even takes refunds into account automatically and provides an in-depth analysis of your data.
8: Remove Vendor Dependency
Traditionally, you’d be stuck with one payment processing service. That seems simple and easy to deal with at first. You pay one company, they handle everything, and while you might not like certain aspects of it, it works, right? Well, there are some problems with that, and I think you should be aware of them.
Being dependent on one PSP leaves you open
to a lot of hassles. What if that PSP suffers an outage? Are you just supposed
to stop selling products until service resumes? What if the PSP decides they
want to jack up prices that you just can’t afford? Let’s get a little extreme
with the examples. What if the PSP wants to sell your customer’s data to more
third parties as many other service providers do? Will you sacrifice your
integrity and reputation to avoid the hassle of switching PSPs? What if the PSP
ups and blocks your settlements without any logical reason?
I’ve been at the butt end of these shenanigans quite a few times when we were small and raw.
Having one PSP can be catastrophic, but a Payment Orchestration Platform allows you to easily integrate several of them simultaneously. If the one you really like working with decides to get a bit out of line, you have a backup. If their service goes out, you can instantly switch to another and keep your business running as usual. Earlier, I even mentioned that you can use multiple PSPs to circumvent failed transactions.
Doing that manually would be a major pain, and the average small business owner doesn’t have the time or resources to worry about that. This is one part of life where I definitely recommend taking the easy route and just getting a Payment Orchestration Platform.
How to Get Started with Payment Orchestration Platforms
At this point, I’m confident that you’re ready to hop on the bandwagon and set your business up with a Payment Orchestration Platform. How do you actually go about doing that, though? I have to admit, I haven’t talked about that much, yet.
Sure, you can take the old-fashioned route as big businesses did back in the day, but that’s not practical or necessary.
I highly recommend partnering with a service provider for this one. There are several high-quality POPs available at prices that are accessible even for businesses on tight budgets, and you can find one that suits your needs regardless of your business model.
Unfortunately, this opens up a whole load of other factors you need to consider. So, we’ll go over those, now.
1: Your Budget
How much can you afford to drop on a POP? That’s the first question you really need to ask yourself. If the provider you’re thinking about partnering with will cost you far more than you’re able to work into your budget, there’s no real point in engaging with them. The idea here is to save money and gain functionality; services outside of your budget won’t allow for that.
So, make sure you do a bit of window-shopping, see what your options are, and try to balance the cost of a service partner against its benefits and features.
Of course, you should also keep in mind that the POP will save you money. So, take that into account when you’re budgeting for it.
2: Partner Policies
Just like any other service you partner with, purchase, or hire, you need to read the fine print and truly understand how they operate. The last thing you want is to partner with a provider that has fees hidden in every obscure corner, random rules that allow them to terminate service or zero guarantees of actually providing the service consistently.
Take your time, read through every bit of material you can about the service, and only commit if you can work with what they have to offer.
Keep in mind that no service is going to 100% match your expectations, though. You might need to be a little lenient in some regards to get a better price, or you might need to pay more for a reliable service. There are pros and cons to everything, and it’s up to your individual circumstances to determine what you can deal with and what you can’t accept.
For example, in the Indian market, we do not have a viable instant cash out product, but a great disbursement product. I am building an instant cash-out product module as we speak, and that would increase the value of my orchestration product considerably.
I’m just here to give you a little nudge toward starting that journey in the first place.
3: Go for Turn-Key Software
Turn-key software is any software solution that can be used right after you set it up. You purchase it, install it, and get to work. If anything, you might have to mess with the settings a little bit.
These are low-code solutions that will appeal to most business owners. Let’s face it, we can’t all have tech-oriented degrees, and some of us struggle to use Word properly. This is the easiest route to take.
The problem with this can be that fees stack up quickly when you scale too quickly. You usually sign up with certain limits in place, and if your business suddenly skyrockets without updating your plan, you might pick up a hefty fee to make up for it.
If you monitor it, that’s not a problem.
This isn’t too big of a deal when you consider the alternative is building your own API, and if you’re like most people, that’s a much more difficult undertaking.
There are software partners who can help with this customized approach if you’d still like to take that route, though.
Whichever route you take, a Payment Orchestration Platform is a major blessing now, and it will be a necessity in the years to come.
Get on board before it’s too late!
Related Read: Maximizing Business Profits with Cloud-Based Apps