Every year, failed payments cost merchants an estimated $118.5 billion globally. That’s not just a number – it’s abandoned shopping carts and frustrated customers who may never return. In some sectors, the damage is even worse. Ecommerce businesses, for example, experience false decline rates as high as 10%, meaning that legitimate transactions are mistakenly rejected, costing merchants $443 billion annually in lost sales.
The complexity of today’s payments ecosystem — multiple acquirers, regional payment preferences, evolving fraud threats — has made it harder than ever for merchants to ensure transactions are completed successfully.
Yet while merchants have more payment options than ever before, many still struggle with inefficiencies that hurt their bottom line. Cross-border transactions, which are projected to reach $250 trillion by 2027, face particularly high rejection rates due to incorrect routing, security checks and local regulatory requirements. At the same time, real-time payments and alternative payment methods are rising in popularity, but many merchants lack the infrastructure to integrate them effectively.
The reality is that traditional payment processing methods are no longer enough. To succeed in this rapidly evolving landscape, merchants need a smarter approach to payments orchestration – one that optimizes routing, prevents unnecessary rejections and ensures that customers can pay the way they want without friction.
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The Cost of Payment Complexity
Many merchants don’t realize just how much revenue they are losing due to poor payment routing. Consider a global online retailer that sells in both North America and Europe. In the U.S., credit card payments dominate, but in Germany, nearly 50% of consumers prefer bank transfers or Buy Now, Pay Later (BNPL) options. Without an intelligent orchestration layer, the retailer might struggle to support these preferences efficiently, leading to unnecessary declines or higher transaction fees from suboptimal routing.
Another challenge is acquirer dependence. If a merchant relies too heavily on a single acquirer or payment processor, any outage or technical issue can result in widespread transaction failures. During Black Friday 2023, one major payment processor experienced downtime, preventing thousands of merchants from processing transactions during the year’s biggest shopping event. The lack of redundancy in their payment setup resulted in millions of dollars in lost sales.
False declines — when legitimate transactions are rejected due to outdated fraud rules — are another hidden drain on revenue. A 2023 study found that nearly 42% of consumers who experience a false decline abandon their purchase entirely. In the luxury goods industry, where average transaction values are high, even a small percentage of false declines can result in substantial losses.
A multi-acquirer strategy can help merchants bring down the cost of payment management and optimize their authorization rates by providing more pathways for transaction approval and more flexibility with payment routing.
How Payments Orchestration Helps
Payments orchestration allows merchants to intelligently manage transactions in a way that maximizes success rates while reducing costs. Rather than sending every transaction through a static, pre-determined path, orchestration systems apply rules-based routing to ensure each payment is processed in the most efficient way possible.
For example, a European travel booking platform struggled with high cross-border rejection rates, as U.S. card issuers frequently declined payments for foreign transactions. By implementing payments orchestration, the company was able to route transactions through local acquirers, increasing authorization rates by 25% and significantly reducing customer complaints.
Orchestration also helps merchants respond dynamically to payment processor outages. If a primary acquirer goes offline, an orchestration system can automatically reroute transactions through a secondary provider, ensuring business continuity. This kind of built-in redundancy is crucial during high-traffic periods like Cyber Monday or major ticket sales for concerts and events.
Another key benefit is regional optimization. In Asia, where mobile wallets like Alipay and WeChat Pay dominate, merchants that rely solely on card payments lose out on a massive consumer base. Payments orchestration enables businesses to seamlessly integrate and optimize these regional preferences, increasing conversion rates and improving customer satisfaction.
Future-Proofing Merchant Payments
The payments landscape is evolving at an unprecedented pace. In the U.S., real-time payments are expected to reach $4.2 trillion by 2024, while the global adoption of BNPL is projected to grow at a CAGR of 22.4% over the next five years. Merchants that fail to keep up with these trends risk losing market share to more agile competitors.
Take the example of the gaming industry, where payment preferences vary widely. In the U.S., most consumers use credit cards, but in Japan, more than 70% of online gaming transactions are processed through prepaid cards or direct carrier billing. A gaming company that lacks an intelligent payments orchestration system may see lower conversion rates in key international markets simply because it hasn’t optimized payment acceptance for local preferences.
Another area where orchestration is becoming essential is fraud prevention. While merchants want to minimize fraud, they can’t afford to reject too many legitimate transactions. AI-powered fraud detection tools integrated into an orchestration system can strike a better balance, reducing chargebacks while ensuring that genuine customers are not blocked unnecessarily.
For merchants, payments orchestration isn’t just about improving efficiency – it’s about maximizing revenue, reducing friction and future-proofing their business in an increasingly complex digital economy. In a world where failed payments can cost billions, merchants that embrace a smarter, more flexible approach to payments will have a distinct competitive advantage.
Erich Litch is General Manager of Payment Software for Merchants and Banking at ACI Worldwide, driving the company’s leadership in payments orchestration for banks and merchants. Litch joined ACI in 2024 as Head of Merchant Solutions. He has more than 20 years of experience in executive and senior leadership roles at SaaS and licensed-based financial technology businesses. At Fiserv, CheckFree, and Corillian, he held various senior leadership roles, driving the sale and delivery of enterprise financial software and payments solutions to large global financial institutions. More recently, Litch served as President and COO of 2Checkout, an online payment processing and subscription management company acquired by Verifone.
