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From one-size-fits-all approach to intelligent payment routing

Have you noticed that merchants are shifting from a one-size-fits-all approach to intelligent payment routing? It’s a big change, and it’s making waves in the industry. PaymentsPedia Research has some insights into why this shift is happening, and it’s worth checking out.

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💡 What Is Multi-AcquirerAcquirer acquirer A financial institution or payment processor that manages the merchant account, enabling businesses to accept card payments. Acquirers receive all transactions from the merchant and route them to the appropriate issuing bank. Routing?

Multi-Acquirer Routing (MAR) is the capability to route online payment transactionsTransactions transactions Interactions where value is exchanged for goods or services. through multiple acquiring banks or PSPs instead of relying on a single provider.

It’s the payment world’s version of “load balancing”—but with business logic behind every decision.

Instead of sending all transactions to one acquirer, merchants (or their orchestrator) choose the best route per transaction based on:

• Card BIN
• Geo
• Currency
• Past success rates
• Fees

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🧠 Why It Matters for Merchants

✅ 1. Better AuthorizationAuthorization authorization The real-time process of verifying that a payment method has sufficient funds or credit limit for a transaction. Results in an authorization code from the issuer. Rates

Each acquirer has different issuerIssuer issuer A bank or financial institution that issues payment cards to consumers. Responsible for authorizations and chargebacks. relationships and fraudFraud fraud Criminal deception involving unauthorized payments or use of financial credentials. profiles. Smart routing can improve approval rates by 2–5%, especially across cross-border and high-risk verticals.

💸 2. Lower Fees

By routing transactions to acquirers with lower fees or domestic licensing, merchants can reduce interchange and acquiring costs—sometimes saving 5–15 basis points per txn.

🌍 3. Geo Optimization

A French cardholderCardholder cardholder The person or business to whom a payment card is issued. gets routed to your EU acquirer. A Singapore card? Use your local APAC PSP. This localized routing avoids cross-border costs and improves acceptance.

🛡️ 4. Redundancy

If one acquirer is down or has elevated declines, others take over. This ensures no single point of failure at checkout.

📈 5. Business Logic and Control

MERCHANTS regain control with data-driven rules like:

• Retry failed transactions via a backup PSP
• Use acquirer A for debit cards, acquirer B for credit
• Apply 3DS only when risk thresholds are breached

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⚙️ How It Works (The Stack)

Here’s a high-level flow of how Multi-Acquirer Routing fits into your checkout:

1. User Enters Card Info
2. Payment Orchestrator Evaluates
   • Rules engine checks BIN, amount, geo, scheme, etc.
3. Route Selected
   • Example: First try Adyen; fallback to Worldpay
4. Transaction Attempted
   • Log response, auth code, response time, decline reason
5. Analytics Logged
   • Monitor performance per acquirer

Diagram: Multi-Acquirer Routing Stack

(coming soon as PaymentsPedia blog image)

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🏛️ Deployment Options

Type	Description	Examples
Built-in	Internal logic by enterprise merchants	Amazon, Uber, Booking.com
POPs	Orchestration platforms with routing logic	Spreedly, Gr4vy, Payoneer
Smart PSPs	Acquirers with inbuilt routing (usually limited)	Adyen (Smart Routing), Stripe (Adaptive Routing)

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📊 Key Metrics Tracked

Metric	Why It’s Important
Auth Rate	% of successful approvals
Retry Success Rate	Success on 2nd/3rd attempt via alternate route
Cost per Transaction	Fee comparisons across acquirers
Routing LatencyLatency latency The delay between a payment initiation and its processing or confirmation.	Response time per acquirer
Failover Success	Backup routing effectiveness

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🔍 Real-World Use Cases

🎧 Spotify

Routes transactions via local acquirers in LATAM and EU. Achieved a 3.4% improvement in renewal success by localizing retry flows.

🚖 Uber

Built its own routing infrastructure that optimizes for:

• Time of day
• Currency
• Issuer bank behavior
• Risk thresholds

🏨 Booking.com

Manages relationships with 6+ acquirers globally. MAR allowed them to significantly reduce retry frictions and boost checkout conversion during high-volume travel seasons.

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🔐 Implementation Considerations

• PCI Compliance: Ensure tokenization and secure card vaults across acquirers.
• 3DS2 Support: Some acquirers handle exemptions better—factor that into routing.
• Token Portability: Scheme tokens (like VisaVisa visa A leading global payment technology company connecting consumers, businesses, and banks. Token Service) can help maintain card-on-file across acquirers.
• Data Ownership: Analytics, decline codes, and routing insights should remain merchantMerchant merchant An individual or business that accepts payments in exchange for goods or services.-controlled.

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🚀 The Future of Smart Routing

What’s next in the evolution of MAR?

• AI-Based Routing: Real-time decisioning using fraud scores, auth history, and issuer behavior.
• Network Token Routing: Tokens that work across acquirers seamlessly.
• Open Routing APIs: Orchestrators exposing full routing logic to merchants.
• BNPL/WalletsWallets wallets See Digital Wallets. with MAR Built-In: Many wallet providers are embedding multi-acquirer logic internally.

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📌 Final Thoughts: Don’t Settle for “One PSP to Rule Them All”

If your business:

• Operates in >1 region
• Has >5% decline rates
• Or processes >$5M in card payments monthly

Then Multi-Acquirer Routing isn’t optional—it’s essential.

Done right, it will:

• Increase conversions
• Lower costs
• Improve redundancy
• Unlock new growth

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🔗 Dive Deeper with PaymentsPedia

For expert guides, payment architecture blueprints, and vendor comparisons—explore www.paymentspedia.com