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Marketplace Payments and how they can affect your bussiness

In today’s digital world, online marketplaces are becoming more on-trend than ever before. E-Commerce businesses can facilitate the process, and clients can find online retail shops or service providers with the best reviews, without much risk of getting tricked into a bad deal, plus it’s easier to compare products from different sellers online, often from the comfort of our sofa. As a result, we tend to shop at online marketplaces that integrate various providers of goods and services with potential clients.

Marketplace Payments and how they can affect your bussiness
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As a marketplace owner, you need to consider factors which may bring about the most comfort for your customers to have a seamless shopping experience. But as well as thinking about how your marketplace works, you need to think about your marketplace payment system.

There’s a lot to consider – splitting payments, regulatory compliance, knowing your customer (KYC), and more. The right method will undoubtedly help you to increase sales, reduce fraud risk, improve chargeback management, and even expand your business internationally.

In this article, we’ll explain how online marketplace payments work, evaluate different marketplace payments, and help you discover the best options for your business.

Why do marketplace payments matter?

Online marketplace payment is the basic feature of any online bussiness. Payment systems incorporated by each marketplace are varied depending on the scalability and the average number of customers it owns. As simple as it may seem at first sight, it is very much different from a normal ecommerce payment flow and there’s more going on behind the scenes. 

Through an online marketplace payment, what basically happens is that the money goes from the buyer to the seller, with or without the interference of an intermediary. A commission is charged on every transaction between the two parties. Online marketplaces need to have split payment functionality meaning that it should hire multiple payment sources to settle the whole cost of a single transaction. Split payments allow individuals to use multiple payment methods to complete an order, or enable several individuals to jointly contribute part of the order total.

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Best payment methods for marketplaces

Basically, when you are building an online bussiness, an array of online payment options are available for you to choose from including card schemes, market-specific bank transfer methods, and wallets. In our payment method guide we’ll offer guidance about the best payment strategies and options and  how you can use them to expand your business.

1. Wire transfer

Wire transfer basically means getting funds via direct bank transfer. Wire transfer might be a suitable option for a marketplace that is just starting since it’s a cheap solution. All you need is to fill a form and get your company bank transaction. 

Despite its being cheap, wire transfer comes with a range of drawbacks. As the initiator of a transaction you need to pay a large fee. The fee however varies depending on geographical region. European banks are  for instance cheaper in this regard. 

Long duration of process compared to other methods and lack of fraud protection or the inability to complete reversals and chargebacks are among other possible drawbacks of wire transfers. 

2. Creating a custom solution

Creating a custom payment solution could be the choice of any innovative bussiness as it will allow you to take all the features and functionalities you desire into consideration. As exciting as it may seem at first sight, it has its own possible ups and downs. It is actually likely to take several years of your time to fully accomplish. Plus you’ll need a PCI DSS Certificate to qualify as a regulated business. Taking the aforesaid license is a complex and lengthy process which may not suit your desires. Last but not least, when creating a custom method, you’re gonna have to hire a team to integrate such an online method which perhaps is going to be extremely costly in the long run. 

3. Using third party providers

This is an option for most large operators. Using this method you can easily offer multiple methods and bring a variety of benefits to your customers. You can  integrate different methods into your system with little effort made. Clear documentation and 24/7 technical support are also other features of using a third party provider. Various security tools are offered to you in order to control the funds, prevent fraud and minimize the financial risk for your platform, as well as for your marketplace sellers and their customers. 

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Best option for online marketplace payments

There are hundreds of third party providers out there which you can choose from but what matters is that working with a reliable one helps you integrate your chosen methods easily into your marketplace and create a seamless customer experience.

When expanding a business, you may come across various global customers; thus, you'll be in need of an instant and secure provider. PayPax is a cross-board online payment gateway provider, which helps your customers send, receive and accept payments in more than 50 cryptocurrencies and digital money. Signing up for a PayPax account is easy and free of cost and  also by verifying your account you can have higher security and lower fees. PayPax support center offers 24/7 customer support for you to be able to easily solve your possible technical issues. Using PayPax gives you the opportunity to integrate different payment methods and provide the most convenient methods for your customers to have a seamless shopping experience.

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