Efficiency and Savings: The ROI of Payment Orchestration

In the ever-evolving world of e-commerce, businesses must constantly adapt to meet the demands of a dynamic market. One area that often poses significant challenges is payment processing. Managing multiple payment service providers (PSPs), navigating complex global regulations, and ensuring a seamless customer experience can be taxing. This is where payment orchestration comes into play.

However, navigating the complexities of payment orchestration can be daunting. The choice between building an in-house solution or leveraging a third-party solution is pivotal for many businesses. This blog explores the value of payment orchestration, and the costs and benefits associated with both approaches to help you make an informed decision.

1. Cost Efficiency: Optimizes transaction routing, minimizing fees, and improving the bottom line.
2. Improved Efficiency Through Consolidation: Reduces internal costs by outsourcing non-core activities.
3. Enhanced Security and Compliance: Ensures adherence to local and international regulations with built-in compliance features.
4. Improved Customer Experience: Offers a wide range of payment options, increasing conversion rates and customer loyalty.
5. Operational Flexibility: Easily switch between different PSPs and payment methods.
6. Optimized Conversion and Authorization Rates: Uses specific providers for different transactions to maximize revenue.

Many merchants start with a simple need to support credit card payments, building their own solutions. However, the costs and complexities of maintaining and updating these in-house systems often prompt a switch to third-party solutions.

In-House Integration Costs

Here are some examples of potential costs when building in-house:

1. Initial Setup Costs: Developing an in-house payment solution requires significant investment. Assuming an hourly cost of €120 for internal resources and 250 hours of work, initial integration costs can start at around €30,000.
2. Integration Expenses: This includes custom integrations for each provider's API, changes to front-end integration, risk management flows, and reconciliation with business applications.
3. Ongoing Maintenance and Support: Regular updates, security patches, compliance, and adapting to future API changes.
4. Additional Hidden Costs: PCI DSS compliance, integrating IT systems, in-house support and 24/7 monitoring, and opportunity costs of long delivery times.

Third-Party Solution Costs

Here are some examples of potential costs when outsourcing to a third-party solution:

1. Setup Costs: On-demand integrations typically cost between €5,000-€15,000.
2. Integration Expenses: Quick setup with commercial and legal agreements, leveraging existing technical configurations.
3. Ongoing Maintenance and Support: Handled by the vendor, reducing the burden on internal resources.
4. Other Benefits: Consolidated reporting, smart transaction routing, consolidated risk management, and centralized post-processing.

Building an in-house solution may seem appealing but carries significant risks and hidden costs. Many projects fail after substantial investments, not to mention the challenges of ongoing maintenance and compliance requirements. Additionally, if you opt to add a new PSP, you will need a unique API integration, adding to the complexity and cost.

Key Considerations:

• Long-Term Viability: Will your in-house solution outperform a best-in-class third-party option?
• Scalability: Can you unify multiple PSPs as your business grows?
• Opportunity Cost: Is it worth diverting the focus away from your core business to devote resources to payment processing? 

Payment orchestration is a powerful tool for businesses looking to optimize their payment processes and stay competitive in the fast-paced world of e-commerce. By leveraging a unified platform to manage multiple payment methods and providers, businesses can reduce costs, enhance security, and improve the overall customer experience. As the e-commerce landscape continues to evolve, embracing payment orchestration can help businesses achieve long-term success.

Get the full report here.

About IXOPAY

IXOPAY simplifies complex payment processes for global merchants. Merchants can choose between an all-in-one payment orchestration platform and payment optimization modules covering areas such as omnichannel tokenization, 3DS, and network tokens. Depicting the entire transaction lifecycle from checkout to settlement and reconciliation, IXOPAY’s best-of-breed payment orchestration platform is PCI DSS Level 1 certified and highly scalable.

A single API allows merchants to integrate around 200 payment providers offering hundreds of global, regional and alternative payment methods. The platform supports smart transaction routing with cascading, state-of-the-art risk and fraud management, fully automated reconciliation and settlements processing, comprehensive reporting and access to hundreds of acquirers, payment service providers and alternative payment methods.

Trusted by many national and international businesses, IXOPAY has offices in both Austria and the USA.