“A New Perspective on the Payments Flow” – Thomas Gillan, BR-DGE in ‘The Paytech Magazine’

For years, orchestration has been framed as an execution layer, when it should also be seen as a distribution layer, says Thomas Gillan, CEO of BR-DGE. And that brings benefits to everyone in the payment chain.

The payments ecosystem is an increasingly crowded spectrum of providers and pioneers. This comes from a burgeoning need for innovation, and the goal of serving the customer better. However, in the short term, this has caused a lot of fragmentation.

With an increasing number of intermediaries, the middle mile of payments, where transactions go between issuer and acquirer, is up for grabs, and there’s a concern that sensible pricing strategies could be thrown out. For PSPs and acquirers the prospect of upcoming regulation in Europe and around the world, only adds to the pressure. PSD3 is being introduced, partly to combat increasing cases of fraud, improve customer rights, level the playing field for new entrants into the market, and facilitate the growth of Open Banking.

With it is a new slate of compliance checkboxes for banks and non-banks alike. And it’s not the only thing being introduced. The Instant Payments Regulation (IPR) and the Financial Data Access (FIDA) proposal, although having their own reasons for existing, add to the pressure currently facing those in this chain. It’s clear that no one wants further disruption, not least merchants who are having to tackle a wider array of payment methods than ever before.

Orchestration might seem to only add to the complexity and costs they face but there is also the potential to provide the simplification required to limit the negative effects of fragmentation. Thomas Gillan, CEO and co-founder of BR-DGE, is keen to redefine this fragmentation as a positive. He stresses that ‘fragmentation is a healthy thing for the market, providing choice, flexibility, opportunity for innovation, and critically, less friction for consumers in the checkout flow’.

Providing that choice to the consumer is the main challenge merchants face today. From the growing popularity of digital wallets like Apple Pay and Google Pay to the increasing slate of BNPL products, the need is there to support more than just debit and credit cards. In certain jurisdictions, there are further methods still, where localised providers are increasingly eating up market share.

Catering to this variety ‘can use up a lot of resources in a period where it’s already difficult to make sure you’ve got the right technical resource in your platform’. In the wake of a huge amount of digital transformation, and innovation within payments, Gillan adds: “The goal is to build a best-in-breed technology stack so that you can capture that revenue, optimise the conversion, and provide for your customers.”

Adding value through distribution
So how to get there and add value in the process, as opposed to further adding to the complexity and making it sustainable to offer choice to the customer? Gillan is quite clear that orchestration is about ‘redefining the roles of payment providers to create a value-driven ecosystem’.

“For years, orchestration has been framed as an execution layer. In other words, it’s simply a mechanism for completing the transaction,” he says. “But importantly, it’s also becoming a distribution layer. That means taking that fragmentation, and the wide range of payment product providers and putting them into the market so the payment orchestration layer (POL) can distribute those services to the customer and offer the execution path on the payment as well.”

“For us, orchestration is about being a distribution point where acquirers and PSPs can access the volumes they want, when they want to, at a price they’re willing to pay”

Delivering value to acquirers and PSPs
There’s a potential here to add value, not just reduce the costs and burden of completing these transactions.‘Value-add’ opportunities include ‘focussing on the optimisation of payment flows and improving the customer journey, delivering these at the right time’. For merchants, cost is obviously a concern.

“The main challenge is not dragging the market into a race to the bottom and commoditising payments,” adds Gillan.

They’re providing a better service to their customers through payment choice but Gillan points out that a well-oiled orchestration platform also ‘allows them to bring in new methods and increase authorisation and acceptance rates by offering specific tailored payment methods to their consumers depending on their risk appetite, and where they’re trading’. The concern for acquirers and PSPs however, is how they hold on to that value. It’s not easy and the payments market is certainly undergoing pressure.

According to Boston Consulting Group, global payments revenues are predicted to see a sharp decline from nine per cent in 2023 to five per cent over the next four years. Increased competition, often driven by challenging the technological inefficiencies and the rising costs of traditional systems, has led to a squeeze on the market. Broader macro-economic trends have also not been favourable.

Fitting another player into the system may not seem like the most appealing option and Gillan is candid about that perception but says this is based on a misunderstanding of what orchestration has to offer. There is actually a unique opportunity to be gained from adding an orchestration layer into the mix.

“It’s important not to look at orchestration as a big stick to beat the acquirers with. It’s already a very competitive world and having an orchestration layer where the value solely lies in encouraging a race to the bottom on processing costs doesn’t resonate with me,” he says. “Rather, where orchestration needs to move to and what we’re focussed on at BR-DGE is how to add value beyond the cost setup of processing a transaction.”

In a similar way to disruptors in the banking space, there is an opportunity here to innovate and challenge the status quo, something orchestration can help with.

“It’s important to note that a lot of the payment institutions and FIs we work with, have provided phenomenal services to the end consumer for years. As time moves on, it’s vital that they stay at the forefront of that and continue to offer those products and services via their merchant base. But as organisations grow, and as volumes grow, continuing to be fleet of foot becomes increasingly challenging.”

For BR-DGE the aim is to ‘augment and add to existing infrastructure that’s already providing great services and make them even better’. One way they can do this is through greater visibility of the transactions coming through, in the process ‘capturing every pound, dollar or euro that flows over their platform or service’. Bringing everything together seems like the obvious solution. BR-DGE has just the tool to allow acquirers to move forward in this space.

“We feel we can add value in a number of different ways. That might be regional processors that want to offer global acquiring connectivity out of the box. They might want to add new payment methods, new alternative payment methods, local acquiring connections, and then deploy that at speed,” says Gillan. “For us, orchestration is about being a distribution point where acquirers and PSPs can access the volumes they want, when they want to, at a price they’re willing to pay.

“At the moment, the acquiring landscape is very much about bundling up all transactions and accessing them directly from the merchant. By putting orchestration technology in between, you’ve got an intelligent layer that can filter transactions, collate data and build-in additional services, to make acquiring efficient, effective and higher value.”

With greater visibility, pricing becomes more pointed and revenue generating opportunities for customers emerge. It’s a whole new way of doing business.

This article was published in The Paytech Magazine Issue 13, Page 6-7