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."