Orchestrator and PSP: a complementarity accelerated by BIN Routing

Just a few years ago, payment orchestration was a new and little-known profession. Today, it has become a key topic at the heart of concerns for merchants and e-tailers alike.
The situation is clear: more than 60% of merchants choose to connect to multiple payment providers.

It has become strategic for e-tailers to be supported by a payment orchestrator in order to: 

• Improve the performance of your payment journey 
• Offer a better shopping experience to your customers 
• Optimize your costs related to payment solutions 
• Support your growth

Payment Service Providers (PSPs) have understood this well and are undergoing significant transformations to meet the needs of merchants and offer high-performance solutions, particularly through BIN routing.

Naturally, BIN routing is part of an orchestration strategy to optimize the purchasing journey and accelerate growth.

While the concept of BIN routing can be applied to both in-store and online payments, this article focuses on online payments.

1. What is BIN routing?

To understand its definition and importance in the complex world of payments, let's start by breaking down the term.

The term "BIN" refers to the first six digits of a payment card, also known as the Bank Identification Number. Each set of six digits is unique and identifies the card's issuing bank as well as the card type (credit, debit, prepaid, etc.). These digits are the key to understanding where a card originates and how it should be handled during a transaction.

Now, "routing" refers to the path a transaction takes when it is processed. In the context of online payments, this means determining which payment provider should handle the transaction and with which acquirer.

So, what happens when you combine these two elements? 

BIN routing involves using the first six digits of a card to determine the payment provider best suited to process the transaction.

But why is this so important? 

When your customer makes a purchase and finalizes it by clicking the pay button, your transaction must be routed to the right payment provider in the background to be processed. This is where BIN routing comes in.

By using the first six digits of the card, the BIN routing system identifies the card's issuing bank and the type of card used, and can then determine the payment provider that offers the best conditions for processing the transaction based on criteria you have predefined. This can include factors such as acceptance performance, transaction costs, commercial agreements, and even geographical considerations.

The result? 

A faster, smoother transaction for customers and a more cost-effective one for merchants. BIN routing optimizes every transaction by ensuring it is processed by the most suitable payment provider, which helps reduce processing fees and improve the overall efficiency of the payment process.

It is a powerful tool enabled by online payment orchestration. By understanding how it works and partnering with an orchestrator like Purse, you can improve your transaction efficiency, optimize costs, and provide a better experience for your customers.

2. What are the benefits?

BIN routing offers a multitude of benefits for both e-merchants and end customers.

1. Optimization of transaction processing costs

By routing transactions to the best-performing PSPs for each card type, BIN routing allows merchants to identify the route with the most favorable performance-to-price ratio.

2. Improved acceptance rates

By ensuring that each transaction is directed to the most suitable PSP, BIN routing helps reduce payment declines and maximize successful authorizations, resulting in increased acceptance rates for merchants.

3. Flexibility and adaptability

BIN routing allows merchants to meet their commitments to PSPs (volumes, card types, etc.) by sending them the agreed-upon card types. It also allows for the distribution of volumes between PSPs in different geographies.

4. Reduction of fraud risks

By using the information provided by BIN routing to assess the potential risk of each transaction, merchants can implement additional security measures to prevent fraud and protect their businesses against financial losses.

5. A “Frictionless” payment: the Holy Grail of BIN routing for improving the payment experience   

A frictionless journey is one that allows the payer to skip the tedious step of strong authentication. 

By routing the payment to the acquirer best suited to the issuing bank, it is possible to bypass mandatory 3DS. This feature is offered by certain PSPs. Thus, BIN routing helps provide end customers with a seamless payment experience where they feel valued, which strengthens their trust and satisfaction while giving the payment a better chance of success.

In summary, BIN routing offers a multitude of advantages for merchants, ranging from optimizing processing costs to improving the customer experience. By understanding and effectively using this feature, merchants can maximize their revenue, reduce risks, and offer a seamless payment experience to their customers.

3. Who is BIN routing for?

BIN routing is designed for all types of merchants. This solution is particularly effective for the following profiles: 

• Merchants with an international presence and end customers from different countries: in this case, routing rules based on the card's issuing country are relevant. 

• Merchants managing their fraud rates with average basket sizes under €250: routing rules will be based on the cardholder's issuing bank to streamline customer journeys with frictionless.

• Merchants with an international presence who also benefit from routing to local PSPs to ensure lower commissions (the merchant then obtains local network and interchange commissions).

• Merchants with contractual commitments to their PSPs who are equipping themselves with a tool to meet them (volumes, card types).

4. Conclusion: Purse x Payplug example

As a European payment service provider and acquirer, Payplug enjoys a unique position in the market: thanks to its membership in Groupe BPCE and its direct connection to the Cartes Bancaires (CB) network, it enables its clients to visibly increase their acceptance rates in France and Europe.

By integrating this solution into your orchestration strategy, you can take advantage of its many benefits: 

• As a local acquirer, Payplug allows you to reduce your interchange costs and service fees in France.
• Payplug incorporates an issuer-centric vision into its approach and technology for maximized payment performance. Its Fastpass program, for example, guarantees you up to 98% of frictionless requests accepted on bank cards issued by Groupe BPCE , which represents 20% of French traffic.
• Payplug executes 100% of CB authentications with 3-D Secure. Coupled with robust fraud analysis, this approach allows it to achieve payment performance above the market average: +7 points of frictionless and +1.8 points in successful authentications on CB transactions.
• As a major member of Cartes Bancaires, Payplug can provide you with access to the Safe’R by CBservice, which allows for up to 99% of frictionless requests to be accepted by French banks (excluding Groupe BPCE) for transactions under €250.

These combined advantages pave the way for smoother payment journeys and a maximized acceptance rate with Payplug and Purse, particularly in France. If you would like to learn more about how Payplug can support your growth strategy in France and Europe, please feel free to contact their team. 

Purse is a payment ecosystem orchestrator designed to enrich online payment experiences while simplifying implementation. With its expert-backed SaaS technology connected directly to over 80 international and local payment partners, it maximizes conversion and ensures optimal transaction acceptance from a single interface. 

Based on the card BIN entered in the checkout page form, Purse analyzes and routes the transaction to the merchant's chosen PSP, according to the rules they have defined in advance. 

BIN Routing is a feature developed by Purse, among others, that allows us to fulfill our commitments to you, the e-merchant: 

• A single technical integration 
• Improve conversion and acceptance rates  
• Optimize the customer journey and secure revenue

In short, by recognizing your customers and their banks, you improve your payment acceptance rate, reduce your fraud rate, and boost your conversion rate! What else?