Navigating Payment Service Providers (PSPs) for Real Estate Crowdfunding in Royalties: High-Risk Solutions and Recommendations

With the rise of fractional real estate investment and crowdfunding platforms, processing payments efficiently and securely has become crucial. For platforms like Block Tech that operate on a royalty-based model for real estate investment, choosing the right Payment Service Provider (PSP) is essential. PSPs facilitate transactions between investors and platforms, ensuring smooth fund flows and compliance with financial regulations. However, real estate crowdfunding often falls into the "high-risk" category, presenting challenges when selecting a suitable PSP. In this article, we’ll explore the unique requirements of PSPs for real estate crowdfunding, discuss high-risk versus low-risk classifications, and recommend some PSPs to consider for integrating with Block Tech’s white-label platform.

Understanding the PSP Landscape in Real Estate Crowdfunding

A PSP acts as a bridge between the platform (such as Block Tech) and the investor, processing payments, verifying transactions, and often providing additional services such as fraud protection and compliance management. For real estate crowdfunding platforms, PSPs must handle large transaction volumes, manage potential regulatory complexities, and ensure the security of investor funds.

Real estate, particularly when linked to crowdfunding, is often considered high-risk due to:

1. Large Transaction Volumes: Real estate transactions usually involve significant amounts, increasing risk for fraud or chargebacks.
2. Compliance Requirements: Real estate investments, even when structured as royalties, require adherence to strict regulatory standards, which vary by country and region.
3. Investment Nature: Crowdfunding models inherently involve speculative returns, which some payment processors consider higher risk compared to traditional retail payments.

High-Risk vs. Low-Risk PSPs

Most PSPs classify merchants into different risk categories based on industry, transaction size, volume, and historical chargeback rates. High-risk businesses are typically charged higher processing fees and may face stricter underwriting criteria. Crowdfunding real estate platforms generally fall into this high-risk category due to the investment nature of transactions, regulatory complexities, and transaction size.

1. High-Risk PSPs: These are providers that specialize in servicing industries with higher chargeback rates or regulatory hurdles. High-risk PSPs are generally more equipped to handle real estate crowdfunding, as they have tailored services and support for such industries. However, they tend to charge higher fees and may impose additional compliance requirements.
2. Low-Risk PSPs: These PSPs cater to industries with predictable transactions, low chargeback risks, and minimal regulatory hurdles. Low-risk PSPs are often not suitable for real estate crowdfunding because they may lack the expertise or infrastructure to handle complex compliance needs and high-value transactions associated with real estate investments.

Key Criteria for Choosing a PSP for Real Estate Crowdfunding

To ensure smooth operations, real estate crowdfunding platforms like Block Tech should consider the following when selecting a PSP:

• Regulatory Compliance: Given that real estate transactions are often regulated, the PSP must be capable of handling Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements.
• High-Volume Transaction Processing: The ability to handle large transactions seamlessly is essential for real estate platforms.
• Fraud Protection and Security: Real estate investments attract large transactions, making security crucial to prevent fraud.
• Customizable Solutions: Since Block Tech operates on a royalty model, the PSP must be able to support flexible payout structures that align with royalty distributions.
• International Capabilities: For platforms operating across multiple European countries, a PSP with multi-currency support and a wide regulatory reach is beneficial.

Recommended PSPs for Real Estate Crowdfunding Platforms

The following PSPs are suitable for real estate crowdfunding, particularly for platforms that operate on a royalty-based model like Block Tech. They specialize in high-risk transactions and offer robust compliance and security features.

1. dLocal

DLocal is an international PSP that focuses on emerging markets and high-risk industries. It offers robust cross-border payment capabilities, making it an ideal choice for real estate crowdfunding platforms that aim to attract investors from various regions.

• High-Risk Friendly: DLocal is experienced in managing high-risk industries and offers solutions tailored for platforms like Block Tech.
• Compliance & Security: They offer extensive compliance support, including KYC and AML checks, which are critical for real estate platforms.
• Flexible Payout Options: DLocal’s solutions support various payout structures, which can be customized to suit the royalty-based model of Block Tech.

2. BlueSnap

BlueSnap is a global PSP known for its flexible payment solutions and high acceptance rates. It is suitable for real estate platforms seeking a partner with expertise in high-risk industries.

• Comprehensive Payment Solutions: BlueSnap provides payment processing, invoicing, and marketplace payouts, making it versatile for platforms needing end-to-end payment solutions.
• Multi-Currency Support: It supports over 100 currencies, facilitating international investment.
• Risk Management: Their platform includes fraud detection and chargeback management tools to safeguard high-value transactions typical of real estate investments.

3. Inpay

Inpay is known for its specialization in high-risk industries and alternative payment methods. It offers innovative solutions for platforms requiring alternative payment methods, making it suitable for platforms targeting a wide range of investor demographics.

• High-Risk Accommodations: Inpay is known to work with high-risk sectors, providing customized payment processing solutions for unique business models like Block Tech’s.
• Security & Compliance: It offers compliance management solutions, helping platforms meet regulatory requirements.
• Crypto and Wallet Payments: Inpay’s platform supports alternative payment methods, including cryptocurrency, which can be an asset for platforms targeting tech-savvy investors.

4. Payeer

Payeer is a payment processor that offers a mix of traditional and alternative payment methods, making it suitable for real estate crowdfunding platforms that want to attract a broad audience.

• Supports High-Risk Transactions: Payeer is experienced in handling high-risk transactions and offers compliance solutions.
• Diverse Payment Methods: In addition to credit cards, Payeer supports cryptocurrencies, which can appeal to younger or more tech-savvy investors.
• Global Reach: Payeer operates in multiple currencies, offering multi-currency accounts for clients, which is beneficial for platforms with a global investor base.

5. Ecommpay

Ecommpay specializes in high-risk and high-value transactions, making it well-suited for real estate crowdfunding. Their solutions are tailored to complex regulatory environments and provide advanced fraud protection.

• Custom Solutions for High-Risk Clients: Ecommpay offers dedicated solutions for high-risk clients, including real estate platforms.
• Extensive Security: They have advanced fraud prevention and chargeback management tools, ideal for large, high-value transactions.
• Regulatory Compliance: Ecommpay is well-versed in handling KYC and AML compliance, ensuring that transactions meet regulatory standards in multiple regions.

6. Checkout.com

Checkout.com offers a comprehensive payment solution with a focus on high-risk industries and compliance. Its scalable infrastructure makes it suitable for growing platforms like Block Tech.

• High-Risk Focus: Checkout.com supports high-risk industries and has specialized solutions for platforms managing large transaction volumes.
• Global Compliance Support: They provide extensive support for KYC and AML requirements, making it easier for real estate platforms to remain compliant.
• Advanced Fraud Protection: Their fraud detection and prevention measures are tailored to handle high-value transactions, ensuring secure processing for real estate investments.

Managing High-Risk Challenges with PSPs

When partnering with high-risk PSPs, platforms like Block Tech can expect:

• Higher Processing Fees: High-risk PSPs generally charge higher transaction fees due to the perceived risks involved. This cost should be factored into pricing strategies.
• Additional Documentation Requirements: PSPs often require more extensive documentation, including business licenses, regulatory filings, and proof of compliance with KYC/AML protocols.
• Chargeback and Fraud Risk Management: Real estate platforms may face higher chargeback rates, so it’s essential to select a PSP with advanced fraud detection and chargeback prevention features.

Strategies for Seamless Integration with Block Tech’s White-Label Platform

Choosing a PSP that aligns with Block Tech’s model is essential for seamless integration. Block Tech’s platform supports royalty-based payments, meaning that the PSP must be flexible in handling royalty distributions rather than traditional payments or equity payouts. Here’s how platforms can optimize PSP integration:

1. Choose PSPs with Customizable APIs: Block Tech’s platform is designed to integrate with various APIs, making it essential to choose PSPs with flexible, developer-friendly APIs that support royalty and recurring payments.
2. Ensure Compliance Capabilities: The chosen PSP should handle KYC and AML requirements, as well as provide transparent reporting features for regulatory audits.
3. Test Multi-Currency Support: Given Block Tech’s European focus, a PSP with multi-currency support will allow seamless processing for investors across the EU.
4. Opt for PSPs with Strong Fraud Protection: With high-value transactions involved, select PSPs that offer robust fraud detection, transaction monitoring, and chargeback prevention tools.
5. Leverage Secondary Market Features: For PSPs that support marketplace transactions, use secondary market features to allow investors to trade their blocks, providing additional flexibility and liquidity.

Final Thoughts

As real estate crowdfunding and fractional ownership models gain traction, the need for reliable, high-risk-friendly PSPs becomes increasingly important. Platforms like Block Tech can achieve operational efficiency, compliance, and investor trust by selecting PSPs experienced in high-risk transactions and regulatory environments. By choosing the right PSP, Block Tech can provide a seamless, secure experience for brokers and investors, making fractional real estate more accessible and trustworthy.

Navigating the PSP landscape may seem complex, but by working with high-risk PSPs such as dLocal , BlueSnap , Inpay , Payeer , Ecommpay , and Checkout.com , Block Tech can build a reliable payment processing infrastructure that supports its innovative, royalty-based model. With robust compliance features, international reach, and flexible payout structures, these PSPs provide a solid foundation for Block Tech to scale its platform across Europe and beyond. As real estate investment continues to evolve, the integration of the right PSPs will be essential in maintaining smooth, compliant, and efficient payment processing for both brokers and investors.