How to manage payments and payouts, for an online digital marketplace website?
To manage payouts and payments for an online digital marketplace website, we need these types of services
- Escrow for marketplace
- Wallet for buyers and sellers
- Commission management for a marketplace website.
- Accept payment from the buyer ( Visa, MasterCard, PayPal)
- Make payments to sellers (Wired transfer, Payment to PayPal)
- Auto-Payment/Subscription Monthly/Yearly
- Refund to buyers
- Points/Credit systems
We need to find and decide, a correct payment gateway, to implement all this.
Escrow for a marketplace website
What escrow exactly means here? Trust is needed between a buyer and a seller, to do business via the marketplace website. Everyone in this world requires, some safety, of their money, to make the transaction happen to the right person, at the right time, and for the right kind of service.
Marketplace, the trust-able agent here, holds the money of the buyer for some time, and handovers the money to the seller, at the right time, for the right work. Technically, the payment buyer makes will be in the escrow account, until the seller completes the service.
The buyer has to give confirmation, about the completion of the service. And, the seller has the safety to work for money, coz once the buyer credits the money in escrow, can’t take it back again, without the knowledge of the seller.
If there are any disputes, it will be handled from the marketplace side, and the marketplace, as an agent here, will decide, whom, the seller or buyer, the payment has to be made, from escrow to personal account.
There are third-party escrow services available to implement this in the marketplace. Some of them are
- Tazapay
- Escrow.com
- JP Morgan
Third-party services will charge a fee for every transaction we do. We can also build our escrow services, probably you can outsource this to a freelancing company or a freelancer, and that doesn’t charge more for you and it is one time if it’s ready. We have to choose the right payment gateway for building this service on our own.
Wallet for buyers and sellers
The wallet is an easy way for buyers and sellers, to get the money paid and for payments also. if a user recharges his wallet, he doesn’t need too many steps to pay or get money via wallet. he doesn’t need a tough password to type or pin to remember, to make a transaction. All he needs is, to log in to the marketplace, that’s it.
Wallet to Wallet transfer, should not be allowed, in the marketplace. Which leads to legal issues, based on the country’s rules and regulations. Check your country’s rules and regulations, to enable, wallet to wallet transfer. It is your wish to have a wallet-to-wallet feature in the marketplace, but I feel it’s not safe.
We can also have ready-made services available in our marketplace, which can have the option to buy easily via wallet. This can apply to both buyers and sellers.
Commission Management for a marketplace website
Of course, every marketplace needs a revenue-generating system to run online, this is a mandatory criterion. But, how these commissions are handled on every transaction matters here. A fixed or variable amount of commission has to be calculated, both from the buyer and seller side, for every transaction, and the commission amount has to be transferred to the marketplace bank account, along with the original transaction.
Usually, when a buyer pays an amount to escrow to buy a service, the commission has to be calculated and send the calculated amount to the marketplace account immediately. Similarly, a commission amount is detected from the seller’s wallet immediately. If the seller doesn’t have a balance in his wallet, the amount will be detected automatically from his linked credit/debit card or the payment method.
It’s not mandatory to have a commission for all types of transactions happening via the marketplace website, but, yes it is completely your idea to have it or not. And, this is the only revenue we get from the marketplace website.
Accept payment from the buyer
To accept payment from the buyer, we must ask the buyer to link his payment options. It is mandatory to have at least one payment method linked to every buyer’s account. When the buyer pays, it will go to the marketplace account and will be considered as an escrow payment.
There can be part payments also from the buyer side, which will be considered as milestone payments, and it also goes directly in the marketplace account.
We can also add a top-up option for the buyers, where they can add the money to their wallet and they can be used later for their milestone payments.
Choose a payment gateway like Paypal, where credit and debit card options are also available to pay. There should be an option for the buyer to select their payment method and pay.
Make payments to sellers
Sellers have to submit their work or the service, and it has to check from the buyer side for the confirmation of the completion. If the buyer confirms the service is done, then he should allow the amount in the escrow to release to the seller.
It will automatically be added to the seller’s wallet and the seller has the option to withdraw the amount. We can have several options to withdraw, like wired transfer, PayPal payment, or any payment method they prefer.
Auto-Payment/Subscription Monthly/Yearly
Also, the marketplace can have features like the buyer can subscribe to the seller for a monthly/yearly agreement, and each time the buyer completes the month/year, the amount from the buyer’s account is automatically transferred to the seller’s account, based on buyers confirmation every month. We don’t see this option in most of the marketplace, but it would be great if we have this feature.
Refund to buyers
In some cases, there will be a dispute between buyer and seller and we need to check the points that are favorable to buyer and seller, if the buyer’s points are good, we should be able to refund the amount to the buyer from the escrow account. It’s better to have the refund to be credited directly to the buyer’s wallet.
Points/Credit systems
We must have the option to have a point/credit system, where if the buyer or seller achieves something, their account will add some value to it. If the buyer has something, it will be shown to the seller to get some grade and if the seller has something, it will be shown to the buyer to get the trust built. We can also have the option for the buyers and sellers to use the credits and get some features added for them on the website.
This is my first article, please tell me your suggestions and improvements, which will be helpful for me to post more articles.
