The term ‘payments orchestration’ seems to be everywhere, but what is it? As defined by PaymentsJournal, payments orchestration is:
A Payments Orchestration layer manages and unifies payments from diverse gateways, payment methods, 3rd party services, and platforms in order to minimize costs, optimize customer experience, and decrease time to market. The Orchestration layer acts as a hub for traditionally more commercial facing or wholesale applications although it can and does also consolidate merchant facing applications.
The term orchestration is really talking about automation—how your system can help automate payments from initiation all the way through clearing and settlement. There’s a lot that happens from Point A to Point B on that journey, including:
- UI/X – This is where the payment originates and businesses can add and remove features from their payments as they please. Businesses can make changes themselves instead of having to change their IT infrastructure or switch to a new payments services provider.
- Approvals and queue management – Payments orchestration helps organizations increase their approval rates. Connectivity to multiple networks allows utilizing the best acquirer to route the payment authorization request, as well as switching when a provider has downtime, poor performance, etc.
- Payment engine services – These include formatting, validating that the payment instructions are correct, limit and fraud checks, OFAC/AML screening, etc.
- Gateway service – The connection to the clearing/settlement networks. Gateway services process inputted information and facilitate payment authorization.
- Notification – Notification from the gateway service that the transaction was accepted/successful.
In sum, orchestration handles the full end-to-end lifecycle of a payment. It leverages API services from external systems that need to be invoked, and should be configurable for each financial institution. API’s make it possible for payments capabilities to be added quickly and cost-effectively. This flexibility can facilitate key payment functions such as intelligent routing. From an end-user standpoint, the payment process is simplified as payments orchestration removes much of the friction consumers face. Ultimately, payments orchestration automates as much as possible.
The payment engine is where payments orchestration happens. The Alacriti payment engine, Cosmos, is the underpinning system of record for payments. Cosmos is the backend connectivity for banks and credit unions to connect to various networks, including The Clearing House’s RTP® network, the FedNow ServiceSM when it’s live, Visa Direct, and heritage platforms such as Fedwire and ACH. Its cloud-native structure makes it both affordable and scalable.
Learn about another common payments term, ‘payments services hub’, in the blog Payments Services Hub Explained.