Payments used to be simple: one processor, one route, one way to get paid. That world is gone. Today you're likely running several processors, selling into new markets, and watching avoidable declines and processing costs eat into revenue you've already earned.
Payment routing is how you take that back. It decides the path each transaction takes so you can lower processing costs, lift authorization rates, and give customers a checkout that works.
Maybe you run multiple processors and want to cut costs while approving more payments. Maybe you want routing to happen dynamically, without an engineer rebuilding logic every time you add a provider.
This guide is for you, whether you're comparing payment orchestration providers or building the business case internally.
Looking to set up payment routing right away? Book a call with our team to see how Primer can help.
What you need to know about payment routing
Payment routing is the process of determining the most efficient and secure path for a payment once a customer presses pay. The best path depends on factors like where the transaction happens, its value, the card type, and which acquirer is most likely to approve it.
Until recently, payment routing was a manual and resource-intensive process for payment leaders. It required development teams to build integrations with different payment service providers (PSPs) before developing complex routing logic on top to determine the ideal payment route.
But now, by working with payment orchestration providers, merchants can consolidate various payment integrations on the back end through one API. This eliminates most of the manual processes and development resources required to adopt a multi-processor payment strategy.
These platforms let you create payment-routing workflows with drag-and-drop functionality and the ability to add conditions such as including 3DS, completing a fraud check, or creating a JIRA ticket, all in a few clicks. They make building a complex, optimal payment routing strategy available to any business.
How payment routing works
Every card payment passes through several parties before it's approved. Payment routing decides which path a transaction takes at each step. Here's the journey, step by step.
- The customer presses pay. The payment gateway captures the card details and encrypts them for the rest of the flow.
- The gateway hands off to a processor or orchestrator. This is where routing happens: the system decides which acquirer and payment method to use for this specific transaction.
- The chosen acquirer submits the transaction to the card network. Networks like Visa and Mastercard set the rules and pass the request on.
- The issuing bank approves or declines. The customer's bank checks available funds, fraud signals, and risk, then returns a decision.
- The response travels back to the merchant. If the payment is approved, it settles. If it's a soft decline, routing logic can retry the transaction through a backup acquirer.
Routing adds value at step two. A good strategy sends each transaction to the acquirer with the highest authorization rate for that card and country, or to the route with the lowest interchange and processing fees. This is where techniques like least-cost routing (picking the cheapest viable path) and cascading routing (retrying a failed payment down a ranked list of acquirers) come in.
Want to see this mapped to your own stack? Book a call with our team and we'll walk through it.
Payment routing vs. payment workflows
You'll often see "payment routing" and "payment workflows" used together, and they're closely related. Routing is the decision about which path a transaction takes. A workflow is the broader no-code automation that holds those routing rules alongside other conditions, such as when to trigger 3DS or run a fraud check.
In practice, routing lives inside a workflow. With Primer, you build routing rules using Workflows, then layer on the conditions that fit your business. Routing is the "where"; the workflow is the "how and when".
What are the types of payment routing?
Most guides split payment routing into two models, static and dynamic. It's the clearest way to understand your options, so we'll start there.
Static payment routing
Static routing uses fixed, hardcoded rules, such as sending all euro transactions to one acquirer. It's predictable, but rigid. If a provider has an outage or its authorization rate drops for a card type, you can't switch routes quickly without going back to the development roadmap.
Dynamic payment routing
Dynamic routing evaluates each transaction in real time and sends it down the best available path. It weighs signals like card type, geography, and live acquirer performance, then routes accordingly. This is the model behind a multi-acquirer strategy, where you spread volume across providers and let the data decide. You can read more in our guide to dynamic transaction routing and how to build a multi-acquirer routing setup.
Fallback routing
Fallback routing is a form of dynamic routing focused on recovery. When a payment soft-declines, cascading routing automatically retries it through a backup acquirer, so a recoverable transaction isn't lost at checkout.
Another lens: the four generations of payment routing
The types of payment routing also read as a short history of payment innovation. Here's how the space developed over the years.
First generation: Single acquirer
In this initial phase, merchants relied on a single acquirer or payment gateway for payment processing. Despite having a solitary route to follow, payment routing was still at play.
Second generation: Static payment routing
As merchants began to onboard multiple acquirers, they faced the challenge of hardcoding routing logic into their backend systems. This manual configuration process typically demanded developer expertise, making it difficult for merchants to make quick changes without returning to the development roadmap. Consequently, if a provider experiences downtime or encounters low payment authorization rates for a particular card type, swiftly switching to an alternative provider isn't possible.
Third generation: Smart routing
Platforms like Primer emerged to help merchants reap the benefits of payment routing without grappling with its complexity. These platforms gave merchants the ability to implement payment routing strategies on a global scale, without code, to optimize payments.
It's been a game-changing development, giving merchants and payment leaders comprehensive control over their global payments. That control lets them use payments as a strategic driver within the business.
Terms such as "intelligent routing" and "dynamic routing" are often used interchangeably with "smart routing" to describe this generation of payment routing.
Fourth generation: Smart routing enriched by AI
In the most recent evolution of intelligent payment routing, AI and machine learning take center stage, giving merchants an automatic boost in authorization rates.
These solutions harness the network effect, analyzing billions of data points generated from millions of transactions to pinpoint the optimal route for every transaction. And all this can happen with no merchant involvement.
The advantages of smart payment routing
Lower transaction costs
Businesses can reduce processing fees by routing transactions through the most cost-effective payment channels, an approach known as least-cost routing. One way to do this is through local acquiring, which routes transactions through an acquirer based in the same market as the customer to cut cross-border fees and lower interchange costs.
Enhanced approval rate
By analyzing factors such as payment methods, geographic locations, payment providers, and risk profiles, smart routing increases the likelihood of a successful transaction. Over time, that lifts your overall authorization rate.
Improved customer experience
Customers benefit from smooth and reliable payment experiences. Smart routing minimizes payment failures and reduces declines, improving overall satisfaction at checkout.
Lost revenue recovery
By rerouting transactions in real time using fallbacks, businesses recover revenue that would otherwise be lost to a failed transaction or payment decline.
How Primer helps merchants implement smart payment routing
Primer equips merchants with the payment tools to optimize payment processing performance, build at pace, and capture untapped revenue via a unified payments infrastructure.
Payment routing is one of the core use cases merchants use Primer for, and here are a few reasons why:
Implement as many processors as required easily with no-code functionality
One of the key challenges of integrating with a new acquirer is that it takes up a lot of valuable engineering time and resources. Your engineering team has to do the research on how to integrate with the payment solution and then actually implement it and get it to work with your existing payment processes and flows. This means taking time away from other priorities to then focus on payments.
With Primer, integrating with a new acquirer can be done with a click of a button. You just need to integrate with Primer once, and you'll be able to start working with a range of local and global payment processors.
We've built a unified schema that is applied to all the different processors. Having to do a direct integration with Adyen, Stripe, and Braintree, for example, would require integrating with three different API schemas. With Primer, it all happens via one API.
Say you wanted to add Airwallex as a processor. You'd just need to head to your Primer Dashboard, go to the integration section, search for their name, and follow the instructions to integrate with them (either via a log-in or adding an API key) and you can start processing payments right away.
The fact that it's so easy to integrate with new acquirers allows your company to complete key business activities, such as expanding to a new country, a lot more quickly and with very little engineering resource.
Build out payment processing flows in no code and based on highly specific attributes
Before payment orchestration platforms existed, if you wanted to fully enable payment routing you needed specialized engineering resources to create payment routes based on specific circumstances.
But payments are likely not your core competency, so it's a waste having engineering resources focused on it when they could be working on the product.
Using Primer, you can build entire payment flows via no-code. When a payment is created, you can tell Primer to trigger a particular workflow and define the conditions and rules for that transaction.
For example, if a payment has a specific customer ID, you can tell Primer to run a workflow, to enable or disable 3DS, or to use a payment option specific to a region.
Consolidating all your PSPs through a single integration also gives you a lot more commercial control and makes it easier to compare costs between processors, while onboarding costs remain low. It also lets you A/B test your hypotheses and optimize your payment flows.
And finally, having the right payment workflows set up can help de-risk your payment processes, so if one PSP has an outage you can quickly route payments via other PSPs.
Easily analyze processor performance and make data-backed decisions
If you integrate with multiple processors and want to analyze the data, you'll have to open each PSP portal account individually to track performance. It takes time to do, and because all the data is siloed you don't get a clear picture of which processor is performing best and when.
With Primer, you can use our Observability platform to see all your payment data across PSPs in one place.
You can also slice and dice the data in any way necessary. For example, you can look at your overall authorization rate across the past 30 days, or see what your acceptance rate is for a specific processor like Stripe or Adyen. If you see that certain payments do better via Adyen, you can then decide to route payments through Adyen at the click of a button.
You can also analyze the data based on BIN numbers, decline reason, MIDs, and more, letting you optimize processor performance or detect and mitigate a spike in declined payments.
A payment routing solution only works as well as your data. If you don't know what is and isn't working well, you can't route payments in the most efficient way. With Primer, you can easily see a breakdown of authorization rates, letting you make optimizations that could have a major impact down the line.
Set up automatic fallbacks to help increase authorization rates
One of the key features of payment routing is fallbacks: if a payment fails, you want another processor ready to process that payment so you don't lose the customer.
Setting up fallbacks manually is highly complex. You need to understand and set up the logic of when to retry a payment with a second PSP. Not only do you have to set up the integrations yourself, but you need to understand the various codes that come back and what they mean. For example, attempting to retry a hard-decline payment can lead to fines from the schemes.
With Primer, you don't need to worry about all this complexity. It has mapped and standardized the decline codes used by all PSPs, meaning eligible payments are automatically retried through your chosen fallback processor.
Having fallbacks in place increases authorization rates, lets you offer a better customer experience, and recovers lost revenue. For example, Banxa, a global leader in crypto infrastructure, achieved a 22% success rate and has recovered over US$7 million in revenue with Primer's native Fallback functionality.
See how fallbacks and routing work together for your business. Book a call with our team to get started.
How Ferryhopper used Primer to increase conversion rates and recover bookings with better payment routing
Ferryhopper is an online travel agency (OTA) transforming ferry travel. It allows travelers to compare and book tickets with over 100 ferry operators and 500 destinations.
At the beginning of its payments journey, Ferryhopper would direct customers to a checkout form on its bank's website to complete payment. But this led to little visibility into what customers were doing at checkout and little ability to optimize for cost and performance.
As the company matured, the team realized they needed to use a third party to help manage the integrations with various processors, and eventually partnered with Primer.
Today, Primer helps Ferryhopper minimize customer friction with Dynamic 3DS and optimize for cost and performance with Workflows via custom payment routing.
With Dynamic 3DS, Ferryhopper can be sure that 3DS is only prompted for payment transactions falling under the scope of SCA. This allowed them to increase their conversion rate by 2%.
"Additionally," Konstantinos Kontos, Payments Product Lead at Ferryhopper, points out, "Primer has extended this feature to request a 3DS challenge for specific transactions made through GooglePay, even when they don't inherently meet the SCA requirements. This has effectively prevented 20% of our customers who used Google Pay from having their payment declined."
With Workflows, Ferryhopper was able to set up smart payments routing to direct payments to the optimal providers.
"Crafting these workflows and implementing conditioning logic has proven to be remarkably straightforward, especially with the outstanding training we received from the team," says Kontos.
They were also able to apply automated fallbacks, which saw them recover 1% of bookings.
"Our collaboration with Primer signifies a significant stride in its quest to become the global ferry expert," says Ferryhopper's CPO and Co-founder, Panagiotis Sarafis. "Using Primer to streamline our operations, enhance our customer experiences, and optimize performance has turned payments into a strategic growth level for our business."
Read more about how Ferryhopper use Primer here: Charting a new course for payments at Ferryhopper.
The right payment orchestration platform is key to getting payment routing right
By embracing smart payment routing, your company can ensure reliable, secure online payments, unlock cost savings, improve customer satisfaction, and run more efficiently.
The right payment orchestration platform lets you visualize and execute on payment flows without extra engineering resource, and gives you deep insight into your payment processing performance.
Book a call with our team to see how Primer can help you with payment routing.
Payment routing frequently asked questions (FAQs)
What is payment routing and why is it important?
Payment routing is the process of choosing the most efficient path for a transaction to reach approval, based on factors like card type, geography, and transaction value. It helps businesses reduce costs, boost authorization rates, and improve the customer experience by minimizing failures and delays during checkout.
What are the different types of payment routing?
At a high level, payment routing is either static or dynamic. Static routing uses fixed, hardcoded rules, while dynamic routing decides each route in real time based on live data. Viewed through the history of the space, it has evolved in four phases:
- Single acquirer routing: A basic setup using one processor.
- Static routing: Hardcoded logic to route payments to specific acquirers.
- Smart/dynamic routing: No-code platforms route payments flexibly based on custom rules.
- AI-enhanced routing: Machine learning identifies optimal routes from large-scale transaction data with minimal manual input.
How is payment routing different from payment orchestration?
Payment routing is one capability. Payment orchestration is the layer that makes it work at scale. Orchestration connects your processors, acquirers, and payment methods through a single integration, then gives you the tools to route, retry, and analyze transactions across all of them. Routing is the decision; orchestration is the system that carries it out.
Is payment routing secure?
Yes. Routing decides the path a transaction takes; it doesn't change how card data is handled. Security depends on the infrastructure around it. A payment orchestration platform should route transactions inside a PCI DSS compliant environment, keep card data tokenized, and support 3D Secure where required. Primer stores card tokens in an independent, PCI DSS Level 1 compliant vault and applies 3DS above the processor layer, so authentication carries across to any fallback route.
How can smart payment routing improve business performance?
Smart routing can lower processing fees, increase authorization rates, and recover lost revenue by rerouting failed transactions in real time. It also creates a better customer experience by reducing declines and offering more reliable payment options.
How does Primer simplify smart payment routing?
Primer lets merchants integrate with multiple PSPs using one API, build customized payment flows with no code, and monitor all payment data in a centralized dashboard. Merchants can A/B test processors, implement fallback logic, and make data-backed decisions to optimize payment performance.
What kind of results can merchants expect with Primer's payment routing?
Businesses using Primer have seen real improvements in payment performance. For example, Ferryhopper increased its conversion rate by 2% and recovered 1% of lost bookings through fallback routing. Primer's Dynamic 3DS and smart routing helped reduce Google Pay declines by 20%, showing clear ROI through optimized payment operations.
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