When it comes to processing payments effectively, businesses face a multitude of challenges. One of the most critical aspects of this process is payment conversion — the ability to complete a transaction once a customer decides to make a purchase. Payment conversion is directly linked to revenue, and any hindrance in this process can result in lost sales and customer dissatisfaction. This is where intelligent payment routing comes into play.
What is Intelligent Payment Routing?
Intelligent payment routing is a technology-driven process that automatically selects the most appropriate payment processor or gateway for each transaction. This selection is based on a variety of factors, including transaction amount, customer location, currency, and historical data on success rates. The goal is to route payments through the most efficient path to increase the likelihood of a successful transaction.
How Does Intelligent Payment Routing Work
Intelligent payment routing operates by leveraging advanced algorithms and real-time data to determine the optimal path for processing each transaction. When a payment is initiated, the system evaluates multiple factors, such as the success rates of various payment gateways, the customer’s location, the type of card used, and even the time of day. Based on this analysis, the system selects the best gateway or processor that is most likely to complete the transaction. If the initial attempt fails, the routing system can automatically retry the payment through alternative routes, minimizing the risk of declines and ensuring a smoother, more reliable payment experience for both businesses and customers.
The Impact of Intelligent Payment Routing on Payment Conversion
Increased Approval Rates
One of the primary benefits of intelligent payment routing is the significant increase in payment approval rates. Different payment processors have varying acceptance criteria, and a transaction that might be declined by one processor could be approved by another. By analyzing past transaction data and real-time conditions, intelligent payment routing ensures that each transaction is sent to the processor with the highest likelihood of approval. This reduces the number of declined transactions, directly increasing payment conversion rates.
Reduced Transaction Costs
Another advantage of intelligent payment routing is the ability to minimize transaction costs. Different payment processors charge different fees based on factors like the type of card used, the transaction amount, and the geographic location of the customer. Intelligent routing systems can identify the most cost-effective route for each transaction, ensuring that businesses don’t overpay in processing fees. Lower costs per transaction can allow businesses to price their products more competitively or improve their profit margins, while still maintaining high conversion rates.
Enhanced Customer Experience
A seamless payment experience is crucial for customer satisfaction. If a customer encounters issues during the payment process, such as a declined transaction or a long processing time, they are more likely to abandon their purchase and possibly switch to a competitor. Intelligent payment routing helps ensure that payments are processed quickly and efficiently, reducing the likelihood of errors or delays. This results in a smoother checkout process, enhancing the overall customer experience and encouraging repeat business.
Global Reach and Multi-Currency Support
For businesses that operate internationally, intelligent payment routing is particularly beneficial. It allows companies to route payments to processors that specialize in specific regions or currencies, increasing the chances of successful transactions in global markets. This is especially important for businesses dealing with customers who prefer to pay in their local currency. By offering multi-currency support through intelligent routing, businesses can cater to a broader audience, thereby increasing their global payment conversion rates.
Data-Driven Insights
Intelligent payment routing systems provide businesses with valuable data on their payment processes. By analyzing this data, companies can gain insights into which processors have the highest approval rates, which regions have the most declines, and where transaction costs can be reduced. These insights allow businesses to continuously optimize their payment strategies, leading to sustained improvements in payment conversion over time.
Take Advantage From Akurateco Payment Routing
Akurateco offers a sophisticated white-label payment gateway crafted by experts with over 15 years in online payments. Our cutting-edge payment routing technology addresses key challenges for merchants and payment service providers, enhancing transaction efficiency and cost-effectiveness.
Akurateco’s payment routing operates based on the following parameters:
Geolocation of Billing Address
To optimize processing fees, our smart routing technology directs transactions to local payment providers according to the geolocation of the customer’s billing address.
Payment Method
Transactions are routed to the appropriate provider group depending on the payment method used—be it credit/debit cards, Alternative Payment Methods (APMs), or cryptocurrencies.
White Lists
Akurateco provides the capability to route transactions from white-listed clients to a specific MID, as designated by the user, ensuring that preferred or high-value customers are managed according to specific criteria.
Bank Identification Number (BIN)
Transactions are routed to the payment connector with the highest success rate for processing transactions from a particular issuing bank, based on the BIN. This approach helps improve transaction success rates by targeting the most effective processing routes.
BIN’s Country
Routing can also be tailored according to the BIN’s country, as indicated in BIN databases, optimizing transaction processing based on geographical considerations.
Credit/Debit Card Brands
To reduce payment processing costs, Akurateco routes transactions to payment connectors offering lower interchange fees for specific card brands, allowing merchants to benefit from cost savings.
Currency
Currency-based routing ensures that transactions are processed through the most cost-effective acquirer or MID based on the transaction currency.
Transaction Amount
Customers can also route transactions to the most suitable provider based on the transaction size, optimizing processing costs.
Custom Routing Parameters
Akurateco allows for the creation of custom routing rules based on any parameter that can be evaluated from the collected data. This flexibility enables users to route transactions according to specific needs and preferences, enhancing the efficiency of payment processing.
Conclusion
Intelligent payment routing offers a powerful solution to the challenges of payment processing by increasing approval rates, reducing costs, and enhancing the customer experience.
Disclaimer: This article contains sponsored marketing content. It is intended for promotional purposes and should not be considered as an endorsement or recommendation by our website. Readers are encouraged to conduct their own research and exercise their own judgment before making any decisions based on the information provided in this article.
