Marketplace and platform payments are different to a normal ecommerce payment flow. When a buyer makes a payment on an ecommerce website, the money goes from the buyer to the seller (though there’s more going on behind the scenes, involving payment gateways, acquirers, and others).

In online marketplace payments, you’re acting as the connecting platform for the buyers and sellers – and often making money by charging a commission on the transactions between them. You can do this in several ways.

Wire transfers

By using wire transfers, you are in charge of accepting and redistributing payments. This usually means getting funds via direct bank transfer. Though this might be a viable option for a marketplace that is just starting, it comes with a range of drawbacks.

– Fees for users: With wire transfer payments, the person who begins the transaction usually pays a large fee.

– Processing time: Wire transfers can take several days to complete. This can cause cash flow issues for your business and create problems for your sellers and their customers.

– Security and compliance: Wire transfers don’t offer fraud protection or the ability to complete reversals and chargebacks. Wire transfers are also not subject to the checks that prevent money laundering and other illegal financial activities.

Creating an online marketplace payments solution

It is possible to create your own marketplace payment gateway. This custom solution will undoubtedly have all the features and functionalities you desire but comes with some considerations.

– Development time: Creating a custom payment solution for your marketplace will likely take several years.

– Security and compliance: A specific licence is required from the regulator to qualify as a regulated business. Getting these licences is a complex and lengthy process. In the EU, regulated companies must comply with the Revised Payment Services Directive (PSD2).

– Costs: Developing your custom-built solution will be expensive and usually require you to hire people who can ensure things run smoothly.

Use a marketplace payment provider

This is the preferred option for most marketplace operators. Partnering with a specialist to care for your marketplace payment processing offers a range of benefits to your business. These include:

– Easily offer multiple payment methods: The best marketplace payment gateways companies allow you to accept leading online payment methods quickly and even guide you to find the best payment options for your marketplace business.

– Easy integration: The best payment service providers (PSP) allow you to integrate their payments solution into your system with little work. That means providing clear documentation and offering technical support when needed.

– Compliance: As a licensed PSP, your chosen payment processor will control the funds, minimising the financial risk for your platform, as well as for your marketplace sellers and their customers.

– Security: The best payment gateways for marketplaces also help provide a range of tools to help offer secure payments and prevent fraud.

– Lower fees: Using a marketplace payment platform will help control costs, as good processors should offer consistent fees and transparent pricing.

– Local support: Navigating payments can be complex, so a good payments partner should offer local support teams that mean you can speak to someone whenever you need help.

These are all features that any good PSP should offer. The best payment partners also provide advanced features that can help any single- or multi-vendor marketplace excel. This includes advanced features that can take care of onboarding and multi-split payments.

When choosing a single- or multi-vendor marketplace payment gateway, think about these things:

– Do they have expertise in my market/markets?

– Do they provide the payment methods my sellers need?

– Can they scale with my marketplace?

– Do they offer transparent pricing?

– Do they offer advanced features?