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Smart Payment Routing: Transactions Moving From A to B

Blog post from Basis Theory

Post Details
Company
Date Published
Author
Basis Theory
Word Count
1,098
Company Posts That Month
8
Language
English
Hacker News Points
-
Post removed?
No
Summary

Smart payment routing directs transactions among multiple payment service providers (PSPs) according to rules designed to improve approval rates, reduce processing costs, support local payment methods, and avoid reliance on a single provider. It becomes more valuable as merchants scale, particularly internationally, because local processor relationships, differing payment-method support, and varying fee structures can affect transaction outcomes and expenses. Routing can include cascading, in which certain declined transactions are retried with another processor, although excessive retries may create risk with PSP partners. Payment routing differs from payment orchestration, which encompasses routing alongside broader capabilities such as fraud detection, transaction monitoring, and reconciliation. Implementing a multi-PSP strategy requires merchants to retain secure access to customer payment data, often through tokenization providers that vault card details and return reusable tokens, helping merchants route transactions without directly storing sensitive information or becoming locked into a single PSP.

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