From gaming purchases to brokerage deposits to online shopping, consumers are making more online payments than ever before, using everything from traditional cards to digital wallets to local payment methods across many currencies. This creates both opportunities and operational challenges for merchants.
Their customers expect fast, secure, and seamless payment experiences; however, approval rates vary depending on processor performance, transaction type, card issuer, region, and currency.
Smart routing technology has emerged as one of the most effective solutions to scaling payments optimally, helping businesses deliver greater transaction experiences to their customers while at the same time ensuring more of their payments end with a 'transaction successful' box, rather than being declined.
Smart routing directs each payment to the processor most likely to approve it. This means fewer declined transactions, happier customers, and better conversion rates for businesses.
Payment orchestration platforms like Praxis Tech connect businesses to multiple payment processors through a single integration. Merchants can then set up smart routing rules, automatic cascading options, and AI-powered optimization to increase approvals and keep payments running smoothly across different regions and currencies. The result is less manual work for payment teams and more successful transactions for customers.
Static smart routing rules have been the backbone of payment optimization for years and remain incredibly valuable today. These pre-configured rules direct payments to different processors based on specific transaction characteristics, such as card type, currency, geography, transaction value, or recurring status.
For instance, merchants might route all Visa card payments in USD to Processor A because they offer the best approval rate and lowest fees for that combination, while routing Mastercard transactions in EUR to Processor B, which specializes in European transactions. Additional rules can include:
The power of static routing rules lies in their precision. Merchants fine-tune their payment infrastructure based on deep knowledge of how different processors perform under specific conditions. These rules require ongoing management as processor performance changes, new payment methods emerge, or businesses expand into new markets.
Cascading takes smart routing a step further by creating a fallback system for payments. Rather than giving up after a single decline, cascading automatically retries the transaction through alternative processors until it succeeds.
How it works: merchants configure a priority order for their processors: Processor A is the first choice, Processor B is second, Processor C is third, and so on. When a payment is sent to Processor A but gets declined or the processor experiences technical issues, the same payment is immediately rerouted to Processor B. If that also fails, it moves to Processor C, continuing through the cascade until the payment is approved or all options are exhausted.
The benefits of cascading are substantial and support businesses to benefit from increased resilience to processor downtimes or technical issues, experience higher approval ratios through using multiple processors for the same payment, and support merchants to deliver improved customer experiences by delivering more successful payment attempts.
At Praxis Tech, we've enhanced cascading with our Smart 3DS feature, which maintains customer authentication when rerouting card payments across multiple PSPs. This means that even when a payment is cascaded, customers don't have to repeatedly verify their identity through Strong Customer Authentication (SCA) checks. This dramatically reduces friction and prevents the cart abandonment that often occurs when customers are asked to authenticate multiple times.
Weighted Routing distributes transaction volume across multiple processors according to predefined percentages. Unlike cascading, which retries declined payments sequentially, weighted routing proactively allocates a portion of transactions to each provider.
For example, a merchant might route 40% of transactions to Processor A, 30% to Processor B, 15% to Processor C, and 15% to Processor D.
Weighted routing delivers several business and operational advantages, including:
By distributing transactions across multiple providers, weighted routing enhances resilience and ensures even load management for high-volume merchants. Praxis Tech's Weighted Routing feature includes allocation locking to ensure selected PSPs consistently receive their designated share of transactions.
AI Smart Routing represents the newest advancement in payment optimization. While static rules, cascading, and weighted routing all require merchants to configure and adjust settings based on their analysis, AI routing adds an intelligent layer that continuously monitors performance and suggests improvements.
The technology analyzes transaction patterns across payment operations, looking at how different processors perform for specific types of card payments. It then recommends adjustments to routing configurations that could increase first-attempt approval rates.
Praxis Tech's AI Smart Routing examines transaction patterns and recommends changes, such as reordering which processor receives transactions first, to maximize approval rates.
Key advantages of AI smart routing include:
AI Smart Routing works with priority routing configurations for card transactions. The feature provides an enhanced interface where merchants can view recommendations, understand the reasoning behind them, and track the impact of changes they choose to implement. This approach combines the efficiency of automation with the strategic oversight that payment teams value, helping businesses maintain strong approval rates as market conditions and processor performance evolve.
Praxis Tech connects businesses to over 900 pre-integrated payment processors and 1000+ payment methods through a single integration. The platform supports all four smart routing approaches: static rules for precise controls, cascading with 3DS authentication support, weighted distribution for cost balance and optimization, and AI-powered recommendations to boost first-time approvals.
Get in touch to learn more about how to optimize your payment infrastructure.