In a landscape where ecommerce is dominant, merchants need to handle large payment volumes while providing a convenient and streamlined customer experience. Learn what intelligent payment routing is and how it can streamline your U.S. debit payments.

What is intelligent payment routing?

Intelligent payment routing has evolved to assist businesses by determining the best provider for each transaction, leading to advantages for today’s merchants.

During the dawn of digital ecommerce payments, the modern concept of payment routing did not exist. Instead, most service providers were connected to just one regional bank. In many cases, payment transactions were slow, and frequently ended in declination.

In recent years, the landscape has changed to become more intelligent and streamlined. No longer does the necessity exist to focus on a single payment provider, when it is possible to work with several at once. 

Intelligent transaction routing is a technological advance that can examine each payment as it is being processed, determining the most suitable provider by leveraging internal data.

Types of payment routing

There are two types of payment routing: static and dynamic. One is the clear winner for today’s businesses.

Static payment routing

Companies have a choice when it comes to the style of payment routing that they choose to use. Static payment routing, often considered to be the more old-school approach, involves determining a fixed provider to process all transactions. If there were ever any downtime or other difficulties with this vendor, a declination message would be sent. 

Consequently, the inability to adapt to changing conditions would likely result in customer frustration and lost sales.

Dynamic payment routing

By contrast, dynamic or smart payment routing is not limited to one processor. When a transaction is initiated, the software will use a set of factors, including currency conversion rates and performance, to pick the best channel. 

Should the chosen gateway fail to respond, the system will immediately cascade it to another provider without any delays.

How smart payment routing works

Intelligent payment routing involves several steps. These include preprocessing data examination, routing path setup by the user, anti-fraud procedures, acquirer selection, and cascading to another provider if necessary.

First, the technology’s preprocessing system takes a look at the transaction details, comparing them with a number of databases, including those dedicated to currency conversion and payment processing, as well as Bank Identification Number (BIN). It then screens for fraud and other security red flags.

In charge of their own destiny, the user is now perfectly positioned to set the routing path using different identified transaction types. 

According to these parameters, the transaction just completed by the customer can then be appropriately directed. 

Factors that influence where it goes include the issuer’s country, transaction amount, currency, and lowest available processing fee.

Benefits of intelligent payment routing for U.S. merchants and debit payment transactions

The advantages of smart payment routing are numerous. They include affordability, optimized success rates, and high levels of security and efficiency.

When static routing is used, the processing of U.S. debit transactions is limited to just one provider, leaving the process vulnerable to being interrupted or declined if the original vendor is unavailable. The resulting decline frequently leads to customer frustration, defection to one of your competitors, and a subsequent loss of revenue for your business.

On the other hand, intelligent routing ensures the success of a transaction, and it does so affordably. That’s because it sends payments to the providers featuring the lowest interchange fees. It goes without saying that a merchant brings in more revenue if the debit payment is routed to a more cost-effective provider.

Additionally, instituting smart routing means that the technology considers the characteristics and limitations of each provider. With these details in mind, it never channels the transaction to vendors from high-risk industries or blocked countries.

Finally, intelligent payment routing protects U.S. debit payments because of its focus on security. This is accomplished by selecting the best vendor based on factors such as demonstrated reputation and historical performance. Additionally, it utilizes data encryption during all facets of the transaction, shielding sensitive details from digital criminals.

In a commercial ecosystem where the efficiency and success of every payment counts, intelligent routing provides the optimal solution. With its dynamic technology, all of the rigidity and guesswork are removed, leaving the likelihood of the most affordable, efficient, and safe outcome every time. 

If you have not already upgraded your systems to process your payments dynamically, there is no time like the present to elevate your business, raise profits, and delight your customers with this game-changing technology.