What is intelligent transaction routing and how does it work?

In today’s complex commercial environment, putting all of your eggs in one basket by relying exclusively on one online payment processing company can spell disaster. Should that entity experience downtime or, in the worst case scenario, go out of business, you will find yourself suddenly unable to process the payments that are the lifeblood of your business.

Thanks to intelligent transaction routing, you no longer need to put your company at risk in that way.

What is intelligent transaction routing?

These days, numerous sponsor banks are available to assist you in processing your customers’ payments.

The question becomes this: How do you direct each transaction to the acquiring bank that is most likely to approve it quickly for a given purchase? That’s where intelligent transaction routing enters the picture.

It works by identifying the most efficient route between sponsor banks and other institutions involved in the payment process, like the card-issuing bank and the payment processor. The key to making this happen lies in something called dynamic routing schemes.

These set forth several possible routes by which a transaction can flow from origin to endpoint and lay out a series of rules to consider during the process. Once you partner with a payment technology provider that offers intelligent transaction routing, you can expect seamless transactions every time with optimal conversion rates.

All the while, your customers are not even aware that this lightning-fast process is going on behind the scenes.

Whether you receive overseas payments or only do business domestically, intelligent transaction routing can jump-start your operations and enhance the customer’s shopping experience. All you need to do is set forth the parameters that will be used to set the best course for the payment.

These include factors such as authorization mode (CVV or 3-D Secure), card issuer, type and brand, amount, currency, geolocation, metadata, and date and time, among other elements. Because you can configure your system to examine quite a few data points, the likelihood of a fast and secure payment is greatly increased.

Benefits of intelligent transaction routing.

Once you integrate intelligent transaction routing into your business, you will understand why it has become so important to businesses of all sizes. Advantages include the following.

• Boost success rates. With intelligent routing onboard, customer transactions will automatically be sent to the sponsor bank featuring the highest authorization rates. Consequently, you will experience fewer declines and abandonments. In addition, your routing engine will often allow you to make a second attempt to accept a payment that has been declined, even further increasing your sales rates.
• Cut down on your transaction fees. Although fees are a given whenever you process customers’ electronic payments, that doesn’t mean you need to overpay on them. 
• Ensure business continuity. As we said above, having multiple processing choices means that your business is immune to glitches and other disasters that it might not be able to avoid if you only worked with one provider. This diversity leads to smoother processes, fewer errors, and happier customers.

Is intelligent payment routing right for your business?

In general, implementing this system is recommended in the following scenarios. 

• You are working with multiple payment methods, gateways, and processors on your ecommerce platform.
• You sell internationally. Intelligent routing can make accepting overseas payments a lot easier because it seamlessly integrates multiple systems while simultaneously allowing for local differences in payment preferences, fees, etc.
• A subsection of your company is considered to be a high-risk business. In the case of certain products or services, there are sponsor banks who refuse to process those transactions. With intelligent transaction routing, those payments can be diverted to banks who do not have those restrictions.
• You experience significant peaks in sales volumes. Intelligent transaction routing can ensure that multiple providers take over the processing duties during busy times so that no sales are lost.

Transactions are becoming more complex and demanding with every passing year. For many businesses, intelligent transaction routing offers a compelling solution that leads to higher conversion rates, smoother transactions, lower costs, and happier customers.

Whether you do business locally, nationwide or overseas, you may benefit from the many advantages that this up-to-the-minute payment technology has to offer.