To reach their full potential and deliver a seamless customer experience, merchants must integrate not only multiple payment service providers (PSPs) but also embrace intelligent transaction routing. Payment routing is a vital process for businesses dealing with numerous PSPs, ensuring transactions flow smoothly across all their payment gateways.
In this blog, we unveil the wealth of advantages that come with payment routing and demonstrate how implementing a smart system can optimize payments, reduce costs, and unlock new efficiencies for your business.
The Evolution of Payment Routing
Traditionally, businesses used a single PSP for payment processing, leading to several drawbacks, including high transaction failure rates, elevated expenses, and poor customer experiences. However, technological advancements, changing customer preferences, globalization, and the rise of e-commerce have paved the way for multiple PSPs and smart payment routing.
Smart payment routing has revolutionized payment processing by enabling merchants to seamlessly route transactions to the most suitable payment gateway. Factors such as transaction success rates, the customer’s location, payment method, transaction charges, card brand, and more are considered when routing transactions. This strategic approach results in lower transaction costs, improved success rates, and enhanced customer experiences.
Understanding Payment Routing Types
Merchants can choose from three common types of payment routing:
Rule-based routing empowers businesses to set specific rules for transaction routing based on various criteria such as the customer’s location, card type, and payment method. If a customer selects a particular payment method or is from a specific country, they will be directed to the payment gateway defined by these rules.
Intelligent routing is an automated solution that continually monitors and assesses various aspects of the payment ecosystem. It makes automated routing decisions based on factors like processing rates, downtimes across payment methods, approval rates, authorization rates, and transaction charges.
Custom API Routing
API-based routing represents the most advanced form of payment routing, offering features like live outage monitoring, fallback/cascading mechanisms, and 3rd party risk scoring. It enhances the reliability and security of payment processing.
Advantages of Payment Routing
Implementing a smart payment routing system yields the following advantages for merchants:
Improved Transaction Success Rates
Efficient payment routing ensures transactions are directed to the payment gateway with the highest success rate. This significantly reduces payment declines and bolsters sales.
Reduced Transaction Costs
Relying on a single payment service provider can limit cost-effectiveness. By employing multiple providers with smart routing capabilities, merchants can select the option with the lowest transaction charges for each purchase, leading to substantial savings over time.
Seamless Payments and Enhanced Customer Experience
Downtime or malfunctions in payment gateways can disrupt payment flows and result in failed transactions, adversely affecting the customer experience. Smart payment routing with cascading mechanisms ensures seamless payments, even when obstacles arise.
Understanding How Routing Works
Payment routing can be achieved through two primary methods:
This static approach involves merchants creating fixed routes for each transaction. It lacks adaptability and responsiveness to dynamic contingencies, potentially leading to poor customer experiences when a selected payment service provider fails.
Dynamic payment routing adapts to changes as they occur. For example, if the default payment service provider fails to process a transaction, a dynamic routing system can automatically redirect the payment through the best alternative gateway based on parameters like geolocation, authorization mode, card brand, and more.
How Web Technology Expert Can Help
Web Technology Expert is a comprehensive payment aggregator solution equipped with an intelligent payment routing engine. With Web Technology Expert, you can optimize all inbound and outbound transactions by routing them through the most suitable payment gateway available.
Our platform enables you to expand your payment reach globally with easy integration of over 300 payment methods and 30+ gateways. The user-friendly, no-code dashboard allows you to customize routing parameters such as card brands and success rates to efficiently route transactions across different countries.
Web Technology Expert empowers you to establish a dynamic routing system that enhances transaction success rates, minimizes transaction costs, and elevates the customer experience. To explore how Web Technology Expert can transform your payment routing, book a demo today!