EXCLUSIVE: “Bringing Harmony to Payments” – Tom Voaden, BR-DGE in ‘The Fintech Magazine’

Tom Voaden from BR-DGE unpacks the increasing appetite for payment orchestration from both merchants and acquirers

The acquiring space has been fundamentally disrupted in recent years. Traditionally the preserve of institutional banks, they’ve lost ground to tech companies and challengers who’ve wooed merchants with value-added services and (apparently) keener prices.Some banks even sold off their acquiring estate. The biggest acquirer in the US now is Fiserv, a global tech company. Three of the top five acquirers in the UK are global payment processors, not banks.

That doesn’t mean banks have to give ground. And some are holding on fast.

In fact, the data around payments that acquiring allows them to collect can create opportunities to deepen relationships with merchants and provide them with other services. The problem in banks leveraging this opportunity is their tech.

“Legacy banks have a huge market share but have struggled with the speed of technological change,” says Tom Voaden, VP of commercial at payment orchestration experts BR-DGE. “A lot of those larger banks might have launched an acquiring platform 15-20 years ago and then patched it over time. But really this was just about keeping the lights on.”

The fact that the number of payment methods, including hyper-local payment schemes, have exploded hasn’t helped. Serving such a diverse and constantly changing payments demographic is a challenge for both merchants and acquirers. Merchants know that offering a full payment stack cannot come at the expense of customer experience, particularly in e-commerce where the slightest friction can impact sales and cart abandonment rates are already running at unacceptably high levels.

It’s something acquiring banks would like to help with. And with payment orchestration, they can, says Voaden.

Payment orchestration is an independent tech layer in the chain, connecting all parts of the ecosystem powering connectivity, routing, resilience and process optimisation. As an orchestration expert, BR-DGE was originally established to help merchants transform and optimise their side of the payment flow. But in doing so, it realised that legacy payment providers and acquiring banks needed help with some of the same challenges, too.

Voaden worked with orchestrators during his time at Visa, and now he’s interacting with players across the payments ecosystem, including payment providers, consultancies, card schemes and enterprise merchants.

“A lot of the legacy banks are trying to plug gaps by white-labelling or partnering with other large payment acceptance players. But often they’re partnering with providers who are also struggling to keep up”

“We interact with digital, full-stack PSPs and acquirers, but we also work with merchants that use larger legacy acquiring banks and it’s clear that competition from these newer players is putting a lot of pressure on more traditional providers,” he says.

They haven’t matched the added features providing other support for SMEs offered by more modern providers, such as Stripe’s, which sit within and outside of payments.

“Building that would be a real challenge for a legacy bank,” says Voaden. “So, we’ve seen a lot of the legacy banks trying to plug gaps by white-labelling or partnering with other large payment acceptance players, but often they’re partnering withproviders who are also struggling to keep up.”

Adding a processor’s legacy tech on top of an acquirer’s own legacy technology certainly isn’t the answer. But while taking on new proprietary or bought-in gateways may provide acquiring banks with cutting-edge tools for their front book, the risk is that it creates inconsistency in the merchant experience and does not immediately service the bank’s back book.

Payments orchestration, argues Voaden, offers a way for acquiring banks to build out the payments connectivity and services they need to better support their customers, without the pain of ripping and replacing tech, relying purely on the ageing platforms of processors, or risking disrupting their merchant experience with new systems. Instead, financial institutions can choose, tailor and implement the pieces that best serve their customers and roll it out easily, using templated or out-of -the-box setups that are built for individual merchant segments.

In other words, orchestration can be the ‘glue’ to bind together the new and old, ensuring that all elements of an acquirer’s tech works together and serves all their customer base

Fierce competition

And that’s important, because enterprise merchants are often looking to work with multiple acquirers, while SMEs are finding new one-stop-shop providers very attractive.

“We typically see that once smaller merchants try out new providers, they very quickly build confidence and move over,” says Voaden. “The likes of the challenger business bank Adyen are pushing into whole new places and starting to make their technology interoperable as well, which will only increase their volume.”

The good news, though, for the legacy acquirers, in the short-term at least, is that often the merchant really wants to stay with their big acquiring bank, he says.

“This might be because they’re reliable, have great customer service or because they bank with them from an issuing perspective. What might be missing is the customer-facing, front-end payment methods and checkout personalisation, as well as the back-end routing, tokenisation and resilience capabilities.”

Which is where BR-DGE comes in.

It didn’t take long, says Voaden, for payment service providers to notice the benefits of having BR-DGE in the transaction flow. “They were saying, ‘you’re making customers stick with us, without disrupting the payment flow. We’re still getting the volume through our gateway and acquiring platform, but merchants are happier because they can offer a better front-end experience, while improved routing, optimisation and resilience means payments keep flowing efficiently behind the scenes’.”

The option to white-label the technology is insurance for PSPs who might be concerned that an orchestrator could steal their business, allowing these acquirers to offer competitive and innovative services to their merchants, who in turn benefit from orchestration services without having to switch provider.

BR-DGE provides a single entry point into multiple gateways and other solutions, offering an interoperable layer where products can be released and updated alongside existing tech. While its full platform is available as a white-label solution, it can also deliver modular product sets, which focus just on routing or tokenisation, for example. In that way, they can more efficiently and selectively consolidate away from their legacy technology over time, says Voaden.

While some level of disruption is unavoidable, he believes: “Banks can take solace in knowing they’re not making their merchant move to another gateway, which is going to be outdated in five years. It’s a technology layer that can iterate, and switch between different providers in the background. It’s about future-proofing and building more resilience.”

And everybody wins.

This article was published in The Fintech Magazine Issue 33, Page 16-17