Routing
Smart routing
Algorithmic selection of an acquirer or MID per transaction to maximise approval rate, minimise cost, or both.
Smart routing involves the use of dynamic algorithms to determine the optimal pathway for a transaction between multiple acquirers or merchant accounts. By evaluating real-time data such as the card issuer's country, the Bank Identification Number (BIN), and current scheme performance for Visa or Mastercard, the system attempts to direct payments to the gateway most likely to authorise the request. This process is frequently employed to mitigate the risk of soft declines caused by geographic mismatches or SCA triggers, as local acquirers typically demonstrate higher approval rates for domestic transactions. Furthermore, smart routing may be configured to balance volume against specific scheme thresholds or to prioritise lower interchange fees and processing costs. Modern implementations often utilise machine learning to adjust routing logic based on historical response codes, such as those related to 3D Secure failures or technical timeouts, ensuring that settlement remains efficient even during periods of acquirer instability.
Frequently asked
How does smart routing specifically reduce the likelihood of false declines?
The logic identifies which acquirers have stronger relationships with specific issuing banks or higher success rates for particular Merchant Category Codes (MCCs). By routing a transaction to an acquirer in the same legal jurisdiction as the issuer, the transaction is less likely to be flagged as high-risk by automated fraud filters.
Can smart routing be used to manage compliance with PSD2 and SCA?
Yes, routers can detect if a transaction falls within the scope of SCA based on the merchant and issuer location. The system can then select a path that supports the necessary 3DS protocols or, conversely, routes the payment through an acquirer where specific exemptions are more likely to be accepted by the issuer.
Related terms
A platform layer that lets a merchant connect to multiple acquirers, APMs, and risk tools through one integration and route transactions intelligently.
A unique identifier issued by an acquirer that ties transactions to a specific merchant account.
An authorisation response refusing to fund a transaction, returned by the issuer with a reason code.
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