The success of a marketplace often depends on its reputation with customers. This includes its ability to guarantee secure payments, which can attract customers and earn trust from vendors. Marketplace operators need to understand security for platform transactions, differences between marketplace payments and those on traditional ecommerce websites, and technical steps that can prevent fraud.

In this article, we explain secure payments on marketplaces, including how they work, what regulations to follow, and which procedures to integrate to create a safe and secure environment for customers and vendors.

Key takeaways

• Securing marketplace payments requires technical and regulatory measures. This can include strong authentication, encryption, tokenization, funds segregation, Know Your Customer (KYC) and Know Your Business (KYB) procedures, and the Payment Card Industry Data Security Standard (PCI DSS).
  
• Marketplace payments involve three parties, one of which is an intermediary. This makes marketplace payments more complicated than payments on traditional ecommerce websites, which involve direct payments and only two parties.
  
• Fund segregation is a key step in keeping payments secure. Marketplaces can become certified by the Prudential Supervision and Resolution Authority (ACPR) to process transactions or work with certified payment service providers that handle collections and segregate funds for platforms.
  
• In France, marketplace payments are governed by the revised Payment Services Directive (PSD2), French Monetary and Financial Code (CMF), and European Anti-Money Laundering Directives (AMLD). Marketplaces must comply with requirements derived from them.
  

What are secure payments on marketplaces?

Secure payments on marketplaces are transactions initiated on digital platforms and protected by technical measures against the interception, theft, and fraudulent use of funds or data. Payment security requires the use of complementary mechanisms to protect customers and vendors who use the platform, including encryption, Strong Customer Authentication (SCA), tokenization, and funds segregation.

Secure payments can reassure customers and strengthen the platform’s reliability. As a trusted third party, the marketplace’s role consists of coordinating multiparty financial flows in accordance with law, while protecting funds and data privacy.

How do marketplace payments differ from ecommerce website payments?

Marketplace payments involve at least three parties: the customer, platform, and one or more vendors. Payments on traditional ecommerce websites occur exclusively between a customer and vendor.

From a technical standpoint, ecommerce website payments follow a direct, one-way process from the customer to the vendor—typically passing through a payment service provider and payment gateway.

On the other hand, managing marketplace payments is more complex and more strictly regulated. There are multiple monetary flows to coordinate: collecting money on vendors’ behalf, segregating funds, deducting commissions, and paying out funds to vendors. Marketplace payments require a thorough technical architecture—unlike traditional ecommerce websites, which do not manage complex multiparty transactions.

How do secure marketplace payments work?

There are several stages involved with secure marketplace payments. First, customers confirm their orders from one or more vendors on the platform. They pay online using one of the available payment methods—typically bank cards, e-Carte Bleue, or installment payments.

Next, the platform receives the funds and deposits them into a secure segregated account. This segregation system temporarily stores the money separately from the marketplace’s funds. Funds the marketplace collects on behalf of third parties do not belong to the marketplace. Therefore, the marketplace must isolate those funds from its cash flow. To do this, the marketplace must be certified by the Prudential Supervision and Resolution Authority (ACPR) as a payment institution, obtain an exemption, or work with an ACPR-certified payment service provider.

Funds are held until the vendor processes the order and then verifies and completes due diligence measures. This process protects customers if there is a dispute or the order is not delivered. Finally, the platform deducts its commission, and the remaining funds are paid out to the vendors or—if there is only one vendor—deposited into the vendor’s bank account.

What are some key considerations for securing marketplace payments?

Securing marketplace payments requires several key considerations, including regulatory compliance, technical protection of sensitive information, segregation of vendor funds, and fraud prevention.

Payment Card Industry Data Security Standard (PCI DSS) compliance

PCI DSS is the payment card industry’s leading international security standard. It applies to any organization that accepts, processes, stores, or transmits payment card data.

The purpose of PCI DSS is to protect cardholders from fraud and data theft. To comply with the standard and keep card payments secure, marketplaces need to include thorough technical and operational protections, such as data encryption, firewalls, access controls, and regular validation procedures.

Strong authentication

Strong authentication is a legal obligation derived from the revised Payment Services Directive (PSD2). It requires marketplaces to verify customers’ identities via at least two factors (e.g., personal identification numbers [PINs], biometrics, smart devices) to validate online transactions. This verification adds an additional layer of protection to distance selling, protecting the platform’s customers and vendors from fraud.

Compliance with the General Data Protection Regulation (GDPR)

The GDPR requires organizations that process EU residents’ data online to comply with transparency, consent, minimization, and security rules.

To ensure secure payments comply with the GDPR, marketplaces need to minimize the amount of data they collect. This includes the customer identities, mailing addresses, and payment information. Marketplaces cannot store the information longer than necessary for transactions, unless they obtain the customer’s express consent to do so to facilitate future purchases. If they do obtain consent, they can only store card numbers and expiration dates—never security codes.

These restrictions help minimize storage of data that could be misused by fraudulent actors if intercepted or leaked.

Data tokenization and encryption

Tokenization and encryption are important technical security measures, especially for entities that process transactions for third parties. Encryption protects payment data during transfer. Tokenization replaces sensitive information with unique tokens that cannot be used while stored. Together, these mechanisms offer maximum multilayer protection to secure payment data during transmission and storage.

Funds segregation

Segregating funds is a legal obligation that prohibits intermediaries from commingling vendors’ funds with their own funds. By depositing vendors’ funds into segregated accounts, intermediaries keep the funds safe until the terms of the transaction have been fulfilled (e.g., vendors process orders, withdrawal periods have passed, transactions are confirmed as compliant). This protects customers’ money in cases of platform bankruptcy, nondelivery of purchases, or disputes.

Know Your Customer (KYC) and Know Your Business (KYB) procedures

Marketplaces use KYC and KYB procedures to verify the identities of private and professional vendors before entering into business relationships with them.

Under KYC, private vendors must provide identification, proof of residency, or recent photos. Under KYB, platforms must ask professional vendors for their Kbis register, bylaws, and identity cards from their beneficial owners (i.e., the individuals who ultimately control the business, directly or indirectly).

These verifications help prevent fraud, terrorism financing, identity theft, and money laundering before transactions take place. They are accompanied by continual monitoring of vendors to ensure secure payment environments.

What are the regulations governing payments on marketplaces in France?

The PSD2, French Monetary and Financial Code (CMF), and Anti-Money Laundering Directives (AMLD) strictly govern marketplace payments in France. At the European level, the PSD2 requires platforms to be certified by the ACPR to collect funds on behalf of third parties, unless they are exempt due to limited networks or small ranges of products and services. The directive also requires strong authentication for most online purchases in Europe. There are some exceptions for purchases of small amounts and low-risk transactions.

Under French law, Article L522-17 of the CMF requires customers’ funds to be segregated to protect and keep them separate from the marketplace’s funds. The KYC and KYB vendor verification obligations derive directly from the 4th directive and 5th directive of the AMLD.

Payment service providers certified by the ACPR—such as Stripe—can help platforms manage regulatory requirements and ensure compliance. Stripe Connect handles KYC requirements, manages segregated accounts, pays out funds to vendors automatically, ensures PCI DSS compliance, and more.

How to handle marketplace disputes and prevent fraud

To handle disputes efficiently, marketplaces need to establish strict policies for vendors when they register. This includes requiring them to make their return and refund policies easily accessible to customers.

Platforms must also define their mediator roles in cases of conflict. This includes determining strict response times (e.g., 24–72 hours) to collect evidence from each party and offering structured, responsive customer support. This can help build customer trust and vendor loyalty.

In addition to KYC and KYB verifications and strong authentication, machine learning tools can help marketplaces detect suspicious behavior and anomalies (e.g., dark patterns), report them to the appropriate team, and block fraud attempts in real time.

How Stripe Payments can help

Stripe Payments provides a unified, global payments solution that helps any business—from scaling startups to global enterprises—accept payments online, in person, and around the world.

Stripe Payments can help you:

• Optimize your checkout experience: Create a frictionless customer experience and save engineering time with prebuilt payment UIs, access to 125+ payment methods, and Link, Stripe’s consumer network.
  
• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency management with cross-border payment options, available in 195 countries across 135+ currencies.
  
• Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalize interactions, reward loyalty, and grow revenue.
  
• Improve payments performance: Increase revenue with a range of customizable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorization rates.
  
• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% historical uptime and industry-leading reliability.
  

Learn more about how Stripe Payments can power your online and in-person payments, or get started today.

FAQs about secure payments on marketplaces