The Power of the Orchestration Layer: Importance and opportunity of the orchestration layer in the European market

Written by Dwayne Gefferie

Guest Author @ PayShield

May 20, 2024

The payments industry is at a pivotal moment. For merchants experiencing rapid growth in size and revenue, dedicating themselves to a single Payment Service Provider (PSP) can be limiting. Enter the payment orchestration layer (POL)—a “revolutionary” approach that bundles the fragmented payments ecosystem into a seamless, unified platform. This shift is not just about technological innovation; it represents a unique opportunity for merchants to optimize their payment processes, reduce costs, and enhance customer experiences. By leveraging POLs, merchants can harness the full potential of a diversified payments landscape.

Europe consists of 44 countries, collectively responsible for $3.6 trillion in payments volume—$2.7 trillion from Point-of-Sale (POS) and $893 billion from e-commerce, produced by a total population of 746 million. The region’s economic diversity and regulatory environment create a fertile ground for payment orchestration platforms to thrive. The United Kingdom stands out, generating $1.4 trillion in POS volume and $315 billion in e-commerce despite having a smaller population than other major markets. 

This vast and varied market presents a significant opportunity for payment orchestration. By integrating multiple payment methods and providers, POLs can cater to the unique preferences and regulatory requirements of each European country, providing merchants with unparalleled flexibility and control over their payment ecosystems.

The payment orchestration space has shifted from older, legacy orchestrators to newer, cloud-native players. These modern platforms offer enhanced capabilities, greater scalability, and improved integration with emerging payment technologies. Key players in the current landscape include:

  • IXOPAY: Known for its white-label solutions and payment gateways, IXOPAY operates in Austria and the US and serves major clients like DHL and Siemens.
  • Spreedly: Focused on North America, Europe, and LATAM, Spreedly offers a robust platform for managing payment networks and enhancing transaction security.
  • Payoneer: A global player with a market cap of around $2 billion, Payoneer provides a comprehensive suite of features, including smart routing and tokenization.
  • Gr4vy: Based in the US, Gr4vy offers cloud-native orchestration solutions that integrate seamlessly with various payment methods and acquirers.
  • BlueSnap: Operating in over 200 geographies, BlueSnap supports payments across multiple channels and has raised significant funding from private investors.
  • A newer entrant that offers a highly flexible and scalable orchestration platform, enables merchants to manage their payments stack through a single integration, allowing for rapid deployment and customization.

These companies exemplify the diverse capabilities and strategic advantages that POLs bring to the table, helping businesses streamline their payment processes and adapt to a constantly evolving payments landscape.

Europe’s payments market is characterized by its diversity in payment methods and regulatory frameworks. This makes it an ideal environment for payment orchestration platforms to operate and provide merchants with a variety of services.

In Europe, the adoption of alternative payment methods (APMs), such as iDeal in the Netherlands, Blik in Poland, Swish in Sweden, and Siirto in Finland, is driven by local consumer preferences and regulatory support like PSD2. POLs can integrate these diverse payment methods, offering merchants the ability to cater to local needs while maintaining a unified payment infrastructure. This adaptability is crucial for businesses that operate across multiple countries and need to provide a seamless payment experience to their customers.

Regulatory frameworks such as PSD2 and the rise of Open Banking have transformed the payments landscape in Europe. These regulations promote competition and innovation by allowing third-party providers to access bank account information and initiate payments on behalf of customers. POLs are uniquely positioned to leverage these regulatory changes, offering merchants seamless integration with multiple banks and PSPs, and ensuring compliance with local regulations.

POLs enhance the customer experience by providing greater flexibility and convenience. For instance, by integrating digital wallets like Apple Pay, Google Pay, and PayPal, merchants can offer their customers more payment options, reducing cart abandonment rates and increasing conversion rates. Additionally, POLs can optimize payment routing, ensuring transactions are processed through the most cost-effective and efficient channels.

By intelligently managing payment flows and routing transactions to the most favorable providers, POLs can significantly reduce processing costs. Traditional payment gateways often charge high transaction fees, which can be a substantial burden for businesses with high transaction volumes. POLs mitigate these costs by selecting the most cost-effective routing options, thereby improving the overall efficiency of the payment process.

Payment orchestration platforms are designed to be highly scalable and handle large transaction volumes as businesses grow. This scalability is essential for companies that experience seasonal spikes or rapid growth. Additionally, POLs foster innovation by enabling businesses to quickly integrate new payment methods and technologies without extensive development cycles. This agility allows merchants to stay ahead of payment trends and meet evolving customer demands.

The European market presents a vast and varied opportunity for payment orchestration platforms. With its diverse payment methods, supportive regulatory environment, and significant e-commerce growth, Europe is an ideal landscape for POLs to thrive. By leveraging the capabilities of modern, cloud-native orchestration platforms, merchants can optimize their payment processes, reduce costs, and enhance customer experiences.

As businesses continue to navigate the evolving payments landscape, adopting payment orchestration layers will be crucial for maintaining competitiveness and achieving sustainable growth. By embracing this innovative approach, merchants can unlock new revenue streams, improve operational efficiency, and provide their customers with the seamless and secure payment experiences they demand. Payment orchestration is not just a technological advancement but a strategic necessity for businesses aiming to succeed in the modern digital economy.

Click here to read more about Dwayne and his wealth of experience in the payments industry!

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