Accepting payments and executing financial transactions is complex and costly. Due to evolutions in payment technology and narrowing customer expectations, more time, money, and resources are needed for payment operations. To combat this erosion of resources and revenue, industry leaders are evaluating payment orchestration vs payment gateway solutions.
A payment orchestration platform (POP) and a payment gateway are examples of technologies that streamline and simplify the payment process for businesses, each offering unique features and benefits. While both are often integral to a business’s payment infrastructure, they are quite different from each other.
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“Knowing the difference between payment orchestration and payment gateways is crucial to optimize payment processes, reduce costs, and enhance customer experiences. Each technology serves unique purposes and selecting the right one saves you from unnecessary complexities, costs, and headaches.” - Lee Cocking, Chief Product Officer. Cybrid |
What you’ll learn in this article:
A payment gateway is a technology that allows merchants to accept digital payments, such as credit and debit cards, along with other forms of electronic payments. Acting as the digital equivalent of a cash register in a physical store, payment gateways facilitate the authorization, processing, and management of payment transactions between customers and businesses.
In 2022, payment gateway market revenue reached $26 billion and is expected to be worth $47 billion by 2025. This growth is being spurred by the increasing preference for cashless payment options and adoption of online shopping.
How does a payment gateway work? Okay, think of a cash register in a store. The cashier or retail associate uses the cash register and its systems to accept a variety of payment types, such as cash, cheque, debit, credit, gift cards, or other payment types.
A payment gateway functions similarly, using its systems to accept various digital payment types, such as credit and debit cards, electronic wallets, and other online payment methods.
Examples of commonly known payment gateway products include PayPal, Stripe, Square, and AmazonPay.
A payment gateway has several core functions. Each is crucial to ensure secure an efficient processing of digital payment transactions as they enable the flow of payments from customers to businesses.
A payment gateway can:
While payment gateways provide essential services for processing digital transactions, they also come with certain limitations that businesses should be aware of as they may not fully meet your payment needs.
Limitations of payment gateways for payment processes include:
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What a Payment Gateway Can Do |
What a Payment Cannot Do |
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Enable digital payments |
Manage complex payment workflows |
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Limited multiple payment option |
Provide advanced business insights |
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Ensure secure transactions |
Handle cross-border compliance seamlessly |
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Prevent fraudulent transactions |
Integrate easily with all business systems |
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Access basic transaction analytics |
Optimize costs effectively |
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Manage all payment methods from a single source |
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Enable crypto payments |
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Scale effortlessly for large, growing enterprises |
A payment orchestration platform (POP) is a comprehensive solution that integrates multiple payment gateways and services into a single, unified system. In the financial world, a POP functions like a central hub for all payment activities, similar to how a financial manager oversees and optimizes a company's entire financial portfolio.
This platform provides businesses with greater control and flexibility over their payment processes, enabling them to optimize and manage all aspects of their payment operations seamlessly.
Currently, many businesses use a combination of different tools and manual processes to achieve what a payment orchestration platform offers. This often includes multiple payment gateways, individual fraud prevention tools, various compliance systems, and separate analytics platforms.
By consolidating these disparate elements into one cohesive system, a POP simplifies the payment landscape, making it more efficient and easier to manage.
Imagine a financial manager who oversees multiple bank accounts, investment portfolios, and financial transactions. This manager ensures that funds are allocated optimally, fees are minimized, and all financial activities comply with regulatory standards.
Similarly, a payment orchestration platform connects and manages various payment gateways, processors, and methods, providing a single point of control for efficient and streamlined payment operations.
An example of a payment orchestration platform is Cybrid.
A payment orchestration platform has several core functions that are essential for managing complex payment processes. These functions help businesses streamline their operations, reduce costs, and enhance customer experiences.
A POP can:
While payment orchestration platforms offer extensive benefits, they also have certain limitations that businesses should consider.
Save time and money, and build secure stability with our payment orchestration platform.
Payment gateways function as intermediaries between online merchants and financial institutions, primarily managing the authorization and secure transmission of payment data.
In contrast, payment orchestration platforms handle a broader range of tasks and more complex payment flows, including routing transactions to multiple payment service providers, executing numerous payment operations, and supporting alternative payment methods.
Payment gateways are often limited to specific payment methods or acquirers, requiring businesses to integrate multiple gateways to support diverse payment options. Payment orchestration platforms, on the other hand, offer greater flexibility.
They allow merchants to connect to numerous payment gateways and service providers through a single platform. This integration helps businesses quickly adapt to evolving customer preferences, security needs, optimized payment infrastructures, and new payment technologies.
Traditional payment gateways typically use a fixed routing model, directing transactions to a predetermined payment processor.
Payment orchestration platforms, however, can support dynamic routing by customizing the flow of payments, intelligently directing transactions based on real-time factors like currency, transaction volume, and provider performance.
This capability helps merchants optimize transaction costs and improve success rates by selecting the best route for each transaction.
Risk management in payment gateways is usually confined to the tools and measures provided by the gateway itself, such as fraud detection and prevention mechanisms.
Payment orchestration platforms, on the other hand, enhance risk management. For instance, Cybrid’s POP is fully KYC and KYB compliant; its users can instantly access, or “piggy-back” a fully compliant payment infrastructure, saving them months of time and millions of dollars.
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Understanding the differences between payment gateways and payment orchestration platforms is key to optimizing your payment processes. While gateways handle basic transactions, orchestration platforms offer a comprehensive solution with dynamic routing, enhanced risk management, and embedded financing.
Ready to transform your payment operations? Discover how Cybrid’s payment orchestration solutions can help you streamline processes, reduce costs, and enhance customer experience.
Book a demo with Cybrid today to learn more and start optimizing your payment processes.
Lee Cocking, Head of Product @ Cybrid