Payment Options for an Online Marketplace

In case you missed it, the marketplace economy is booming. At this point, there’s more stuff sold on Amazon than could fit in the actual Amazon rainforest.

Coupled with the millions of other marketplace websites around the world, it’s safe to say that the internet has changed the way we shop.

Online marketplaces are websites or applications that connect buyers with sellers, offering a convenience to consumers. Marketplaces act as brokers, charging providers a commission for their services, or as final sellers, adding their own markup to vendor pricing. Marketplace payment processing is a hot topic. That’s not to say the “storefront” style of e-commerce and brick-and-mortar stores are failing — the evolution of technology created additional avenues to connect buyers with sellers. Niché marketplaces continue to sprout up to serve the specialized interests and needs of specific consumers.

With consumer spending nearing $16 trillion in the third quarter of 2021, integrating an end-to-end, account-to-account payment solution to affordably, reliably and securely collect or disburse funds is crucial to scaling an online marketplace. Account-to-account payments like ACH, push-to-debit and real-time payments give marketplace businesses a competitive advantage amid a myriad of consumer sites today.

Rather than relying on cards and paper checks for marketplace payment processing, account-to-account transactions give marketplaces an online payment option to control the flow of funds between their business and end users.

How to Improve Your Marketplace Payments

Our focus at Dwolla is being the ideal platform for online marketplace payments to collect or disburse funds. We want emerging and legacy marketplaces to run as efficiently as possible from a payments perspective.

Marketplaces are constantly accepting payments from buyers and paying out to merchants.

Being able to collect money from buyers and pay vendors is easy, in theory. But with an unsuitable payments integration, your marketplace could be paying unnecessary fees or spending undue time on both ends of the transaction. As a marketplace, you want to collect payments as fast as possible and disburse funds on your schedule.

Important Aspects of Marketplace Payments

Make it easy for a consumer to make a purchase on your marketplace. The ideal account-to-account payment solution creates a positive user experience, making it easier for customers to buy the things they want, when they want them.

The Nielsen Norman Group measures user experience in five components:

• Learnability: How easy is it for users to accomplish basic tasks?
• Efficiency: Once users have the design learned, how quickly can they perform a task?
• Memorability: When a user returns, how easily can they reestablish their proficiency?
• Errors: How many errors do users make, how severe are these errors and can they recover from making the error?
• Satisfaction: Is the design pleasant to use?

User experience is a necessary consideration for marketplaces to survive in today’s mobile era of the internet.

Marketplace Payment Processing Options

Credit Cards

Because of how common they are to most consumers, accepting credit cards during the debit portion of the transaction is common. Cards are ubiquitous and convenient for the consumer but come with high fees for the marketplace that are often passed back to the customer in the form of higher prices. These fees will increase in April 2022.

ACH Payments

ACH payments can eliminate the process of mailing and managing paper checks by sending funds from bank account to bank account. This significantly reduces the time and cost of making payments.

As marketplaces compete for buyers and sellers, having a payment integration that collects and presents transaction data in an easy-to-use format can help with monitoring transactions and responding to any support issues. Marketplaces need a payment service provider that enables the business to run more efficiently, not one that adds more processes and uncertainty. Being able to make payments online and accurately track transactions is necessary for online marketplaces.

Instant Payouts to a Debit Card

Instantly send money to a debit card with push-to-debit payments. This payment method combines the speed of a card transaction with the affordability and control of an account-to-account transfer. Marketplace businesses want to receive payments quickly and send funds when it works best to manage cash flow.

Real-Time Payments

One of the newest payment rails in the United States is the RTP® Network that is owned and operated by The Clearing House.

Real-time payments are disbursements that can be initiated at all hours of the day. These are balance-sourced account-to-account payments that clear and settle near instantaneously. A disbursement from bank account to bank account in real time is the ultimate form of control for a marketplace business.

Why would a marketplace use RTP? Considering the user experience of the marketplace, having the ability to send payments to an end user’s bank account in real time is a significant advantage. There are no checks to mail or processing delays. Budget reconciliation is much simpler for accounting teams when you know funds have been sent and delivered.

RTP is just one of several account-to-account transfer types that an integration with Dwolla’s payment API can lead to. We’re helping marketplaces manage their complex payment flows and transaction timing.