Getting in Tune with Payment Orchestration

The proliferation of payment options has given rise to
a new layer of technology to manage payments, which are gaining traction in the
travel industry, but they also have the potential to further complicate the
payment process for customers.

Known as payment orchestration, this technology sits on
front of a company’s payment infrastructure and can integrate with multiple
payment channels. This is meant to ease the complexity of having to integrate
directly with the ever-increasing slate of payment providers.

One player in the payment orchestration space, Canadian
fintech company Nuvei, recently published a white paper based on a survey of
more than 100 international businesses across multiple verticals, done in
partnership with Edgar, Dunn & Co. The research showed more than half of
online businesses use at least six payment providers in their checkout process,
and about a third have direct acquiring relationships with at least five banks.

The paper also highlighted the necessity of payment
optimization, showing that 59 percent of companies said that their customers
would not return if they believed they received a false decline on their
payment option.

“Payments have become increasingly complex,
especially for businesses with various subsidiaries, operating in multiple
geographies, selling in different currencies and offering different payment
methods,” according to Edgar, Dunn & Co, CEO Peter Sidenius.
“Payment orchestration is considered by an increasing number of businesses
as the solution to retain control of their payment stack.”

This
includes travel suppliers. At UATP’s Airline Distribution conference in Boston
last March, Copa Airlines merchandising and ancillary revenue manager Alicia
Racine said the carrier faces a “very lengthy process” every time it
wants to integrate a new payment option.

“We’re
looking into orchestration capabilities, single integration on the backend we
can leverage on good technology,” she said. “We’re not meant to be
technology developers, and we want to have a good commercial approach toward
opportunities on the market.”

While
this might seem a bit in the weeds from the perspective of a travel manager, it
does bear following as many on the travel side are still on a learning curve
with the technology, UATP president and CEO Ralph Kaiser said. Some of the
technology providers in the payment orchestration space are not travel
specialists and therefore do not understand all the nuances that come with
travel, he said.

“They
haven’t figured out travel fully,” Kaiser said. “So, when you process
something this way, and then there’s a refund, they don’t know how to do it,
and you have to do it as a manual process.”

Using
an orchestrator also can come at a heavier cost than directly connecting with
payment systems in some cases, depending on an airline’s strategy, so suppliers
should be carefully evaluating to see what added services they are getting, he
added.

Some
players are emerging directly in the travel space, in the meantime. In March,
the founders of Hahn Air launched a payment orchestration platform for travel
merchants, FinMont, that integrates acquiring banks, payment, fraud prevention,
foreign exchange and chargeback providers for airlines and agents.

The
idea is to give agents more freedom of choice in payment partners, according to
FinMont CEO Suby Valluri.

“To
date, many businesses use virtual cards to pay suppliers; however, connecting
multiple virtual card issuers with a single integration and automatically
issuing the virtual cards has proven to be difficult to manage,” Valluri
said. “Also, many firms still struggle to automate [chargeback] claims,
making them time-consuming and difficult to track.”

In
the larger picture, the focus on payment orchestration is another indication on
how suppliers and agents are taking a closer look on costs associated with
payment, and legacy players are taking a deeper role. The International Air
Transport Association launched its own payment solution in 2022, for example,
and Amadeus this year will be launching its own payment-focused
business, Outpayce.

“Longtime
players are doing more on the front end, and that’s a good thing,” Kaiser
said. The idea is to provide better service at a lower cost, and I do think
we’re all motivated to go in the right direction.”