How Can Payment Routing Benefit Your Business?

Having an easy and fast payment system is essential for every business. For consumers to enjoy the smoothest shopping experience, the payment page should be seamless and delay-free.

In most cases, a single Payment Gateway serves this purpose. However, a single gateway can’t handle all the transaction loads of a growing business and causes payment failures. When your business grows and sales spike, it is necessary to work with multiple payment gateways to ensure that the transactions are routed correctly without any payment failures. In order to reduce these payment failures and cart abandonment rates, a payment routing method is used.

What is Payment Routing?

The Payment routing process involves multiple payment gateways to route transactions to keep the platform agile and reduce payment failures.

If a transaction fails at once, it will automatically send to another payment gateway through our dynamic rule engine.

This technical solution helps you achieve high success rates, low operational costs, and a superior checkout experience.

How does a Payment Router work?

Step 1. When the customer lands on the checkout page, they choose the payment method.

Step 2. The Router routes the transactions according to the business rules engine.

The choice is determined in two ways:

• Maximize payment success rate — This routes the transaction to the gateway, which has the best chance of completing the transaction successfully. This analysis considers both the historical and real-time performance of PSPs for similar transactions.
• Merchant Preference — The merchant can define routing preferences between gateways based on the type of transactions they are processing.

Example: If a master card merchant wants to route 70% of transactions to PSP1 and the rest 30% to PSP2. In case the merchant has set such a routing preference, the preference is given to both PSP1 and PSP2, provided they are performing above a threshold that the merchant can control.

Step.3 Payment gateways connect with networks and banks to facilitate transaction processing.

Step.4 Once the transaction is completed, the customer will redirect to the successful payment page.

Why do Payments Fail?

Here are the main three reasons:

Financial — When the Cardholder has insufficient funds to cover the transaction or the cardholder’s card limit has been reached.

Technical — A bad connection or downtime from a key entity involved in a transaction can cause transactions to fail.

Risk Assessment — A lack of data or other factors can result in risk assessment solutions falsely flagging a transaction as fraudulent.

How is Payment Routing beneficial for an organization?

Here are 6 remarkable benefits of payment routing for your business:

Lower Transaction Costs

A business can benefit from multiple payment providers by sending each transaction to the providers that offer the most suitable rate for their service. Finding the lowest-cost routing configuration will reduce transaction costs and will be beneficial for merchants who are selling high volumes of goods.

Increase in Payments Success Rate

Routing based on transactions increases the payment success rate, which is one of the most significant benefits. To prevent a transaction failure, payments may be routed to alternative payment gateways if the primary gateway is unavailable.

Increase in Approval Rates

With Payment Routing, businesses can increase approval rates by finding the best payment route, resulting in fewer payment failures. As a result, the entire approval process is sped up, which leads to a high approval rate.

Real-Time Insights

Dynamic payment routing uses real-time performance data to determine which routes are successful. Besides optimizing conversion rates, this also provides your business with current analytics and statistics.

Better Customer Experience

By enabling various payment options and smooth transaction flow, businesses can simplify the payment process and enhance the customer experience.

Customizable Solution

Some PSPs may not offer enough options for business owners. Through payment routing, businesses can utilize tools from multiple providers to create customized solutions tailored to their needs.

Conclusion

If you want an efficient payment flow, you should partner with the right Payment Router. Take your time, do some research, and find the right team to develop your payment platform.

If you have questions regarding building an optimized payment orchestration layer, please do not hesitate to contact us. Our team will be happy to answer all your questions.

So that’s it for now. We will come back with something new very soon.

Original Content : https://blog.mcsam.in/how-can-payment-routing-benefit-your-business/