E-commerce orchestration

Orchestrators can potentially solve the challenge for merchants of how to access fintech innovation easily, at scale, giving them access via open APIs to agnostic routing for the best price, allied to the efficiency of aggregated processing and enriched data services. However, it can be argued payment orchestrators are still more retail focused and introduce a single point of failure as well, thereby requiring strong recovery plans by the corporate end user. 

A payment orchestrator, such as Paydock, offers an alternative to undertaking an in-house build, with its associated IT maintenance costs, or letting a PSP handle everything, which would route in their favour. They might be able to offer lower payment prices to a corporate because of their agnostic stance and large volume, delivering economies-of-scale processing benefits. This, allied to a newer technology stack for digital payments, might be beneficial.

But orchestrators are a relatively new phenomenon that takes advantage of the enhanced connectivity and data-exchange capabilities of open APIs. Whether treasurers want to take the risk, instead of letting their bank handle all the logistics, is debatable.

The payments orchestration layer, on which these platform vendors rely, integrates and handles flow from different PSPs, acquirers, payment gateways, and banks on a single, unified software layer. It simplifies front- and back-end integration between the corporate’s e-commerce estate and various PSPs. The software executes complete payment processing, from validation to routing and settlement, bringing together merchant and user accounts, acquirers, payment providers, and fraud detection and compliance services to initiate, validate, route, and process transactions among the parties.

A platform might additionally handle reconciliation, billing, payouts, and reporting, depending how it is specified. It would have to include such functionality, if a treasurer were to use it in the B2B arena. Banks traditionally offer such full logistics support themselves anyway, so lower processing price per transaction would have to be a key differentiator.  

A payment orchestrator cannot solve every connectivity issue either, as embedding fintechs isn’t as easy as it sounds when sanctions, FX, and other complications are considered. Data-centric liquidity services for a B2B-focused treasury unit will also be lacking because orchestrators are mainly focused on e-commerce, and the routing and processing of payments, rather than the down-the-line liquidity impacts on working capital optimisation. For acceptance it’s an increasingly popular option to look at orchestrators but for ‘all treasury’ activities it’s got a long way to go to gain traction. 

E-commerce lessons for the corporate world 

“The adoption of retail payment techniques covering acceptance and processing, impacting AR and AP, has eventually brought about a sea change in how corporates handle payments,” argues Sanjeev Mehta, Head of Transaction Banking Sales, India & South Asia, Standard Chartered. Lessons can be learnt from the retail payment arena for the benefit of the corporate world. “This is partly due to the demand from professional corporate users, who have experienced a seamless service online in their personal lives, now wanting it in their business lives.

“Real-time payments [RTP] and processing gives instant information – if the data within the transaction is aligned and accessible via the ISO 20022 standard on modernised instant infrastructures and/or via widely available APIs. The connected service you see in e-commerce is coming to the corporate B2B world. 

“Data-centric services can positively impact corporate treasury further down the line with improved cash tracking, speed, recognition, and so on,” continues Mehta. “This enhances liquidity data that can then improve cash flow forecasting, working capital optimisation, and a host of other services in the financial and physical supply chain. 

“The benefits multiply as domestic instant platforms interoperate on a common global ISO 20022 standard and as Swift adheres to it, alongside moves to further open up its cross-border interbank platform.

“Widespread open API usage further deepens the connectivity and easy exchange of data – if banks embrace this change, as we have at Standard Chartered,” enthuses Mehta. “This is the most immediate benefit of enhanced payment systems and evolving methodologies, which are available right now to treasurers.”