Panagiotis Kriaris

A Holistic View On Payment Orchestration 💡 If we look at the evolution of the payment gateway (2000-2025), I see three major versions: from basic (1.0), to advanced (2.0), to full orchestration (3.0). The complexity of the (online) merchant payments ecosystem has considerably grown over the last 25 years, driven by global e-commerce, security, compliance, and new payment products, channels, and touch points. Payment orchestration is now in the middle of this ecosystem, right between merchants and a wide range of providers, in a way like the yellow Circle line on the London Tube map. Lots has been said and written about the need for payment orchestration, about buy vs. build, speeding up the implementation timelines for new products and services, and how it can help improve success rates and reduce costs 💰 In an ideal world, a payment provider (PSP) should be a one-stop shop, covering and harmonizing the end-to-end process visualized in the infographic. Over the last 25 years, it has become clear, however, that the fast-growing demand for payment products and value-added services, for merchants in a wide range of verticals, across multiple regions, is basically impossible to cover in a single full-service / collecting model. This is due to the efforts required to absorb all the complexities, but also due to the choices made by the PSP resulting from company strategy. A ‘tech only’ middleware can decouple the gateway and collecting component, adding flexibility, reducing dependency on roadmaps and strategies of individual payment partners 👨‍💻 First of all, it’s technology only, so outside of the money flow and contractual relationships with licensed payment processors and banks. An orchestrator should not have ‘skin in the game’ when it comes to applying business rules for transaction routing and invoking value-added services. That’s for the merchant to decide based on their own KPI’s. So agnostic and independent are two key characteristics. Robustness as a company and platform redundancy are also mandatory, as a merchant, you’re handing over the orchestration of the entire transaction flow; therefore, both short-term and long-term availability needs to be guaranteed 🚀 Source: Paul van Alfen - https://shorturl.at/uJu4I #Innovation #Fintech #Banking #Ecommerce #Retail #Merchants #OpenBanking #API #FinancialServices #Cards #Payments #Orchestration #Routing

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It’s one of the biggest evolutionary shifts in payments in decades: digital identity is merging into payments, with digital wallets becoming the all-encompassing layer underneath. 𝗧𝗵𝗲 𝗰𝗼𝗻𝘃𝗲𝗿𝗴𝗲𝗻𝗰𝗲 • Digital payments evolved to securely move money, while identity verification stayed separate – manual, siloed, and fragmented. • The result: repeated identity checks, user friction, fraud vulnerabilities, and regulatory headaches. • Without identity integrated into payment flows, transactions lacked the essential “trust backbone” needed for secure and compliant exchanges. • Digital identity can close this gap by enabling instant, real-time verification of who is paying and why through cryptographically secured credentials. • That means less fraud, simpler AML/KYC, and new use cases like cross-border and embedded finance. 𝗗𝗶𝗴𝗶𝘁𝗮𝗹 𝗪𝗮𝗹𝗹𝗲𝘁𝘀 • Digital wallets are becoming the platform that securely merges verified identity and payments into a single user-controlled experience. • They let users authenticate and pay in one step, often biometrically, cutting friction and delays. • Wallets empower users to share only what’s necessary, boosting privacy, while businesses gain simpler compliance, reduced fraud, and efficiency. • As wallets evolve and scale, they create network effects: faster transactions, stronger protection, and space for innovation. 𝗧𝗵𝗲 𝗘𝘂𝗿𝗼𝗽𝗲𝗮𝗻 𝗗𝗶𝗴𝗶𝘁𝗮𝗹 𝗜𝗱𝗲𝗻𝘁𝗶𝘁𝘆 𝗪𝗮𝗹𝗹𝗲𝘁 (𝗘𝗨𝗗𝗜𝗪) • EUDIW is Europe’s most ambitious attempt to create a trusted, public digital wallet as the default gateway for both identity and payments. • Every citizen and business will be offered one – not just to pay, but to prove who they are, sign agreements, and seamlessly access services across borders. • If it succeeds, EUDIW could turn fragmented national systems into a unified European standard for trust and security. • EUDIW flips the model: individuals control their own data, regulators set common rules, and financial institutions and service providers connect into the same trusted layer. 𝗖𝗼𝗻𝘁𝗶𝗻𝘂𝗲 𝘁𝗵𝗲 𝗱𝗶𝘀𝗰𝘂𝘀𝘀𝗶𝗼𝗻 𝗮𝘁 𝗜𝗗 𝗫 𝗦𝗨𝗠𝗠𝗜𝗧 𝟮𝟬𝟮𝟱 If the above topics resonate with you, then the ID X Summit 2025 is the event to dive deeper. Join the debate on how digital identity, wallets, and payments are converging – and what this means for trust, control, and the future of Europe’s digital market.   📅 When: 25 September 2025 📍 Where: Factory Hammerbrooklyn, Hamburg 🔗 Get more details here: idxsummit.de/tickets #IDXSUMMIT25 Opinions: my own, Graphic sources: WebID, European Commission

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Merchant Acquiring Business Model – Balancing Revenue, Costs & Risk How Acquirers Make Money — and Why Risk Management Wins In the payments world, merchant acquirers sit at the nexus between merchants, banks and card schemes. The model looks simple on the surface, but profitability is a balancing act of revenue, costs, and risk. Below’s a clear breakdown you can share with your network. 🔹 Revenue Sources ◾ MDR (Merchant Discount Rate): A small percentage deducted per transaction. ◾ Terminal & Setup Fees: Charges for POS devices and maintenance. ◾ Service Fees: Value-added services like settlements, dashboards, and fraud support. ◾ Other Streams: FX margins, data insights, penalties. MDR (Merchant Discount Rate): the core revenue — a % taken from each card sale. Illustration: If a merchant does $100k/month at a 1.2% MDR, gross revenue ≈ $1,200/month. Terminal & setup fees: one-time installation fees, monthly rentals or device sales. Service charges & value adds: settlement acceleration, reporting portals, dispute handling, API access, premium support. Other streams: FX margins on cross-border payments, analytics/data products, penalty fees. 🔹 Cost Structure ◾ Interchange Fees: Paid to issuing banks per transaction. ◾ Scheme Fees: Paid to Visa, Mastercard & other networks. ◾ Operations: Terminals, network, customer support, compliance, fraud monitoring. 🔹 Risk vs Reward Low-Risk Merchants (supermarkets, hospitals, fuel stations) ✅ Stable, high volumes ❌ Thin MDR margins due to competition Medium-Risk Merchants (travel, retail, electronics) ✅ Better margins, growing segments ❌ Higher fraud/chargeback exposure High-Risk Merchants (gambling, forex, crypto, adult entertainment) ✅ Very high MDR (3–10%+) ❌ High regulatory scrutiny, fraud & reputational risks Risk vs. reward — merchant segmentation Low-risk (supermarkets, hospitals, fuel stations): • Pros: steady high volume, predictable flows, low chargebacks. • Cons: fierce price competition → lower MDR. Medium-risk (online retail, travel, electronics): • Pros: higher average ticket, room for add-on services. • Cons: greater fraud/chargeback exposure; requires good fraud controls. High-risk (gambling, forex, crypto, adult): • Pros: much higher MDRs (often several % points). • Cons: elevated chargebacks, regulatory scrutiny, potential for scheme penalties, brand risk. 👉 As payments evolve, acquirers who adapt risk controls and deliver value-added services will win both merchant trust and profitability. ⚖️ The winning strategy? Balance volume with margin while managing risk effectively.

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From 44% to 15%: Cash is vanishing at the checkout. Are banks and merchants in Luxembourg keeping up? Ten years ago, cash ruled the world. In 2014, it made up 44% of all in-store payments globally. Fast forward to 2024, and that figure is expected to shrink to just 15%. This isn’t just a change-it’s a massive shift. ↳ Contactless cards. ↳ Mobile wallets. ↳ Instant payments. The future of money is digital. By 2027, the numbers get even more extreme: - France, South Korea, the UK → cash is under 10% of payments. - Colombia, Nigeria, Spain → cash still dominates. What about Luxembourg? In the euro area, cash remains popular for smaller transactions (52% in 2024), but the shift to cards and wallets is unstoppable. Luxembourg is no exception-it’s following the same trend. Here’s what banks and merchants in Luxembourg need to do to thrive: 1/ Adopt digital wallets → Apple Pay, Google Pay, and others are taking over. They offer ease, security, and speed. 2/ Enable SEPA Instant payments → Instant payments will replace cash for daily transactions-fast, secure, and convenient. 3/ Keep cash accessible (for now) → Tourists still carry cash. Markets like Spain and Mexico still prefer it. Keep ATMs and cash options available to stay inclusive. The truth is simple: Cash may be disappearing, but it’s not dead yet. The challenge is balance. Innovation drives progress, but inclusion keeps us connected. Can Luxembourg’s financial ecosystem adapt to the shift while leaving no one behind?

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𝐁𝐞𝐡𝐢𝐧𝐝 𝐄𝐯𝐞𝐫𝐲 𝐏𝐚𝐲𝐦𝐞𝐧𝐭: 𝐖𝐡𝐨'𝐬 𝐀𝐜𝐭𝐮𝐚𝐥𝐥𝐲 𝐌𝐚𝐤𝐢𝐧𝐠 𝐢𝐭 𝐇𝐚𝐩𝐩𝐞𝐧? Ever wondered what’s really happening when you swipe your card or make a payment online? Behind that smooth experience lies a complex payment ecosystem: -> Issuers: Approve applications, issue cards, take on consumer risk -> Acquirers: Handle merchant onboarding, settlements, and risks -> Card Networks: Set rules, run infrastructure, maintain the brand -> Gateways: Act as the tech layer connecting merchants to banks -> Aggregators: Bundle services for merchants and assume transaction risk Each player has a distinct role, relationship, and revenue model. This breakdown offers a clear and concise view of how payments actually work. Perfect for anyone in fintech, product, analytics, or just curious about how money moves digitally. Follow Nikhil Kassetty for more tech learning ! #Fintech #Payments #ProductManagement #DigitalBanking #DataAnalytics

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