Static and dynamic payment routing: pros & cons compared
Routing is one of the crucial elements of payment processing. Your conversion and approval rates are directly dependent on how you route your transactions. If you work with a single payment service provider, there’s not much you can do – every glitch or downtime of your provider will result in your losses. That’s why it’s reasonable to work with multiple providers, and this is where you need to route your payments in the wiser way possible.
In this article, PayCore.io cuts a long story short and offers you a straightforward guide to static and dynamic payment routing.
What is payment routing?
💡 Payment routing is an essential payment processing feature for businesses working with multiple payment providers. It allows sending each transaction to the optimal payment gateway based on selected parameters.
This way, a business can reach its processing goal: transaction costs optimisation, acceptance rates increase, provider downtimes protection, or payment load distribution.
A business can route its transactions in a desirable way by creating static routing schemes. However, modern smart routing solutions enable greater efficiency by automatically and dynamically routing your transactions to the best-suited provider. Now, let’s see how static and dynamic payment routing are different in greater detail.
How does static routing work?
Think of yourself as a logistics operator. Your freight is your transactions. If you pick a map, draw a route for your cargo to be delivered, and follow it strictly no matter what, that will be static routing. A tree topples onto your road, and you can’t make the delivery anymore.
💡 Static payment routing implies sending transactions to payment providers through manually configured routes. These routes are fixed and unresponsive to any occurrences. If your pre-defined route becomes unavailable, you can’t process transactions, and therefore lose sales.
How does dynamic routing work?
Let’s get back to our logistics fantasy. Imagine you now have an advanced GPS navigation system, which picks the optimal route to deliver your freight considering traffic, weather, and road conditions. Once a system detects a car accident on your way, it will choose an alternative route to complete freight delivery.
💡 This is how dynamic routing works. It allows adapting to changes and selecting the most efficient way to ensure each transaction’s successful completion.
Setting up various dynamic routing rules paves the way for continuity of your operations, leading to an increase in approval ratios. For instance, our smart routing engine can select the best route based on multiple parameters, such as card issuer/type/brand, country, currency, amount, date & time, etc.
What is the difference between static and dynamic routing?
The table below summarises both static and dynamic payment routing’s main characteristics and gives you a clear vision of how they differ.
|STATIC ROUTING||DYNAMIC ROUTING|
|Routing rules are strict and fixed||Various rules cascade in real time|
|The provider is pre-defined||Transactions go to the best available provider|
|Totally dependable on provider’s stability||Eliminates the effect of provider’s downtimes on your business|
|Acceptable for small businesses||A must for medium and large businesses|
Static routing is often considered as an outdated option, unsuitable for modern realities. Nevertheless, it may be helpful for cases when you need to establish strict rules and use only selected merchant account to process particular transactions. That’s why static routing is also called rule-based. Still, this option is hardly scalable. With the growth of your business, the complexity of rules will also increase. Moreover, you’ll have to maintain and update them manually.
With dynamic routing, every transaction is automatically routed to the provider offering the highest probability for success. Alongside smart processing tools like cascading and failover management, dynamic routing helps eliminate the effect of any issues on providers’ side on your business. Your customers enjoy the seamless and frictionless experience, while your business benefits from operational continuity and increased conversion.
How PayCore.io’s smart routing capabilities can help optimise your operations?
PayCore.io’s smart routing engine maximises payment performance and enables the highest success rates by optimising all incoming and outgoing transactions in real-time. With this tool on board, you can easily implement and alter various flow strategies, such as:
- Optimisation by fees. PayCore.io can dynamically determine the optimal route based on a transaction fee value. The real-time monitoring of fees and currency conversion rates helps to optimise all transactions and ensure least-cost payments routing. Our cost analytics will help you reorganise the flows most optimally.
- Optimisation by conversions. Our platform measures all routes’ performance in real-time to calculate success rates for every route while also collecting statistics and providing analytics. Follow the conversion optimisation strategy by setting the success rate attribute in the routing scheme.
- Optimisation by balances. Automatically allocate a payment or payout request to a single account with sufficient balance. We provide real-time monitoring and tracking of merchant account balances through a single Dashboard to keep you constantly updated on your funds.
- Optimisation by weightings. Distribute turnover and risks among multiple merchant accounts. Our system supports the automatic allocation of incoming and outgoing transactions to a single account by weightings criteria. It makes your business more flexible in operations.
- Optimisation by turnover volumes. Based on the turnover statistics collected for all of your merchant accounts, you can opt for routing by turnover volumes. Set up turnover limits for any merchant accounts you have and automatically distribute cash among them considering that parameter.
- Combined optimisation strategies. You are free to modify and combine all of the above-listed strategies, as well as to use various strategies with different merchant accounts. It creates almost endless routing possibilities and serves your business’ needs.
If you’re ready to try out this powerful tool and see it in action, click here to request a live demo. We would be glad to show you how our platform works and how you can benefit from using it.