Strategic integration of payment orchestration for software platforms to maximise revenue streams

In the dynamic environment of modern business, the key to success lies in the adaptability of software solutions. The increasing demand for integrated payment features presents a lucrative opportunity for software firms to pave the way for heightened profitability. 

However, becoming a Payment Service Provider (PSP) requires navigating complex financial regulations and undergoing a comprehensive overhaul of business processes. The process is not only prolonged and financially demanding but also subjects software platforms to the same rigorous scrutiny as banks.  

Payment orchestration - a cutting edge technology - allows software platforms to activate and deactivate different payment functions on demand. This includes tailor-made adjustments by country, product, issuer, and beyond. This provides a strategic advantage for software platforms and circumvents the high costs associated with maintaining multiple payment integrations. 

The hidden gem - Unlocking potential through payment orchestration 

Payment orchestration has snuck in under the radar as the number one way for businesses to grow their revenue by optimising their payment processes.

To put this simply, picture an orchestra. Much like the many musicians playing a specific instrument, each company will have a payment provider carrying out different parts of the payment process. The same way a conductor brings an orchestra together, a payment orchestration platform consolidates all the payment use cases, capabilities and geographies into a single platform.

This solves a challenge most businesses face when levelling up their payment process, technical debt. Businesses that use two to three payment gateways increase their overheads by having to hire a specialised team of fintech developers.

By consolidating all the payment needs under one hood, businesses have more control over their payment stack. They also have the flexibility to customise their payments process to reduce inefficiencies. By routing transactions through a global network of banks, businesses can drive down cross-border fees, foreign exchange rates and increase authorisation rates.

And a huge factor in all this is that businesses are also protected by built-in failover and redundancy – where failed transactions are re-routed to backup banks.

Behind the decision: Why software platforms are selling payments

Nearly half of software platforms (48%) are outperforming their rivals by turning to one of the use cases of payment orchestration – embedded payments. This is where non-financial companies like software platforms integrate and embed payments into their product. And the trend has exploded in popularity for two reasons: demand and diversification.

Since businesses are becoming increasingly married to their software, there’s a demand for everything from CRM to payments to happen under one hood. It’s why we’ve seen SaaS platforms like Toast and Shopify see the success they have. Businesses using these platforms don’t need to switch between different platforms or start a whole new business implementation – that ease of use and integrated data is what’s driving this tipping point.

For software platforms themselves, it’s about the diversification element. With the software industry becoming crowded, many are using payments as a way to diversify from subscription fees and add-on services. Rather than solely generating revenue from software subscriptions, these platforms now monetize each transaction – earning a slice of every payment facilitated through their software.

There’s a very tangible Return on Investment (ROI) too. SaaS firms can see up to a 5x increase in value per client by embedding payments into their core product. This is why platforms like Shopify have seen tremendous growth. By embedding payments they’re able to create mutual incentive for them and the businesses they serve – shared profit. This is a win-win as customer businesses can drive a higher volume of transactions, and improve loyalty, while their end users benefit from a seamless payment experience.

Collaboration with specialist partner = Enhanced results 

For software platforms to tap into these lucrative benefits, there are two routes they can take: become a Payment Service Provider (PSP) themselves or partner with a global payment orchestration platform.

It’s a lengthy and costly process to become a PSP, with over half of platforms citing that it took them longer than a year. Not only this, but there’s a higher risk of technical debt if you’re a global platform, and need massive compliance requirements to help with underwriting and risk processes.

Since payment orchestration reduces the strain on resources and financial risk, forward-thinking firms prefer to turn to the experts. And, because it’s not a “one size fits all” approach, software companies can tailor their payments infrastructure to their business – depending on their global markets, product, issuer and more.

Want to offer SEPA to your customers in just Germany? Done. Prefer stricter fraud rules on your new software update in France? A payment orchestration platform can make it happen. Only want to embed payments in your existing market before expanding? No problem.

It’s this sort of flexibility that’s led 89% of software leaders to choose to work with a payments expert rather than become a registered payment facilitator or PSP.

Navigating ROI: It’s not just about trimming expenses

Investing in new technology is often perceived as a significant expense for businesses. However, genuine return on investment (ROI) extends beyond mere cost cutting. 

When evaluating the shift from old technology to new, it’s crucial for businesses to assess whether it enhances operational efficiency, opens up new or improves existing revenue streams, and aids compliance with evolving regulations. These factors are pivotal in determining whether a new technology investment will yield a positive ROI. 

Payment orchestration ticks all the boxes. The rise of sector specific software platforms underscores why both established entities and newcomers are turning to payment orchestration as a strategic means to stay competitive while staying ahead of the curve.