A platform’s success relies partly on its choice of marketplace payment services. Marketplaces account for 35% of online purchases in France, and 92% of marketplace customers declare wanting to maintain or increase their purchases on these platforms. With marketplace use increasing, operators must offer efficient payment services on their websites to ensure secure, frictionless transactions between customers and sellers.

In this article, we explain marketplace payment services, types, and benefits and how to choose one.

Key takeaways

• Marketplace payment services handle transactions between customers, sellers, and marketplace operators.
  
• Marketplaces can become certified as nonbank financial institutions, be exempt from certification, or hire a certified payment service provider to handle multiparty payments.
  
• The benefits of payment services designed for marketplaces include enhanced security, automated payment processing, detailed reports, and legal compliance.
  
• The choice of payment service can affect a marketplace’s success. Businesses must consider cost, features, customer support, ease of integration, and service scalability.
  

What are marketplace payment services?

A marketplace payment service is financial infrastructure designed to handle multiparty transactions between customers, sellers, and marketplace operators efficiently and securely. Payment service providers (PSPs) are important for:

• Centralized, secure collections
  
• Calculating and handling commissions and service fees
  
• Refunding payments to sellers
  
• Legal compliance
  

What are the options for reliable marketplace payment services?

Marketplaces have many options when choosing a reliable payment service for its customers. They can become certified as nonbank financial institutions and process transactions themselves, or they can hire a payment method provider. In certain cases, marketplaces might not require certification to handle specific transactions.

To become certified to process payments without an external provider, marketplaces must apply to the Prudential Supervision and Resolution Authority (Autorité de contrôle prudentiel et de résolution, or ACPR). Certification is a long, demanding, costly process typically not suitable for smaller businesses.

Article L.521-3 of the Monetary and Financial Code lets some platforms process transactions without certification if they sell a specific or limited range of products or services. BlaBlaCar and France Gourmet Diffusion are examples of French marketplaces exempt from the certification requirement.

However, most marketplaces use a PSP certified by the ACPR. PSPs offer ready-made reliable payments infrastructure capable of handling transactions on behalf of businesses. They facilitate collections, manage various types of transactions, secure money flows, and distribute funds to the correct party. They also ensure legal compliance with the EU Payment Services Directive (PSD2 or eventually PSD3, which will replace it soon).

What are the benefits of third-party marketplace payment services?

Marketplace payment services are designed to handle complex multiparty transactions. They offer several benefits to platform operators, including:

• Enhanced security
  PSPs verify transactions and protect users from fraud, reducing financial risk for all parties.

• A smooth, user-friendly experience
  PSPs offer a reliable payment interface and a range of payment methods (e.g., installment payments, bank card payments, Single Euro Payments Area (SEPA) transfers, digital wallet payments), which enhances the payment experience, increases conversion rates, and retains customers.

• Automated money flow management
  PSPs handle the collection, verification, calculation, and distribution of payments. They also manage fees, refunds, and cancellations. This saves time, prevents errors, and frees businesses from the complexities of handling multiparty payments themselves.

• Improved visibility into money flow
  PSPs provide dashboards and detailed reports to help businesses track sales and transactions and make informed decisions.

• Legal compliance
  PSPs ensure compliance with European directives, Know Your Customer (KYC) laws, the Payment Card Industry Data Security Standard (PCI DSS), and the General Data Protection Regulation (GDPR).

How to choose a marketplace payment service

Choosing the right payment service for a marketplace’s needs is important for customer satisfaction and profitability. These factors are important when selecting a service:

• Service cost: Some PSPs bill per transaction or by subscription, while others charge a fixed fee.
  
• Payment method options: For a frictionless payment process, a business should choose a PSP that offers the payment methods its users expect.
  
• Internationalization: Businesses that plan to go global should choose a marketplace payment service that can handle multiple currencies and accepts local payment methods.
  
• Technical integration: Depending on their needs, businesses might choose a customized solution compatible with their tools and enhanced for mobile.
  
• Customer service and technical support: For a smooth user experience, a payment service that offers efficient, accessible customer service and personalized technical support for the integration process is important.
  

How Stripe Connect can help you

Stripe Connect orchestrates money movement across multiple parties for software platforms and marketplaces. It offers quick onboarding, embedded components, global payouts, and more.

Connect can help you:

• Launch in weeks: Use Stripe-hosted or embedded functionality to go live faster, and avoid the up-front costs and development time usually required for payment facilitation.
  
• Manage payments at scale: Use tooling and services from Stripe so you don’t have to dedicate extra resources to margin reporting, tax forms, risk, global payment methods, or onboarding compliance.
  
• Grow globally: Help your users reach more customers worldwide with local payment methods and the ability to easily calculate sales tax, value-added tax (VAT), and goods and services tax (GST).
  
• Build new lines of revenue: Optimize payment revenue by collecting fees on each transaction. Monetize Stripe’s capabilities by enabling in-person payments, instant payouts, sales tax collection, financing, expense cards, and more on your platform.
  

Find more information on Stripe Connect, or get started today.