How to Regain Control of Your Payment Operations
Maybe you didn’t even realize it was happening. You chose to work with a payments provider 10-15 years ago who, at the time, could help you offer digital payments. All you had to do was use their proprietary integration method, specific fraud partner, only offer the payment methods they had, let them own all of your customer data, and conform your treasury and finance back office to meet their requirements, then you’re golden. All of your payments requirements in one place (or so it seemed).
You complied with their proprietary requirements because that was one of the only options available to you at the time. Unless, of course, you wanted to use tech resources to build out full payments gateway capabilities in-house. Because of the lift required to build out, maintain, and operate a payments platform, the in-house option was out of the question. You went with a single payments provider. They required you to use their payment network, value added services, and discouraged your business from using multiple payment providers.
Soon, your payment provider became more and more ingrained in your back office and customer service processes. They forced you to adapt to their systems, workflows, and customer channels. Your internal ERP systems and treasury functions adapted to your payment provider and their limitations. You had to build out your own settlement and reconciliation systems because your payment provider didn’t offer those services. And, what might be the worst of all of the limitations, they began to own your customer data and experience.
You’re experiencing vendor lock-in.
When you’re locked in, you miss out on opportunities to improve conversion rates, manage payment costs, and retain control over your payment operations. Most importantly, you struggle to meet the needs of your customers and can’t keep up with the pressure from competitors because you are reliant on a single partner and their roadmap.
With the innovation happening globally in fintech and payments, this is a position that no business wants to be in. You want to bring in additional payment services and products to offer your customers, but you feel like you can’t. Your payment provider has become so ingrained into your systems that you feel stuck with them. You feel like you’ve lost control of your payment operations.
But, you can regain control over your payments operations, customer experience, and data with a payments orchestration platform.
Table of Contents
1. What is Payments Orchestration?
“Payments Orchestration is the ability of a business to manage the complex flow of money and payments data during the lifecycle of a payment. Orchestration brings together the set of services and third party providers in a loosely coupled way that provides the flexibility needed to evolve and change as the payments world continues to become more complex.”
The world of payments is growing in complexity as we continue to add in new channels and payment partners. Not too long ago, available channels were limited to cash, check, and card. With the advent of the internet, the potential channels grew almost exponentially to include IoT and the increasing number of alternate payment methods around the world.
Not only do you have to deliver secure payment services to all of your customer touchpoints, you also have to manage the processes and steps, the data about those payments, and the associated funds throughout its lifecycle – a lifecycle that continues to evolve and become more complex.
Tracking payments throughout their lifecycle is a key feature of payments orchestration.
The need to link the original customer order to both the money flows and data flows is one of the hardest problems to solve. In most systems today, the PSP simply provides payments data to the enterprise possibly linked to the deposits they receive via their bank. The task of managing the settlement and reconciliation function falls completely on the enterprise. Linking the actual customer data to the payment and the funding requires the enterprise to manage data from disparate systems and sources. Payments Orchestration is the key to managing this complexity and freeing you to focus on your core business, rather than managing payments by abstracting your internal processes, platforms, and channels from your payment providers.
TODAY'S BUSINESS IS COMPLEX & SO ARE PAYMENTS
A Payments Orchestration Platform (POP) helps process and manage payments throughout this entire lifecycle, including settlement and reconciliation, instead of focusing on authorization and settlement like most PSPs today. Payments Orchestration addresses this by linking the order data, the payments data, and the fund movement data, which keeps the data flows and money flows married so your real-time insight fidelity remains high.
Payments orchestration opens up the world of available payment services by abstracting those connections away from your internal systems. This means your system doesn’t have to change as you add and remove payment products and providers based on the needs of your business. YOU get control back in deciding where your transactions route. YOU get to choose which fraud and chargeback provider you want to use. YOU get to dictate what your differentiated customer experience looks like. YOU are in the driver’s seat when it comes to delivering payment services without the burden of managing and maintaining a complete payments stack.
Instead of tying yourself to another payment provider or trying to manage the complexity of multiple payment service providers, it’s time to look to a Payments Orchestration Platform.
2. Orchestration vs Legacy Payment Providers
To date most think that there are two ways to build your payment capabilities:
- Build it all in-house, or
- Outsource to a payments provider for all your payments needs.
Building out your payments capabilities yourself requires a significant multi-year investment building up an experienced payments team and taking on the burden of the ongoing maintenance and compliance of your payment platform. It’s understandable that many companies choose to outsource this to a single provider like Cybersource, Worldpay, or PAY.ON. The problem is that having a single payment service provider isn’t a viable option for large enterprises. No single provider can support today’s complex enterprises. You might have a proprietary payment method that you want to incorporate into your payments experience, need an add-on direct integration at a bank(s), want to test out a new payment method or credit service, launch a new loyalty scheme, or add a new processor in a different market. Either you choose to miss out on business opportunities and best-of-breed providers by not adding any new integrations on top of your payments provider, or you do the integrations yourself and increase the complexity of your payments stack exponentially. Here is where the feeling of vendor lock-in can become overwhelming.
A Payments Orchestration Platform is the best of both worlds.
Instead of choosing one single provider and building around them, a POP enables you to have your pick of best-of-breed partners. Orchestration tracks both money flows and data flows throughout the entire payment lifecycle ensuring the highest level of fidelity in your treasury and financial systems. By abstracting your payment partners from your internal systems, a Payments Orchestration Platform can provide access to any payment services your business needs.
Some of the key differences between using a legacy payment provider and leveraging a POP are:
Legacy Payment Platform
Payments Orchestration Platform
Invasive integration limits control over customer experience and payments operations
Orchestration delivers control of your payment flows, payment data, and customer experience
Wants to be your sole provider for payments, fraud, and value added services
Allows for seamless integration with existing PSP as well as new best-of-breed providers
Your internal systems must conform to Cybersource processes and their limitations
You can build your internal systems in the way that makes the most sense for your business
Limits your ability to innovate and differentiate your customer experience
Drives conversion by tailoring checkout to your geographies and company brand using Modo’s Modal
Payment Lifecycle Tracking
Loss of data fidelity because data flows and money flows lack coordination
Marries data flows and money flows to ensure transactions are always in balance through settlement and reconciliation
The largest distinction between a legacy payment provider and a POP is the amount of control you regain when leveraging payments orchestration.
Control over your payments provides many benefits:
- The world of payment providers are opened up without requiring lengthy integrations
- Reducing the complexity of your back office delivers efficiencies without continued impact of your payment providers
- You can negotiate for better Service Level Agreements (SLAs), rates between providers, and route between them for the best rates possible
- You get control over your customer journeys and are able to deliver differentiated experiences
- Seeing all of your payments in a consolidated view in order to make better decisions about your payment operations
It’s time to use a POP and remove yourself from the vendor lock-in experienced by working with a single legacy payment provider.
3. How to Orchestrate your Payments
Working with a POP like Modo is straightforward. You pick all of the payment partners you want connections to, and we make it happen. It really is that simple, and we use a fully RESTful and modern API to ensure it stays that way.
Modo’s cloud-native POP is made up of five components:
- API: Use a single API to call any payment service provider or payment method
- Modal: Hosted page, hosted fields, or on-page widget for any payment details through any channel
- Portal: Dig into your payment operations with the insights, reporting, and configuration tools in Modo’s portal
- Connectors: Access to connections around the globe. If Modo doesn’t have the connection you want, we can build it using our agile development model for rapid delivery
- Vault: Secure facility for payment details, payment service provider credentials and other sensitive data
Since we abstract your payment partners from your internal systems, no changes are required to your treasury, ERP or order systems in order to get plugged in with new partners. Since Modo does not hold money on your behalf, you will be able to negotiate the contracts with your payments partners yourselves in order to get the best rates.
Modo leverages flexible, modern integration models that support all channels and differentiated user experiences. With Modo’s Modal, you can securely build the checkout experience best suited for your business without having to worry about PCI compliance.
Modo provides a consolidated view of your payment ecosystem aggregated across multiple payment partners and services. This includes integrated settlement and reporting, reconciliation and exception reporting, and insight into payment provider performance and consumer payment behavior.
Finally, use the control you’ve gained with payments orchestration to negotiate better rates with your providers or choose to route between different providers for certain transactions.
Modo enables you to be flexible with your payments operations and be free from vendor-lock in experienced by working with a single legacy payment provider.
4. Getting Started
Any change or migration of your payments providers can seem daunting. We believe that the first step is to remove the constraints of your current PSP from your customer facing channels. This begins your movement to payments orchestration by focusing on improving the customer experience.
Using Modo’s Modal, you can use either use the hosted page, hosted fields, or on-page widget implementations to:
- Build your differentiated checkout experience
- Begin owning your customer data, and
- Simplify new payment method integration and maintenance
The technology used by legacy payment providers typically limit your ability to manage the style and branding of your checkout experience, lacking the flexibility to easily add new payment options, and usually require invasive integration into your systems. Modo’s Modal gives you control over your checkout experience including supporting all payment types optimized by channel.
The first step in beginning the migration to payments orchestration is leveraging Modo’s Modal, then working to build out a full strategy for orchestration.
Reach out to Modo to schedule your payments assessment and begin unlocking your payment operations!