The Green Sheet Online Edition
August 11, 2025 • 25:08:01
AI-powered routing is the new game-changer in payments
The global digital payments market is revolutionizing commerce at an unprecedented rate. By the end of 2025, the total transaction value is expected to reach an astounding $20.09 trillion, further emphasizing the significance of digital transactions in the global economy.
This surge in digital payments compels businesses to seek out efficient methods to increase transaction approval rates while optimizing costs. This is where AI-powered routing comes in—a cutting-edge advancement in payment processing technology that helps companies maximize transaction efficiency and revenue.
For businesses, choosing the right acquirer for every transaction is a critical yet complex process. Poor routing decisions can lead to higher costs, an increase in declined transactions and ultimately reduced revenue. With millions of transactions processed every day across multiple sectors, the need for an intelligent and cost-effective payment routing system has never been greater.
AI-powered or smart routing is a game-changing solution. By leveraging multiple routing mechanisms and advanced artificial intelligence (AI), it precisely identifies the best acquirer for each transaction, ultimately reducing cost and improving operational efficiency. For businesses, this means unlocking new revenue streams while simplifying the complexities of modern payment processing.
What is payments routing?
At first glance, payment processing might seem straightforward. However, it is anything but. Payment providers face a multitude of intricate decisions that determine the route a transaction will take before its approval. This is where AI-powered or smart routing can really make a difference.
Smart routing is an intelligent payment decision engine. It applies predefined criteria to transaction data and directs payments to the acquirer best suited for the transaction. One of the most important benefits of smart routing is that companies have full control over these predefined routing rules.
They can set parameters based on what matters most to their business, such as cost efficiency or approval likelihood. Here's how smart routing customizes transaction routing based on individual business needs:
- Cost optimization: Routes transactions to the acquirer with the lowest interchange fee to minimize costs.
- Higher approval rates: Directs transactions to acquirers more likely to approve payments, ensuring a more efficient and smooth customer experience.
- Segmentation and scalability: Facilitates routing between multiple acquirers and configures volume percentages flexibly, which aligns with a company's unique organizational needs.
These customizable options make smart routing an invaluable tool across different channels, vertical markets and geographic regions. It not only simplifies payment processing but also automates decision-making to optimize outcomes in an increasingly dynamic digital payments landscape.
AI elevates smart routing efficiency
While rule-based routing solves many inefficiencies in payment processing, integrating AI takes smart routing to an entirely new level. The combination of AI algorithms and machine learning refines decision-making by analyzing historical and real-time data from past transactions to predict the most effective routing paths.
- Enhanced authorization rates: AI-powered systems learn continuously from transaction patterns, increasing the likelihood of successful payments. Companies benefit from fewer declines due to incorrect routing and experience smoother, more efficient processing overall.
- Data-driven decision-making: By capitalizing on historical transaction data, AI achieves unparalleled precision in routing decisions, ensuring optimal efficiency for every payment processed.
- Seamless, predictive payments: AI's ability to evaluate multiple variables simultaneously ensures the smoothest and most reliable transaction processing path, irrespective of external or unforeseen factors.
With AI analysis enhancing transaction routing at every stage, businesses experience improved approval rates, reduced risk of transaction failures and optimized operational workflows.
Key benefits of AI-powered routing
AI-powered routing offers not just high-efficiency payment processing but also tangible business benefits tailored for modern commerce. Some of the key advantages of implementing smart routing technology include:
- Omnichannel payment integration: The digital-centric world we operate in demands seamless versatility in payment processing. From ecommerce platforms to in-store transactions, smart routing bridges multiple channels, enabling consistent functionality. Companies managing transactions across various touchpoints gain better connectivity and customer satisfaction with minimal effort.
- Business continuity assurance: Payment interruptions are a trader's nightmare, particularly when an acquiring bank is unavailable. Smart routing mitigates this risk by automatically redirecting transactions to alternative acquirers with no loss of performance, always ensuring continual reliable payment processing.
- Cost reduction: Smart routing simplifies cost management by funneling payments to the acquirer with the most cost-effective interchange fees. This improves profit margins, providing cost savings at scale without requiring time-consuming manual supervision.
- Simple setup and integration: The beauty of smart routing lies in its simplicity. Its intuitive interface allows companies to set their routing parameters seamlessly and integrate them into existing infrastructure without interrupting operations. The ease of deployment means businesses can start optimizing payments without a steep learning curve.
- Improved approval rates with AI: The success of a commercial transaction hinges significantly on approval rates. By integrating AI, authorization rates can increase by up to 5 percent, combining up to 3 percent gains from rule-based routing with an additional 2 percent uplift through enhanced AI-powered decision-making. These small percentage increases can contribute to significant annual revenue for businesses processing high transaction volumes.
How AI-powered routing shapes the future of payments
Businesses stand at the cusp of a payments revolution, and AI represents a major step forward in streamlining the complexities of global transactions. By automating payment decision-making, simplifying omnichannel operations and reducing costs, it is empowering companies with greater control over their revenue management.
The inclusion of advanced machine learning can future-proof businesses, placing them in a strategic position to thrive in the increasingly competitive digital payments ecosystem. Furthermore, as the intricacies of payment processing continue to grow, smart routing ensures that businesses can adapt seamlessly to scalability, efficiency and business growth.
The competitive edge
With the digital payments market expected to surpass $20 trillion in total transaction value this year, staying ahead requires innovative solutions such as AI-powered routing. For those ready to streamline payments today while future-proofing their operations, AI-powered routing offers unparalleled advantages.
Businesses that adopt AI-powered or smart routing can unlock untapped revenue streams and position themselves for enduring success in tomorrow's payments landscape. Whether they are optimizing costs, improving approval rates or ensuring greater reliability across global markets, smart routing can deliver on all fronts. 
Khalil Kammoun is a vice-president of product and technology at Worldline, and is responsible for Shared Services, leading strategic initiatives to drive innovation and growth for Payment Solutions. Over the past 12 years at Worldline, he has held multiple leadership roles in E-Commerce, Partner Management, Omnichannel & Collecting, contributing to the company's expansion and development in online and in-store payments. With extensive experience across the payments industry, Khalil is committed to advancing secure, efficient, and innovative payment technologies for a rapidly evolving digital economy. Contact him on LinkedIn at linkedin.com/in/khalil-kammoun-worldline.
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