Amid global economic headwinds, one market remains ripe for growth: cross-border payments. Spurred by online shopping and mobile payments, the Bank of England predicts cross-border transactions will be worth $250 trillion by 2027 – more than doubling their value over the course of a decade. According to GlobalData estimates, e-commerce will witness a global compound annual growth rate (CAGR) of 12% between 2021 and 2025. Expansion could be up to 50% faster in rapidly developing, high-growth markets like South Korea, Brazil and Turkey.
Brands are keen to cash in. Cross-border payments between businesses and consumers saw a CAGR of between 8% and 9% over the past five years, gaining ground on business-to-business cash flows that have hitherto dominated. But barriers exist to further expansion. Setting up local entities and navigating country preferences can be costly. Working out how to authorise, route and settle transactions flowing from different corners of the globe is a legal quagmire. And keeping abreast of diverse markets is difficult for those who do take the leap. Unless multiple payment options and providers are immediately available, cart abandonment is a real risk from consumers who do not feel like waiting around; a 2021 survey found 18% of US adults frequently did just this.
As Nathan Salisbury, Managing Director of PaymentIQ, Worldline, explains: “what we’ve seen over the past ten years is a shift from the largest e-commerce merchants, who want to maximise their authorisation rates in different markets as they enter new global markets.” This means devoting resources to creating internal payment teams. These teams can set up technical connections to a merchant’s many providers and manage how transactions are routed. They can then set up their own rules allowing volume shifts between providers in case of outages, and create software systems affording them full control over payment stacks. As new markets are entered and conditions in existing ones change, these software systems are adapted and updated.
Creating an entirely new internal payment team is all well and good for e-commerce giants. But it may be out of reach for brands even with well-established bases in their home countries. Daunted by upfront costs from entering high growth markets, the end rewards seem out of reach for many businesses.
Enter payment orchestration
This is where payment orchestration makes a difference. Payment processing requires a merchant to work with several different entities spread across numerous markets. Payment orchestration, on the other hand, manages all these entities and settles diverse transaction flows on one platform, with in-built, market-by-market compliance. These platforms may be integrated with hundreds of different payment providers, meaning that, when a transaction fails to authorise, it is automatically rerouted to a new processor. Merchants can also set up payment orchestration platforms with custom-designed rules, keeping both interchange fees and payment failure rates low. And the data determining what these rules should be is right at the merchant’s fingertips via the platform’s analytics.
In short, payment orchestration does all the work of a multinational’s internal payments team in a single piece of software – allowing merchants to focus on scaling up. As Salisbury says: “you get the best of all the providers you choose, you don’t need to choose one. And then you have the full flexibility over where transactions go. So you build in your redundancy, and you build in the ability to go into new markets very quickly.”
It is already enabling high-growth firms to expand in high-growth markets. Salisbury gives the example of the gaming industry, where Worldline’s PaymentIQ platform sits at the heart of some of the world’s major gaming merchants’ cross-border payment strategies. “We’ve seen volumes on the platform grow exponentially,” he explains. “As a cloud native platform we are currently handling more than 300 million transactions per year and scaling fast. Typically merchants conduct 100,000 to 200,000 transactions per month, but we have others processing half a million. They can have a one-person manager setting up their rules. If they need to tweak something, they do it within the software. And if one provider goes down, there’s automatic routing to the next one.”
The PaymentIQ way
In the case of PaymentIQ, four distinct elements of the software give it an edge.
First, transitioning to the software is a breeze. Merchants connect via modern APIs with flexible checkout options. Transactions are fed straight through into the PaymentIQ system – home to around 250 providers – and the merchant’s account is configured with all their existing providers on their behalf – meaning even a relatively mature merchant payment setup can be massively scaled up in an instant.
Another is the rules engine, one of PaymentIQ’s modules. This allows merchants to set up their own logic to decide where transactions should go. Transaction paths can be optimised and costs reduced depending on the perks offered from acquirer to acquirer.
The handy addition of the token module lets merchants outsource card data on the PaymentIQ platform instead of handling it directly. Developing data-handling compliance procedures for new markets can weigh heavily on businesses with small payment processing teams. It may seem completely prohibitive to others with no such teams to begin with. By handling these procedures on the platform, PaymentIQ lifts the burden.
Finally, AccountIQ – PaymentIQ’s reconciliation module – unites all the platform’s payment processors in a single view. Reconciling “settled” payments against reports from acquirers can reveal discrepancies in settlements. But it is an onerous process that finance departments must manage manually. On the AccountIQ platform it is entirely automated. This data can then be fed into reports, and overcharged fees or missing payments quickly established.
The flexibility, responsiveness and simplicity of PaymentIQ is blasting open new markets for more merchants than ever before. Salisbury gives the example of an enterprise business with significant e-commerce flows. While it may have “three or four” connections with major payment providers, experimenting with new ones in high-growth Latin American markets is a potentially time-consuming and costly process. But with the PaymentIQ platform, where hundreds of these connections are built in, they have a passport to expand. Salisbury predicts these solutions could be adopted by new verticals in e-commerce “very quickly.” He earmarks businesses dealing in digital goods and services and heavily regulated markets as PaymentIQ’s customers of the future – helping them navigate complex payment rules in unchartered territory at the click of a button.
Payment orchestration means futureproofing, an advantage that cannot be overstated. High growth markets like Turkey and South Korea have a mishmash of frequently changing regulations that merchants may find tricky to navigate. And the advent of Web3 means digital goods and services will require payment processing solutions just like the physical ones dominating e-commerce at present. By building a bridge between businesses and consumers wherever they are based and whatever they are buying, payment orchestration offers an answer. And PaymentIQ – connected to hundreds of providers processing tens of thousands of transactions each month – is standing on the frontier of change.
For an in-depth guide on how to build a market-beating cross-border payment strategy, download the whitepaper on this page.