Throughout 2021, Edgar, Dunn & Company (EDC) has been tracking fifteen Payment Orchestration Platforms (POPs). These are specialist companies that have received just over $350 million of investment. Regardless of the pandemic, there remains a robust and steady investment into POPs that are serving an interesting and evolving retail payments acceptance market. As digital payments are undergoing rapid growth, partly driven by the pandemic and partly because of the continued adoption of Alternative Payment Methods (APMs), such as Buy Now Pay Later (BNPL), retailers are aiming to expand their reach, grow their range of APMs they accept and increase sales.

Payment orchestration is not a new idea, around for almost 10 years, what is different this time is the accelerated drive toward digital transformation and the benefits of cloud technology. One example, and a relatively new entrant, Pagos, is a start-up founded by former Braintree and PayPal execs, who raised $10 million in seed funding in October 2021. Pagos is building an API-driven micro-services platform that claims it can integrate with any retailer’s payment stack. The platform is designed to provide “payment optimization” for the retailer’s existing payments infrastructure. Is Pagos stepping on the toes of the POP companies? That is too early to say. What remains to be seen is there is an appetite from the investor community to back these companies and a demand to reduce payment complexity that many merchants and online retailers are finding as they grow their businesses.

The most recent addition of investment has been for Primer, a London based POP-like start-up company, which raised $50 million which has meant they have a $425 million valuation. That is a big valuation for a relatively unproven and emerging payment infrastructure proposition. Primer aims to differentiate themselves from other POP companies by focusing on the merchant’s checkout component. The four distinct components of any decent Payment Orchestration Platform can be found in a previous article here.

Is a POP company offering a technological solution looking for a business problem? What is common for many of these POP companies – they are aiming to save time and money for merchants, whilst enabling them to scale globally and offer relevant Alternative Payment Methods (APMs) – or as we prefer to call them “Appropriate Payment Methods”. All merchants want to save time and money. For some of the largest global retailers, the biggest challenge is their legacy payments infrastructure that was designed five or ten years ago or in some cases, more than ten years ago. The aspiration to move away from the constraints and overhead of these older systems to newer cloud-based payment solutions is high on the agenda for many online merchants and omnichannel retailers. It is questionable whether a POP is the best solution for your business. Each merchant has a very different back-end and a long history of integrations with third-party payment providers. Adding yet another integration to a POP is not always the solution and, in some cases, a complex payment ecosystem has been made more complex to manage and the goal to simplify has been disastrous.

Payment Orchestration Platforms, on paper at least, are functionally rich and can clearly demonstrate significant benefits for retailers, but an independent assessment is always recommended for any retailer or online merchant interested in optimising and improving its payment acceptance strategy.

Where next for the POPs?

Conducting the payments orchestra can be a daunting task, even for the largest merchants.  If you are interested to know how a POP can help your business to operate more effectively in an increasingly complex payment ecosystem, do not hesitate to contact Mark Beresford at Edgar, Dunn & Company (EDC).‍

The content of this article does not reflect the official opinion of Edgar, Dunn & Company. The information and views expressed in this publication belong solely to the author(s).