Online marketplaces are booming. By connecting shoppers and vendors around the world in one streamlined platform, marketplaces have played a critical role in allowing global e-commerce to flourish.
But as your marketplace expands and you begin to do business in different parts of the world, you might find that the payments platform you started out with is not robust or comprehensive enough to support the growth of your business.
As you know, payments for marketplaces are complicated — with split transactions, payouts to multiple vendors, potential chargebacks and a lengthy onboarding process — and they become especially complex when you begin to operate in multiple regions around the world.
But the truth is, marketplace payments don’t have to be so cumbersome (and expensive) for your business. The right payments provider can smooth out the kinks in your global marketplace payments process and, as a result, help you minimize costs and maximize profits.
Here are 4 things to look for to ensure that your payments provider helps, not hurts, your bottom line.
4 Ways the Right Payments Provider Can Save You Money
1. Fast & Frictionless Onboarding
The sooner you can onboard new vendors, the sooner you can begin processing transactions and making money. The trouble is, many payments providers can take weeks to complete the underwriting process to get your marketplace payments up and running.
How many potential sales would you lose in the days or weeks you’re left waiting? Too many.
Luckily, some payments providers offer an easy onboarding process that allows you to hit the ground running with minimal paperwork and without skimping on the required due diligence. Even if you don’t have all of the necessary information upfront, you can start processing payments right away and work with the provider to complete the setup over the next few days.
2. Global Payments & Localized Checkouts
When you’re selling online, you shouldn’t be limited by borders. But many marketplace providers only offer their solution in one region, one bank, or one currency.
As your business expands, these limited options will increase the risk of the transactions being rejected, possibly flagged as fraud, detering global customers from completing the sale and increase the complexity of payouts to global vendors.
For example, say you’re a US-based marketplace that connects with local florists to deliver fresh flowers to shoppers who ordered online, but you want to expand beyond the U.S. to send flowers to allow customers to send flowers to their grandmother in London. The local florists in the UK will want to be paid in Euros, and shoppers in the UK will expect to see their local currencies and payment options on the checkout page.
With the right payments provider, you can connect to multiple banks around the world and customize the checkout experience to meet the needs and expectations of your global customers. This seamless global expansion will increase your overall revenue and decrease the expenses associated with foreign exchange fees, fraudulent or failed payments and dissatisfied international customers.
3. Split Transactions & Simple Money Management
Managing split transactions is, perhaps, the most difficult part of marketplace payments.
Let’s go back to our florist example to illustrate this difficulty. If your marketplace partners with a local florist and the florist partners with a delivery service, then the transaction request made by the shopper will need to be split between the marketplace owner, the florist and the delivery service company. Multiple vendors on a single transaction — especially if these are international vendors and they each accept different currencies — makes the payout process a nightmare for the marketplace’s financial manager.
However, with the right marketplace payments provider, a simple API can relieve you of this process, saving you time, money, and frustration. The provider will manage the fees, splits, and payouts automatically based on customized commission splits, so the marketplace’s financial manager doesn’t have to worry about handling money directly. This added efficiency allows marketplace financial managers to think more strategically about their role, focusing instead on building accurate reports and working with vendors to meet their SLAs.
4. Robust & Detailed Reporting
Speaking of accurate reports, maintaining an adequate, in-depth view of transaction history and vendor performance is especially challenging for global online marketplaces. With data coming in from multiple countries, in multiple currencies, and for multiple vendors, how can you possibly manage it all?
The right marketplace payments provider will help you view and manage reports much more efficiently. Beyond the basic transaction reporting, a good payments provider will pull together streamlined reports for vendors as well. Through these reports, you can see not only how transactions are being split and what you owe, but also how each vendor is performing.
For example, you might find that one of your vendors, a local florist, is consistently receiving customer complaints and chargeback requests due to poor service. Excessive chargebacks, of course, are a revenue drain for your business, so you might make the decision to cut ties with that vendor to save money. Trends and complications like these might not be immediately obvious to you with less-detailed or disparate reporting capabilities, and in the long run, it could cost you an incredible amount of money.
In that way, a payments provider with a comprehensive suite of reporting tools can help you manage your entire business more effectively and more profitably.
Choose a Payments Provider Who Can Grow With You
As your marketplace continues to scale, you need to find payment provider who can connect you with the customers, resources, and capabilities you need all around the world. Without the necessary features for processing global payments efficiently and effectively, you’ll lose money, deter customers and hinder your business growth.
Countless marketplaces just like yours have made the switch and are reaping the benefits. For example, the multinational company Autodesk upgraded their marketplace payments provider and saw a number of positive, revenue-driving improvements including a 20% increase in checkout conversions.
Look for a marketplace payments provider who offers quick onboarding, global payments, localized checkouts, split transactions, and robust reporting — and begin growing your global business the right way.