Payment Orchestration at a glance: Payment Orchestration is software that lets a business connect to and manage multiple payment providers and banks in one place, automatically choosing the best way to process each payment.
It acts as a ‘traffic controller’ for transactions, directing payments to the best provider based on factors such as speed, cost and availability.
In global finance, it’s the solution to fragmentation - allowing institutions to manage cross-border flows and real-time payments without juggling multiple, separate integrations.
This glossary explains everything you need to know about Payment Orchestration - so you can reduce transaction failure, lower costs and achieve greater operational resilience.
What is Payment Orchestration?
To fully understand Payment Orchestration, it helps to be familiar with the following related terms:
- Software Layer: An interface that sits between systems, enabling communication and interaction while allowing each component to be developed, modified and tested independently.
- Payment Service Providers (PSPs): Third-party companies that enable businesses to accept and process digital payments. PSPs act as the bridge between customers, merchants and banks, typically offering services such as payment gateways, fraud prevention and multi-currency support.
- Acquiring Banks: Financial institutions that process credit and debit card transactions on behalf of businesses. Acquiring banks connect merchants to card networks such as Visa and Mastercard and facilitate the settlement of funds.
- Payment Rails: The underlying networks and systems that move money between parties - the ‘digital plumbing’ of payments. These include bank transfer systems (such as ACH, FedNow, SEPA), card networks (Visa, Mastercard) and cross-border payment networks (such as Swift).
Bringing it together
With these components in mind, Payment Orchestration can be understood as:
A software layer that sits between a business and the payments ecosystem. It connects multiple payment service providers (PSPs), acquiring banks and payment networks and routes transactions in ways that improve success rates, reduce costs and increase reliability.
What is a Payment Orchestration Platform?
A Payment Orchestration Platform (POP) is the technology stack that facilitates this centralization. Rather than hard-coding connections to individual banks or networks, an organization connects its core system to the orchestration platform once.
The platform then manages the connections to the outside world. This creates a ‘hub and spoke’ model where the platform handles the complexity of formatting, compliance and routing.
Core functions include:
- Gateway Agnosticism: Connect to any bank, network or PSP without vendor lock-in
- Transaction Routing: Dynamically selecting the best path for a payment
- Unified Reporting: Aggregating data from all providers into a single view for better liquidity management
- Security Centralization: Handling payment security and fraud checks in one place, so core systems don’t need to manage sensitive data
How does Payment Orchestration work?
Payment Orchestration works by using smart routing to decide how each payment should be processed.
When a payment is started, the orchestration layer looks at key details - such as the payment method, location, cost and provider availability - and then sends the payment through the best option. This helps payments go through faster, cost less and fail less often.
The workflow:
- Initiation: The core banking system or corporate treasury sends a payment instruction.
- Enrichment & Validation: The layer checks for compliance (AML/Sanctions) and ensures the message format (e.g., ISO 20022) is correct.
- Routing Decision: The orchestration layer selects the optimal route. For example: Is this a high-value USD transfer? Route via Swift. Or: Is this a low-value domestic payment? Route via local ACH.
- Execution: The payment is sent to the selected provider.
- Failover (Cascading): If the primary provider is down or declines the transaction, the platform automatically retries with a secondary provider - instantly.
What is the Payment Orchestration Layer?
The ‘layer’ refers to where this software sits in your IT architecture. It is a middleware solution.
- Front-end: Your channels (mobile app, corporate portal, core banking system)
- The Orchestration Layer: The bridge that translates and directs traffic
- Back-end: The external networks (Swift, SEPA, FedNow, Local Clearing Houses)
Why is ‘Smart Routing’ critical?
Smart routing is the brain of payment orchestration. Without it, payments follow static, hard-coded paths that are often expensive or slow.
With smart routing, institutions can set rules based on:
- Cost, e.g.: Always choose the provider with the lowest fees for transactions under $1,000
- Performance: Avoid Provider A between 2:00 AM and 4:00 AM due to scheduled maintenance
- Geography: Route European payments through our SEPA partner to avoid cross-border fees
- Resilience: If the primary line to the central bank is congested, switch to the backup correspondent bank
Payment Orchestration vs. Payment Gateways
A common confusion arises between a gateway and an orchestration platform. Here’s how the two differ.
|
Feature |
Payment Orchestration Platform |
Payment Gateway |
|
Connectivity |
Connects to many gateways, banks and processors simultaneously |
Connects to one specific acquirer or processor |
|
Routing |
Dynamic (chooses the best path in real-time) |
Static (one path) |
|
Failover |
If it fails, it retries with a backup provider |
If it fails, the transaction is declined |
|
Primary Use |
Managing and optimizing the payment flow |
Processing the payment |
Common challenges solved by Payment Orchestration
|
Challenge |
The problem (without orchestration) |
How orchestration solves it |
|
Integration Fatigue |
Adding a new payment rail (like Instant Payments) requires a massive IT project to update the core system |
The core system connects only to the orchestration layer. New payment rails are added to the orchestrator, not the core, allowing faster rollout with less risk |
|
System Outages |
If a bank's connection to Swift or a local clearing house goes down, payments stop |
The system automatically reroutes traffic to alternative providers, ensuring business continuity |
|
Data Silos |
Transaction data is scattered across five different banking partners, making liquidity reporting a nightmare |
The platform aggregates data from all partners into a single dashboard for real-time visibility |
|
Cross-Border Friction |
High fees and slow settlement times for international transfers |
Smart routing selects local payout partners, turning cross-border transfers into lower-cost local payments |
Bringing the process to life: A real-world example
A Tier-2 bank needs to process a high volume of corporate payments.
The Scenario: A corporate client submits a batch of 1,000 international supplier payments.
Without Orchestration: The bank sends all 1,000 payments via their primary correspondent bank. The fees are high, and 5% of the payments fail due to formatting errors or technical timeouts. The client is unhappy.
With Orchestration:
- Analysis: The platform scans the batch.
- Optimization: It identifies that 200 payments are going to the Eurozone and routes them via a SEPA partner (low cost). It sees 800 payments are USD and routes them via Swift (high speed).
- Correction: It detects that 10 payments have invalid IBAN formats and flags them for repair before sending, preventing rejection fees.
- Result: The client saves money, the payments arrive faster and the bank’s operational team spends less time fixing failed transactions.
Modernizing with PaymentSafe
For financial institutions, orchestration isn't just about efficiency - it's about compliance and security.
This is where Eastnets PaymentSafe acts as your orchestration hub. It creates a centralized, automated bridge between your internal systems and the external financial world - streamlining operations, reducing manual effort and supporting compliance with evolving regulations.
Ready to simplify your payment operations?
PaymentSafe allows you to consolidate your payment flows, manage liquidity in real-time and ensure seamless connectivity to Swift and local clearing houses.
FAQs about Payment Orchestration Platforms
Map Your Flows: Understand where your payments are going (geographically) to select the right mix of providers.
Define Routing Logic: Establish clear rules for when to prioritize cost vs. speed.
Centralize Security: Ensure your orchestration layer handles tokenization to keep sensitive data out of your core systems.
Monitor Analytics: Use the unified data to negotiate better rates with your banking partners based on volume.
Plan for ISO 20022: Ensure your orchestration platform can translate between legacy formats and the new global standard.
Yes. By centralizing connections, it reduces the number of entry points hackers can exploit. Most platforms also use tokenization, meaning the core system never touches raw sensitive data.
Yes. By dynamically routing transactions to the most cost-effective provider (e.g., using a local rail instead of a cross-border wire), institutions can significantly lower their average cost per transaction.
It is essential for:
- Banks managing multiple clearing routes
- Fintechs needing to scale globally without building new integrations for every country
- Large Corporates with complex treasury operations and multiple banking relationships.
A ‘payment switch’ is often a legacy term for routing transactions, typically used in card processing (switching between networks). Payment orchestration is a broader, modern concept that includes not just switching, but also smart routing, data analytics, cascading and risk management across all payment types (wires, cards, instant payments).