Hidden Savings: Why Payment Orchestration Deserves a Place on the Treasury Agenda

The Right Payment Orchestration Strategy: A Critical Factor for Success 

The digitalization and globalization of payment infrastructures have significantly impacted businesses in recent years. Financial departments of multinationals operating in a multi-channel environment are now required to manage a diverse range of payment methods, currencies, and interacting platforms, increasing complexity. This results in higher costs for companies, especially those with higher transaction volumes in B2C, diverse market operations,  and global presence. These organizations are further required to integrate disparate payment solutions, including mobile payments, e-wallets, and physical channels. The global reach of these systems adds challenges in overseeing cross-border transactions, managing a broad and diverse group of payment service providers.  

Moreover, the regulatory environment in the payments sector is constantly evolving. New regulations such as PSD2 in Europe, stricter data protection guidelines like GDPR, and international standards like ISO 20022 are influencing how payments are processed. Organizations must continually adapt to these regulatory changes to ensure compliance while maintaining efficiency and security in their payment processes. These changes can significantly impact systems, processes, internal cost structures, and often require strategic realignment.  

Under this scenario, can companies afford to leave millions in savings on the table?  

Previously considered merely as an operational task, payment transactions offer a way to unlock untapped value while navigating the complexities of global payments and hence has gained strategic importance. Efficient payment management will enhance a company's liquidity, minimize risks, and reduce costs. By leveraging a modern payment orchestration, companies can centrally control their payment flows, gain real-time transparency over their financial positions, and make better decisions in cash and liquidity management. This not only significantly contributes to a company's competitiveness and financial stability but also has the potential to become a critical success factor for the organization and to directly influence liquidity — a central focus of any treasury function. 

In other words, a well-designed payment orchestration strategy is far more than a technical enhancement. It is actually a vital component of a modern, efficient business strategy for corporations operating in B2C environments and those adapting to evolving business models in B2B markets.  

Understanding the Use of Payment Orchestration 

As customer demand for specific payment channels has grown, companies have increasingly relied on single payment service providers, especially for incoming payments, in order to offer global solutions. However, this dependence amplifies organizational risks, as any failure or disruption within the provider's system can severely impact operations and costs. The challenges and resource demands of switching providers, coupled with reliance on bespoke solutions, further entrench this dependency, leaving companies vulnerable to operational disruptions and potentially escalating indirect transaction costs over time. 

Under this context, payment orchestration can mitigate these adverse effects by integrating multiple providers and using advanced technologies, like redundancy and dynamic routing, that improve success rates and minimize transaction costs, ensuring maximum efficiency for global operations. 

An efficient payment orchestration strategy requires careful consideration of factors such as the organizational anchoring of the topic (with treasury in the lead), the business model’s geographic presence, customer-specific needs, and the impact of payment methods on revenue and customer acceptance. Optimizing cost structures across providers and channels demands a deep understanding of business models and their fee structures. Under this topic, the Payment Orchestration Expert Thomas Tittelbach, CPO DINAPE Solutions GmbH, quotes the following: “Corporates often struggle with the complexity of payment processing, non-transparent pricing, and provider lock-ins. With the growing success of payment orchestration offerings, Corporates get back in the driver seat for their business.”  

Technical Optimization: Breaking It Down 

The payment environment is undergoing significant changes, particularly in digital payment methods. Concurrently, there is a shift in demand across various channels, prompting providers to offer innovative solutions. Leading providers like Stripe, Adyen, and Computop rely on advanced platform technologies to ensure optimal payment execution. These providers simplify payment processing by consolidating multiple payment channels—such as Payment Service Providers (PSPs), gateways, and wallets—onto a single platform. This integration aims to reduce costs through intelligent strategies that consistently deliver the best solutions for the organization. To understand this better, it is crucial to examine how payment orchestration impacts cost factors: 

• Service and Technological Capabilities: Features offered by providers to help reduce transaction costs. 

• Fees Charged by Providers: The costs associated with the services they deliver. 

• Post-Processing Services: Solutions that unify and automate data transfer to ERP and treasury systems. 

Regarding service and technological capabilities, providers often align their marketing with buzzwords like “dynamic routing,” “multi-acquirer strategy,” and “interchange optimization.” Let us break these down further: 

• Dynamic Routing: Dynamic routing allows payment orchestration platforms to optimize transactions by selecting the most cost-effective provider, reducing interchange and scheme fees, improving success rates, and minimizing currency conversion costs. This results in significant cost savings and increased operational efficiency for the organization. 

 For instance, routing a European customer's payment to a local acquirer instead of a global provider could generate savings of almost 1.5% per transaction by avoiding unnecessary cross-border fees. 

• Multi-Acquirer Strategy: By integrating multiple acquirers, platforms leverage local providers for local transactions, create competition to lower fees, and ensure redundancy by rerouting payments if one provider fails. 

• Authorization Optimization: Advanced platforms use machine learning to determine the optimal time for submission, select transaction currencies that issuers are most likely to approve, and account for issuer preferences in different regions. 

• Interchange Optimization: By routing transactions through acquirers with the lowest interchange fees, particularly in international contexts where these fees can range from 1–2% or higher, companies can minimize costs. 

The Business Case: Numbers That Speak for Themselves  

Asessing the effectiveness of technological capabilities can be complex, but comparing provider fees is much more straightforward. Transaction size and volume significantly influence overall costs, with volume-based discounts often playing a decisive role. Companies processing over one million transactions annually can negotiate processing fee reductions of up to 0.2%, resulting in substantial savings. Additionally, processing costs can be reduced by up to 0.5% through the addition of new payment methods via payment orchestration. 

This case highlights the stark cost differences among providers, analyzing credit cards (EU and international), wallets, and direct debit payments. Providers such as Adyen, Stripe, Payone, Mollie, Checkout.com, Worldline, and Computop were included in the comparison, with a focus on European-based companies operating internationally. 

While direct debit offers limited opportunities for price differentiation, credit cards and wallets reveal significant variations. For EU credit cards, fees can differ by a factor of 2.3 annually among providers. Wallet fees, while less variable, still show discrepancies of up to 20%. Consequently, companies could pay over 1 million EUR more in credit card fees alone when choosing a more expensive provider. 

Not all fees are transparently structured, and acronyms are frequently used to describe cost components. However, the fees for each payment method can be categorized into the following structure: 

Our analysis closely examined the official fee structures of the providers listed, and calculated costs based on specific parameters outlined in Figure 1. The scenario focuses heavily on EU credit cards and wallets, while chargeback costs, currency conversion fees, and other cost components were excluded for simplicity. Figure 2 provides an overview of the average costs across all providers. A key finding is that payment processing costs, particularly for credit cards and wallets, can accumulate significantly if the details are overlooked. For wallets specifically, fee structures show considerable variation between providers. 

These differences are significant. In total, the gap between the most cost-effective and most expensive provider in our hypothetical analysis reached nearly EUR 5 million annually— a figure that one cannot neglect and would justify a closer look at payment orchestration. 

Payment Orchestration as the untapped Opportunity 

The business case underscores the significant cost differences between providers and the key factors affecting payment efficiency, showing that payment orchestration can play a significant role in the organization’s success in managing cost and liquidity — a central focus of any treasury function. As a result, a  well-executed payment orchestration strategy is not only an operational improvement but also a strategic element for a company’s overall success. Consequently, selecting the right provider goes beyond operational considerations and demands strategic evaluation of company goals, payment flows, and international presence.  

By integrating payment orchestration into their cost and efficiency strategies, multinationals can achieve measurable financial and organizational benefits. With Zanders’ expertise, companies can align payment orchestration capabilities into their payment transactions’ framework to enhance operational transparency, optimize transaction approvals, achieve cost savings, and improve liquidity management. This can lead to increased profitability, enhanced liquidity, and improved compliance across different jurisdictions. Neglecting this potential means leaving substantial untapped value on the table—value that could otherwise drive growth and innovation. 

If you would like to learn more about digital payment strategies in corporate treasury, please reach out to Sven Warnke or Gustavo Alves Caetano.