Innovation

How digital wallets and payment orchestration are reshaping the payment ecosystem

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With digital payments expected to grow over 20%, reaching US$361.30 billion globally by 2030, and cashless transactions increasing 80% to reach 1.9 trillion by 2025, traditional payment methods are rapidly giving way to new ones.

In this evolving context, digital wallets have emerged as frontrunners, clearly reshaping the payments ecosystem with several advantages:

  • Convenience
    The primary goal of digital wallets is to simplify and streamline the payment process. With just a smartphone, consumers can conveniently pay online or in physical stores, accelerating transactions through a hassle-free experience.
  • Enhanced security 
    Robust security measures, such as biometric authentication and tokenization, make it difficult for malicious actors to access a user's payment information, adding an extra layer of protection.
  • One-stop solution 
    Beyond payments, digital wallets provide a seamless user experience, helping us manage multiple facets of our lives, like loyalty, boarding passes, event tickets, and even identification documents. 

Digital wallet challenges

Delivering comprehensive, user-friendly experiences requires digital wallet providers to overcome complex challenges to meet the diverse needs of users around the world, including:

  • Diverse payment methods 
    Users expect wallets to support a wide range of payment options like credit and debit cards, bank transfers, peer-to-peer payments, and even cryptocurrencies. Ensuring compatibility and smooth transactions across these diverse channels can be complex.
  • Global accessibility
    Digital wallets are used by individuals worldwide, and their availability should reflect this global reach. To stay competitive, wallet providers need to offer their services in multiple languages, currencies, and regions, adhering to various regulatory requirements.
  • Partner integration
    Digital wallet providers often partner with merchants, banks, and other financial institutions to offer their users a comprehensive solution. These partnerships require seamless integration, as well as the ability to orchestrate payments across multiple platforms.

Enter payment orchestration

Payment orchestration ensures diverse payment methods, currencies, and regional adaptations work seamlessly with digital wallets, offering several advantages including:

  • Flexibility and adaptability 
    Payment orchestration platforms allow digital wallets to quickly integrate new payment methods and expand into new markets without significant development effort. This agility is crucial in a rapidly evolving, global landscape with regional specificities.
  • Centralized management 
    Managing multiple payment channels from a single point of control simplifies how digital wallet providers monitor and optimize payment flows, detect and prevent fraud, and ensure compliance with regulatory requirements.
  • Enhanced user experience 
    Offering a broad range of global, regional, and local payment options through intuitive interfaces drives last-mile conversion and enables seamless user experiences.
  • Mitigating risks 
    Payment orchestration platforms incorporate advanced risk management features. This is vital for digital wallets to protect their users and their own operations from fraud and other security threats.

Interdependence and synergy

Digital wallets have undoubtedly revolutionized the payment ecosystem by offering unmatched convenience, security, and integration into our lives. However, their success hinges on their ability to adapt to the ever-expanding demands of a diverse user base and complex payment landscape. Payment orchestration is pivotal to addressing these challenges. 

As digital wallets continue to evolve and expand, payment orchestration will remain a crucial component in their success story. IBS Software´s Payment Orchestration Platform enables flexible, efficient, and centralized operations, empowering digital wallet providers to offer seamless and secure user experiences in an increasingly digital world. The synergy between digital wallets and payment orchestration is poised to redefine the way we make payments, making it more accessible, efficient, and user-friendly than ever before. 

Author info

Swamynathan Rajendran is a Senior Product Manager of Productized Services at IBS Software.

His passion lies in driving transformative shifts within the travel industry, with a primary focus on harnessing cutting-edge technologies and AI to elevate operational efficiency and enhance the overall passenger experience. Swamynathan envisions a seamless future for air travel, fueled by customer-centric innovation and a dedication to providing an unparalleled journey for every traveler.

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