Marketplace Payments
Are you building the next Uber or Airbnb? One of the most important parts of your marketplace is the flow of money. How do you plan on collecting funds from the customers, paying the sellers and most importantly, taking your fees?
After working with marketplaces for the past couple of years, I figured it was about time I write a simple two-minute post giving startups a crash course with everything they need to know when it comes to payments.
Is your business type supported?
Before you go through the hassle of building you marketplace you may want to make sure that your novel idea is ok with the card networks, the bank & the Payment Facilitators. You should also find out if your business type requires special government or banking licenses. (A widespread one is a money transfer license if you are building a Venmo style app)
What are your technology needs?
Before you choose a payment provider make sure that they offer the features that are essential to your marketplace. At the minimum ensure that they have an easy to use API, Split Payments & Instant Onboarding. If you integrate the wrong payments, it will be a nightmare to switch.
Who is liable for chargebacks and PCI compliance?
Liability may seem like a simple one, but some of the larger providers (Stripe & Braintree) hold the marketplace responsible for chargebacks and some of the compliance. Ultimately this can take a massive bite out of your future profits.
What are the fees?
Discussing the prices in advance are an absolute must as some providers charge extra fees when it comes to marketplace accounts. A common fee is a per account monthly fee of $2 or sometimes even a fee per payout. These extra costs can run up a tab of thousand of dollars down the line.
What type of support does the company provide?
Before you start working with a provider try and find out what kind of support they offer. A lot of the vendors only provide online support that takes 48 hours to get a reply. You should also find out if they offer help throughout the integration process.
Will they allow you to outgrow them?
Because marketplaces have fast growth, you may find yourself moving millions of dollars. When you get to that point will the payments provider allow you to move up the food chain and take payments in-house?
As the head of business development for Splash Payments, I would like to keeps the lines of communication open for my fellow entrepreneurs. Feel free to reach out to me with any additional questions you may have [email protected]