Payment orchestration: How does it work and do you need it?

Key takeaways

• Payment orchestration unifies multiple payment processors, gateways, and other service providers in a centralised platform.

• The main benefits of payment orchestration platforms include lower payment failure rates, improved cost-effectiveness, and fewer issues when navigating complex or highly regulated environments.

• Payment orchestration platforms can be expensive to set up and maintain, and finding the right fit for your business requires a thorough understanding of how these platforms work and how they compare with other solutions.

As your business expands into new regions, payment needs, regulatory demands, and data security concerns invariably become more complex. Accepting multiple currencies often means using additional payment providers – all with their own processes.  

All of this can increase costs and risks, so it’s not surprising 93% of Australian businesses using multiple providers would consider consolidating them into one.¹

A payment orchestration platform (POP) unifies all your payment services, freeing you from the hassle of juggling multiple providers. To help you make the right choice for your business, this article outlines the benefits of payment orchestration, who these platforms are best suited to, and how they compare with other solutions.

What is payment orchestration?

Payment orchestration is the process that lets you manage multiple payment service providers (PSPs) and payment gateway relationships in a single system.

A payment orchestration layer acts as a central hub, connecting and managing multiple PSPs, acquirers, and banks. It uses advanced algorithms to route payments through the most efficient and cost-effective channels in real time.

While a payment orchestrator can offer significant benefits, the decision to use one should be based on specific business needs, the complexity of your payment ecosystem, and your growth plans.

How does payment orchestration work?

Payment orchestration involves using a centralised platform to integrate, route, and manage multiple payment providers. Here’s how it works:

• Payment initiation: The payer selects a payment method at checkout.

• Gateway selection: The payment orchestrator chooses the optimal gateway ‌to process the transaction, considering factors like success rates and costs.

• Cardholder verification: Security measures, like 3D Secure, one-time passwords (OTPs), or biometric authentication, are used to reduce fraud and prevent chargebacks.

• Authorisation request: The transaction is sent to the issuing bank for approval to verify funds and compliance with security and legal requirements.

• Routing optimisation: The payment orchestrator routes the transaction through the most suitable gateway and methods depending on customer location, cost, and other factors.

• Payment acceptance: If approved, the payment is successfully captured and processed, moving the transaction closer to the merchant’s account.

• Transaction reconciliation: Funds are deposited into your bank account, and the payment orchestrator ensures accurate and clear transaction records for reporting and accounting.

Implementing a payment orchestrator can add an extra layer of complexity to your payment system, especially if you already have existing systems in place. This might require additional technical resources and expertise to set up and maintain, and may require changes to your current infrastructure.

Also, while they can certainly reduce costs in the long run, there are often initial fees and ongoing service charges that can be significant to your business. Once you’ve integrated with a payment orchestrator, it can be costly to switch to another provider, limiting your flexibility and options in the future.

Benefits of a payment orchestration layer

Flexibility, security, and efficiency are the top priorities when choosing a POP. This includes several features like:

1. Global payment capabilities: A payment orchestration layer can manage and integrate multiple payment methods and currencies, making it easier for businesses to grow both domestically and internationally. This is particularly useful for international companies.

2. Transaction success rates: Payment orchestrators use real-time data to route transactions through the most reliable and efficient payment paths. This reduces the likelihood of payment failures and improves the overall transaction success rate.

3. Customer experience: By optimising the payment process, a payment orchestrator can reduce friction and speed up transactions. This leads to a smoother customer experience, boosting customer satisfaction and driving repeat sales.

4. Cost efficiencies: Since payment orchestration can optimise payment routes, it can reduce transaction fees, especially for high-volume processing. Still, the initial and ongoing maintenance can be significant.

When do you need payment orchestration?

Choosing a payment orchestrator isn't a decision to be made lightly. The right orchestrator can enhance transaction success rates, reduce costs, and ensure regulatory compliance, but the wrong choice can lead to increased complexity, higher costs, and potential security risks.

On top of that, the integration process can be time-consuming and require significant technical resources. Once integrated, switching to another provider can be challenging and costly. So it’s important to evaluate your options carefully and consider your long-term needs.

Payment orchestrators are particularly relevant for businesses that face:

• High payment failure rates: Failure rates above 5% can frustrate customers, cut into revenue, and increase support workload. An orchestrator can improve approval rates by automatically routing transactions to the most reliable PSPs for each region or card type.

• Multiple PSPs: Using several PSPs across regions – each with its own APIs, integrations, and processes – adds extra complexity. A payment orchestrator centralises everything, making your payments easier to manage. If you’re working with three or more PSPs, orchestration can be worth considering. 

• Significant cost inefficiencies: High transaction fees, limited discounts, or routing payments through expensive channels can eat into your bottom line. An orchestrator can direct transactions to the most cost-effective payment providers, reducing fees and improving margins. 

• Strict compliance requirements: Highly regulated industries (like pharmaceuticals, aerospace, defence, government, and public services) must protect sensitive data while maintaining smooth payment flows. Payment orchestrators can maintain compliance and safeguard data. 

However, for smaller businesses, PSPs may be a better solution than payment orchestrators. They’re often simpler to set up, and the cost difference can be negligible if the company has a lower transaction volume.

Airwallex is a PSP that offers features to control and customise payment solutions – ideal for smaller businesses looking to avoid complexity. For instance, our checkout solution is low-code, making it easy to add to your site and customise as needed. Airwallex also offers many third-party integrations and supports multiple currencies. This can help to streamline payments and keep failure rates low without involving a payment orchestrator. 

How to choose a payment orchestration platform

Even if you’re sure a POP makes sense for your business, choosing the right platform is a tough call.

Here are a few key elements to look out for:

• Integration coverage: If you rely on third-party services, such as fraud protection or payment methods, your chosen orchestration platform should support them all. Otherwise, you may end up complicating your processes even more.

• Processor redundancy: With a task as important as payment processing, downtime and technical errors mean lost business. Strong POPs offer fallback or alternative processors to keep transactions flowing smoothly.

• Customer support: Even when a platform has fantastic technical chops, you’ll want reliable help when issues arise. Be sure to check the platform’s support channels and availability.

• Data security: Businesses in regulated or complex environments should assess a platform’s data security practices. Look out for encryption, fraud detection, tokenisation (the replacement of sensitive data with non-sensitive tokens), and compliance with standards such as the Payment Card Industry Data Security Standard (PCI DSS).

• Real-time insights: Payment orchestrators add value by consolidating data from payment services into one view. This can reveal performance trends, costs, and optimisation opportunities, such as addressing high failure rates.

• Costs and fees: Features matter, but so do budgets. POPs often involve setup fees and ongoing maintenance, so be sure to factor in the total cost of ownership.

Payment orchestration vs. payment gateways vs. PSPs

People often get confused between payment orchestration, payment gateways, and Payment Service Providers (PSPs) because these terms are closely related and sometimes used interchangeably. But they serve different functions in the payment ecosystem.

We’ve already covered payment orchestration, which integrates services like payment gateways and PSPs, to make sure your payment takes the most efficient route.

A payment gateway is the interface where a customer enters payment information, which the gateway then encrypts and transfers to the payment processor to facilitate the transaction.

Payment service providers, or PSPs, combine the functions of a payment gateway, merchant account, and payment processor, with extra services like fraud protection and customer support.

As a PSP, Airwallex can offer many benefits that a payment orchestrator provides. Since we accept payments using 160+ payment methods in 130+ currencies across 180+ countries and regions, you can easily improve the customer experience without a complex solution like a payment orchestrator.

Accept global payments easier with Airwallex

A payment orchestration platform can be a great way for some businesses to simplify the management of payment providers, but implementing one can be time-consuming, and it can take a long time before businesses realise cost efficiencies.

A good PSP like Airwallex allows businesses to reap the benefits of a payment orchestrator without the added complexity by combining a gateway, acquirer, and processor in a single platform.

Airwallex is an excellent alternative to payment orchestrators. By connecting directly with us, businesses can benefit from more transparent pricing, reducing overall costs. Additionally, our integration process is typically simpler and faster. This direct approach also allows for greater control and customisation, enabling businesses to tailor payment solutions to meet their specific needs.

With Airwallex Payments, businesses can boost payment acceptance rates across 180+ countries. More importantly, they can settle funds from their customers in the same currencies they pay in, avoiding costly FX conversions back to the business’ home currency.

Payment orchestration frequently asked questions

What is the transaction orchestration layer?

A transaction orchestration layer is a framework that facilitates the payment orchestration and unification of your payment system. It’s another name for the payment orchestration layer (POL), payment orchestration platform (POP), and payment orchestrator.

What is a payment instrument?

Payment instruments refer to physical and digital payment methods that support contactless transactions. These include credit and debit cards, direct debit, and digital wallets.

Is Airwallex a payment orchestrator?

No, Airwallex isn’t strictly a payment orchestrator. Airwallex is an end-to-end payment service provider that can ease the payment process while simplifying your financial operations with an all-in-one financial solution.

Sources

1. https://go.ezidebit.com/rs/959-IFO-826/images/Ezidebit%202025%20Payment%20Pulse.pdf?version=1

Disclaimer: This information doesn’t take into account your objectives, financial situation, or needs. If you are a customer of Airwallex Pty Ltd (AFSL No. 487221) read the Product Disclosure Statement (PDS) for the Direct Services available here.