26/08/2022

Differences between a payments middleware vs. orchestration vs. gateway

By Mariana Marques

The payments ecosystem has an ever-changing array of providers and technologies on offer. New solutions such as middleware and orchestration platforms aim to make it easier for enterprises to navigate this complex world. However, their definition may confuse many, even industry insiders. This article explores the differences between a payment middleware like Imburse, a payment orchestrator, and a payment gateway.

What is payments middleware?

A middleware is a software solution that enables communication between two or more applications. It serves as a tool that connects different software systems, applications, or databases. There are various types of middleware, such as web servers, databases, and integrations. A payments middleware focuses on connecting enterprises with the payments world (payment providers, technologies, and other solutions). Through a payments middleware, enterprises can integrate with payment providers much faster, cheaper, and using less of their own resources.

A payments middleware like Imburse offers connectivity to the entire payments ecosystem, enabling enterprises to integrate with any payment provider or technology, in any market, for both collections and payouts. This is a crucial factor for various sectors, such as insurance, which focus on both the collection of premiums and the claim reimbursements. Insurers also require multiple providers to offer their customers the payment experience they expect, considering their payment preferences and unique requirements.  

What is a payment orchestrator?

A payment orchestrator or payment orchestration platform is a type of software that manages the whole payment process. This process includes authorization, transaction routing, and settlement. It enables merchants to optimise payment operations by gathering all payment points into a single software layer. It also gathers different PSPs and other technologies that can process various types of payments. You are still required to integrate with multiple payment providers, but you can manage these integrations through your orchestrator. Payment orchestrators focus on online solutions, such as eCommerce, so they may not be the most suitable for other industries.

One of the most significant benefits of payment orchestrators is smart routing. This orchestration layer automatically identifies the best route for payments. For instance, if you have a single processor, the payment needs to go through them. When you can access multiple processors and smart routing, this orchestration layer will send the payment to various processors. If the payment fails initially, it will be sent to the next best suitable processor. This reduces the likelihood of a failed payment and lost sale.

What is a payment gateway?

A payment gateway is a software tool that transfers payment data from the payer to the payee or recipient’s bank account. When customers swipe their card or insert their card details online, payment gateways capture their data and securely pass it to a payment processor. They are the first point of contact between the Issuing bank and the rest of the payment players involved in the transaction. Payment gateways are essential for two main reasons:

  1. They ensure that the payer has enough funds in their account for the payment to be processed. The payment can’t go ahead if the customer doesn’t have enough funds.
  2. They ensure that the customers’ information matches their account details, verifying their legitimacy before the payment is processed. If details don’t match, the payment can’t go ahead.

Payment gateways are also responsible for notifying customers once the payment is authorised. Payment authorisation happens if there are enough funds in the account and if the identity check performed didn’t raise any issue.

Main differences between middleware, orchestrator, and gateway

Payments middleware offers both payouts and collections, while orchestrators and gateways only work for collections. This is a huge barrier for industries like Insurance which, as we have seen before, need to optimise their payments operations for claims reimbursements too, as this is an integral part of their business.

When it comes to payment providers, orchestrators and gateways have a limited choice of providers on offer, meaning that enterprises won’t be able to integrate with any provider they want, for all the markets. Middleware, on the contrary, offers unlimited coverage. This means that enterprises can integrate with any provider or technology of their choice, even if they aren’t already pre-integrated with the middleware. This gives extra flexibility to enterprises that need to adapt quickly to market changes and expand to new customer bases.

Another significant difference between the three solutions is that middleware doesn’t take any revenue share from the enterprise or payment fees. Instead, you will pay a fixed price for the solution. Both orchestrators and gateways will have fees per transaction.

About Imburse

Imburse is a cloud-based middleware connecting large enterprises to the payments ecosystem, regardless of their existing IT infrastructure. Through a single connection to Imburse, enterprises can collect or pay out using various payment technologies and providers around the globe.

In a world where consumers’ payment preferences and technologies are ever-evolving, Imburse works with insurers to future-proof their payment requirements. Regardless of the business area, market, or needs, Imburse will connect you to your choice of technology and provider.

Reach out to our team should you want to discuss how Imburse can help you. Our team is happy to show you what our platform can do for your business and offer you a free demo.

About Mariana Marques

Mariana is a content writer at Imburse, specialising in Finance and Technology topics.

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