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Payments for Marketplaces

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If you want to start a marketplace platform it turns out that finding a payment solution is really hard…

I’ve been contacted by four platforms in the past 7 days, all trying to solve the problem.

Why is it hard?
1. There are pay-ins and payouts, which most PSPs can’t handle
2. If you’re in the EU or UK, regulation means that you can’t hold the money yourself and pay out later
3. Stripe is an obvious choice but you cannot use them if you need a delay in payout (unless you’re in the US)
4. If you’re a startup, you have no financial history, no leverage and no back-office processes to get a deal or run the process yourself
5. You have to work with one PSP for a single checkout process, this limits you in terms of acquiring customers
6. If you’re merchants are selling high risk you even more limited in terms of PSP options
7. If you’re building the platform, you’ll have to build most of the payment infrastructure and user experiences
8. If you want to operate internationally then you’ll have to deal with cross-border payouts

What are the business models?
– The marketplace can be the merchant of record
– The merchant can be the merchant of record

– You can take a % of the transaction at the point of transaction
– You can take a % of the transaction post-transaction
– You can charge a subscription fee

Types of marketplaces:
– B2C
– B2B

– Multi merchant basket
– Single merchant basket

– Products/Services sold, when it’s known at the time of sale who the seller is
– Products/Services sold when it’s not known at the time of sale who the seller is

What are the answers?
If you’re a startup in the US then Stripe is a good place to start for any model, but you won’t be able to do high risk stuff.

If you’ve got traction then you can use Adyen or Braintree as your monolith solution.

If you’re a startup in Europe, then Stripe could work if you know who the seller is and can payout immediately.

If you need to have a number of gateways for pay-in then you can use some marketplace middleware like Payaut or Ryft.

If you don’t want to be the merchant of record then you can use Payaut.

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