The role of the Payment Gateway for MarketPlace Payments
When evaluating technical payment solutions that address the primary needs of a MarketPlace Payment solution the integration to the Payment Gateway plays a vital role in the MarketPlace success. For platforms considering launching or monetizing their MarketPlace payments play a vital role in both the success [or failure] of the platform as well as a primary revenue driver6.
The MarketPlace Payment Gateway must first and foremost allow for secure PCI compliant credit card data transmission. MarketPlace Payment solutions also must address:
- Easy, friction free sub merchant boarding
- Split payment functionality. Eg $100 sale means payout seller $97 and fund the MarketPlace $3
- Payout via ACH and in some cases via seller debit card
- Potentially support convenience fees that pass on payment related fees to the buyer
- Provide reconciliation tools so that the platform can provide reporting to the sellers eg monthly sales review, tax planning documentation
The requirements above are all addressed during the integration with the Payment Gateway for MarketPlace partner.
MarketPlaces make money in different ways but acting as the MarketPlace Merchant of Record [MOR] is typically the largest profit generator.
As an example consider Etsy. Etsy offers sellers of jewelry, fashion items etc an easy to use platform to advertise and sell their wares. Etsy charges 3% plus 25 cents to process the payment plus a 5% “transaction” fee.
The actual cost to process payments is likely around 2.5%. With margin of 5.5% Etsy makes over 150 million dollars per year from their payments business [process over $3 billion per year].
Note: these are estimates
As you consider MarketPlace Payments Solutions and specifically Payment Gateways for MarketPlace Payments it makes sense to speak with experts that can listen to what your goals are and potentially save considerable time and money implementing your solution. Contact us to explore your options.