How Payment Orchestration and Smart Routing Maximize Payment Success

When you walk into a restaurant and see an empty table with the exact number of seats you need, a good maître d' pulls out a chair and says: “sit right down.” There’s no unnecessary wait. The restaurant keeps humming, the water is poured, and you’re ready to order.

Smart routing is like that: a key ingredient of payment orchestration that won’t leave patrons waiting at the metaphorical bar. But in large and growing companies, it does more than reduce the wait, aka processing, time. It increases authorization rates, lowers transaction costs, and increases payment success rates by rerouting payments in cases of gateway outages. Let’s explore these benefits—and why smart routing should be part of your payment orchestration platform.

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Key Capabilities of Smart Routing in Payment Orchestration

“Intelligent routing” will do more than choose the best payment processor or gateway to handle your transactions. Let’s look at how it factors into your total payment orchestration picture:

• Dynamic processor selection: Need to choose a processor based on complex conditions, like locations, currencies, and transaction types? Smart routing handles it with speed, increasing the likelihood the payment goes through.
• Backup routing and failover: Gone are the days of swiping a card and hoping it goes through—without any other options. Smart routing can use failover mechanisms to avoid failed transactions, which boosts revenue thanks to a higher payment success rate.
• Geographical optimization: Local providers might have better understanding of regional banking systems and regulations. With a localized approach, you can minimize any associated payment risks to ensure smoother transactions.
• Data-driven routing: With machine learning algorithms in place, smart routing can quickly analyze patterns and predict outcomes based on previous transactions. Variables like approval rates and transaction types all factor in, enabling your routing system to adapt to changing conditions and optimize the chances of high payment success rates.
• Cost optimization: When smart routing can find the lowest-cost gateways to minimize transaction fees—all without compromising transaction success rates—you’ll get an immediate boost in revenue.
• Fraud detection and prevention: A fraudulent transaction means lost revenue. Intelligent routing can analyze patterns to enhance security, ultimately protecting you against these transactions and protecting your success rates.

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The Benefits of Smart Routing: Real-World Applications for Enterprises

Do these features produce tangible, bottom-line results? Large companies seem to think so. According to Forbes, 68% of large organizations plan to invest in their payment infrastructure by the end of 2025. The driving factor? Meeting their fiscal and operational goals to:

• Maximize revenue recovery: With smart routing, enterprises can automatically direct transactions to payment gateways with the highest authorization rates. This leads to improved transaction approvals, recovering more revenue. 
• Lower transaction costs: Intelligent routing optimizes payment processing by selecting the least expensive gateways. This can reduce overall transaction fees, giving you more breathing room in your margins.
• Improvethe customer experience: With fewer payment failures due to smart routing, customers enjoy smoother transactions. In one survey, nearly a quarter of respondents said they’d abandon an app if they had any problem with transacting funds.
• Make their payment infrastructure resilient: Smart routing will keep your operational continuity by automatically rerouting transactions to backup processors if there are any outages. This can minimize disruptions and reduce transaction failures.

The benefits of smart routing add up to a single experience: smooth transactions. Customers and point-of-sale operators won’t be aware of all the moving parts on the back end, and that’s precisely the idea.

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68% of large organizations plan to invest in their payment infrastructure by the end of 2025.

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How to Implement Smart Routing in Payment Orchestration

Implementing smart routing sounds like a slam-dunk—if only you knew how to implement it into your payment orchestration systems. Fortunately, the process isn’t as complicated as you might imagine.

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Key Steps for Implementing Smart Routing

System Audit

Start by auditing your existing systems. What payment infrastructure do you have in place, and is smart routing a already available feature or compatible with those systems? Legacy platforms don’t always play nice with modern payment solutions. At the very least, it may take considerable effort to integrate this new, modern feature. 

If your current platform doesn’t offer intelligent routing or integration difficulties throttle efforts to upgrade, it might be time to modernize and say goodbye to outdated payment systems.

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Choosing The Right Processor

You should also evaluate your options for payment processors and merchant accounts. You’ll want to weigh their performance, approval rates, risk tolerance, and—if you have specific geographical needs— regional coverage and supported currencies.

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Identify Parameters and Create Routing Rules

Think about which parameters matter the most for effective routing decisions. For instance, should you route differently depending on transaction amounts? Currency types? Payment methods? The type of transactions, like one-time purchases vs. subscription payments? These are all important factors to consider.

The framework can then be used to create rules for how payments are typically routed and even what happens if something atypical occurs. With payment orchestration, you have more control than ever and the ability to tweak your rules to improve efficiency over time.

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Challenges to Overcome

For many enterprises, the top challenge with adding smart routing is ensuring your legacy system is compatible with your ideal smart routing software. Ideally, your platform can easily manage your compatibility between various payment gateways, which means you can handle intelligent routing as a baseline feature. If not, you may have to consider choosing a new platform.

Another key challenge is data handling. As your business grows, you need a flexible payment orchestration platform capable of handling secure, efficient data transfer protocols at scale. Look for payment orchestration platforms with robust encryption and secure APIs to safeguard and streamline your data transfers.

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The Role of Machine Learning and AI

The beauty of machine learning? It’s mostly a hands-off process. But you should evaluate your current routing features to see how robust this machine learning might be:

• Can the AI look at previous transactions and their success rates? 
• Can it work in the background, improving accuracy and efficiency over time?
• If not, does it need your input for optimizing routing decisions? 

Ideally, every answer should mean that AI requires less input from you over time. This brings you a key advantage from machine learning: AI can handle transaction analysis while your team is free to focus in big-picture payment strategies.

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Smart Routing as the Key to Payment Orchestration Success

Intelligent routing is more than just a good maître d'. It’s a strategic investment, boosting transaction success rates, reducing costs, and enhancing customer satisfaction—all while humming quietly in the background. 

But like all good investments, it does require your implementation. That’s where we can help. Book a free consultation with Clear Function’s payment experts and let us guide you to a smart routing solution—we’ll do everything but pour the drinks.