In this comprehensive article dedicated to marketplace payments, you will find detailed information on their business model, advantages, possible payment methods (e.g. Split & Merge), and the importance of staying vigilant when it comes to securing these payments via a PSP (Payment Service Provider) such as Digiteal.
The definition of a marketplace is “any store, physical or online, that facilitates the exchange of goods between buyers and sellers”.
There are two main types of marketplaces:
Marketplaces and e-Commerce websites are not the same thing: they don’t operate according to the same model, even though they are both designed to sell on the Internet, which can lead to confusion. A marketplace collects funds from third parties for sellers who have previously registered with the marketplace. An e-Commerce business, on the other hand, directly collects the amounts paid by customers, without redistribution.
Responsibility is also different. The marketplace brings buyers and sellers together and facilitates purchasing, but is not responsible for the products or services sold: this responsibility lies with the seller. E-commerce is offered directly by a seller, who assumes full responsibility.
A marketplace generates revenue by charging a commission on each transaction carried out on its platform. This commission may be fixed or based on a percentage of the transaction amount.
Moreover, some marketplaces may also offer additional services for a fee, such as advertising or product showcasing. The main aim of a marketplace is to facilitate exchanges between buyers and sellers, while generating revenue from the transactions carried out on its platform.
Ideally, the marketplace should enjoy a certain notoriety and gradually become a reference point for buyers, or even something automatic.
Purchase-related costs, such as delivery charges, may also be offered if the total amount of your order exceeds a certain sum.
To increase customer (and target/prospect) loyalty, special promotional programs are set up to reward loyal customers (VIP program and/or points collection).
The marketplace’s excellent ergonomics (UX) is also a very important point differentiating it from the increasingly tough competition. The various options and paths on the website, such as the customer journey, must be clear and efficient to avoid customers abandoning their shopping carts…
Over the last ten years or so, we’ve seen the emergence of a host of different marketplaces in a variety of sectors (retail, fashion, automotive, catering, etc.), such as Vinted, Etsy, Cdiscount, Uber, Ankstore and others.
This business model is becoming increasingly popular, thanks to the proliferation of new marketplaces. Marketplaces have several competitive advantages:
There are two invoicing options
The marketplace issues the invoice in its own name, and is therefore responsible for warranty, service, etc., towards its customers. In this case, the marketplace can collect the funds into its own bank account. Strictly speaking, it is no longer a marketplace, but a reseller.
If the invoice is issued in the seller’s name, the money cannot be collected via the marketplace’s bank account. It is legally required to use an escrow account, a “third-party account”. And this is precisely one of the services offered by Digiteal, in its capacity as a payment institution authorized by the National Bank of Belgium.
With an authorization to operate on a European scale, Digiteal provides you with an escrow account in order to be 100% compliant with legislation. Our Fintech adds even more value, as it enables you to collect a single payment (pay-in) and automatically distribute this sum between the marketplace and the seller(s) concerned.
While users are always advised to use caution, such as verifying the seller’s reputation and using secure payment methods, fraudsters are becoming increasingly inventive.
Payments on marketplaces are (generally) secured through the services of a PSP (Payment Service Provider), which has a third-party account. A Payment Service Provider (PSP) is a so-called third-party company that enables businesses to accept electronic payments, such as credit or debit card payments. PSPs act as intermediaries between those who make payments, i.e. consumers, and those who accept them, i.e. retailers/vendors.
These PSPs offer secure payment solutions through various methods such as data encryption, user identity verification and fraud protection. They also facilitate transactions by providing various options and managing refunds, if required.
Digiteal is a payment facilitator (Multi-PSP), a company that provides the necessary infrastructure for merchants to accept payments. Merchants register and benefit from the technology needed to process electronic payments and receive the related funds.
To provide these services, Digiteal relies on acquirers who are directly connected to the payment schemes to collect the funds. The funds are then transferred to escrow accounts managed by Digiteal, allowing them to be paid out to merchants.
Digiteal complies with personal data protection legislation as established by the GDPR and is additionally ISO 27001 certified, an international information security standard.
ABOUT DIGITEAL
COMPANY
Digiteal SA
BE 0630675588
Rue Emile Francqui 6/9
1435 Mont-Saint-Guibert
Belgium
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