Payment provider routing and its benefits

Understand payment routing and how your e-commerce can use this feature even before Black Friday.



What does provider routing mean, anyway?


This is one of the main questions that many digital commerce managers have because unlike the physical environment, where it is just a matter of changing the credit card reader, in the digital environment, everything happens in a layer that no one sees.


To answer this and other related questions, our expert team explained what payment routing is and why every digital business should route its providers.

In this article you will learn:



What is a payment provider?


There is still a lot of confusion about the role of each party involved during a transaction, if this is not your case, skip to the next point! Joking aside, to clear up all these doubts, let's go back to a few posts.


A payment service provider (PSP) is responsible for supporting digital transactions with credit cards, digital wallets, and other forms of payment in a transparent and fast manner.

Besides simplifying online payment acceptance by merchants, they also offer security regarding sensitive data and some management and monitoring tools, like dashboards and reports.


Why do I need to use more than one payment provider?


Besides the fees, which are often a motivator for switching between payment providers, there are other reasons why you should use more than one provider.


Unavailability

Something that is very common is the unavailability of the system. Many customers have encountered problems with the unavailability of service by the provider, or even total unavailability.

This is one of the problems that you cannot predict, but you can be prepared in case it occurs. And the best way to do this is to be integrated with more than one provider because in cases of unavailability or system failures, your store will not be compromised and will not be affected by the loss of sales.



More diverse payment methods

With the growth of online shopping in recent years, accepting several payment methods becomes more and more important. And one of the reasons that you need to use more than one payment provider is directly linked to this.

It is very common that the fees associated with each payment method change between providers, besides that, integrating certain methods can be easier or more complicated depending on the technology offered by the provider.

What many businesses do is integrate with a certain provider one method, and with another provider, another method, or sometimes they decide not to accept a certain method, which can jeopardize the business in the medium to long term.


Reduced costs and increased sales

Besides all the points we mentioned above, integrating more than one provider can contribute to reducing costs in your sales process, and consequently increasing your sales volume.

It may seem a bit of a strange equation, I know, but by integrating more than one provider you get to choose the type of transaction that goes through each of them, and furthermore, you can choose the method that is most cost-effective in fees and increase your sales capacity.


Support for scaling your sales

In addition to availability, it is common for some providers to have more resilient technologies than others. Resiliency in payments is sometimes an overlooked topic by some digital business managers, but it is very important.

As your business scales the number of sales, and/or for some reason has periods of high spikes in sales, your provider needs to be able to handle the business without failure and adapt when your payment infrastructure needs it.


What is payment provider routing?

Provider routing is nothing more than having a system that allows you to transact part of your sales on one provider and another part on another. Moreover, by using two providers and performing routing between them, you gain a backup in case of failure, scalability problems, and so on.



What are the benefits of routing between providers?

Previously we mentioned points that by themselves already count as benefits when using more than one provider, below we will talk specifically about some features that can further benefit your business.


Payment retry

Payment " retry" is a feature that is made possible by integrating more than one provider in an API such as Plug. It works like an emergency light, if while performing a transaction your customer experiences a failure either due to unavailability, provider error, or anti-fraud failure, you have the possibility to try a new transaction within 30 seconds.

All this happens on a layer that your customer doesn´t see, so the person doesn´t need to fill in the card data again and make a new payment attempt, this process happens automatically.



A/B Testing

A/B Testing is a feature that allows you to analyze your business transactions. And it can be considered a benefit because by conducting A/B testing you can understand which sales approval parameters, fees charged on each sale, and which methods are best accepted at a given provider.

By doing this, you can determine that provider A can be a priority for sales, and B can act as a backup, or vice-versa.

Besides the points mentioned, it is possible to reduce costs, after all, with more accurate and transparent data from your transactions you will be able to create optimization rules for your payment process.


Increase in the approval rate

Most digital businesses lose sales due to provider failures, but without a solution that provides full transparency of transactions, it is difficult to find out.

One of the benefits of using a payment provider routing is the increase in your approval rate. Since you can execute payment retries by routing the providers, your chances of losing one sale become much smaller.


2 step provider routing

Well, I hope you have enjoyed the content so far and have enough information to realize that using more than one provider and routing between them can greatly benefit your business. To conclude we have listed two simple steps to perform the routing.


Integration with providers

The first step is not to integrate with more than one provider in addition to what you already use, it is much simpler than that. What you need is to be integrated with an API like Plug that allows your business to be integrated with multiple providers in a single integration.


Payment flow management

After integrating with several providers, you will be able to create your own payment flow. In it you will be able to say, for example, what sales percentage you want to transact with a particular provider, or which one will be your first choice, and so on.


Conclusion

Now that you know what payment provider routing is, and how it can benefit your digital business, you only need a payment expert team to guide you through how to create a payment flow that will support your business and help to increase your sales.

Do you want to conduct a free consultation and understand how routing can benefit your business? Talk to our team!





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