Introduction

Have you ever heard that payment solutions for online marketplaces can significantly contribute to the success of your eCommerce store? Well, this is the primary reason Uber grew globally right after it switched to Braintree back in the day when even a dollar-euro currency conversion was not available! Nowadays, Uber processes mobile payments in 130 currencies worldwide.

And yes, each online marketplace faces challenges and solves various problems, so they must rely on a selected payment solution and its vital features.

What should you know about payment solutions for online marketplaces?

Payment methods may vary depending on the marketplace type.

Single vs Multi-vendor marketplace

There are two primary online marketplace types. Generally, all marketplace websites are split into multi- and single-vendor websites. The type itself depends on the platform vendor numbers.

Single-vendor store payment processing is technically more accessible than on a multi-vendor. This is because all buyers pay one supplier, while the website owner needs to provide payment details to get money.

What are the two-sided marketplaces (they can also be called multi-vendor, P2P, or peer-to-peer)? First, it is an intermediary platform for many vendors to sell goods to many buyers.

For multi-vendor marketplaces, things are less obvious but more tricky instead. There are many sellers on such platforms with many bank balances, and the marketplace owners should make a profit from their stores.

What is a Payment Gateway?

Payment solutions help business owners to control payments inside their platforms in a fast and convenient way. In general, the payment gateway flow is divided into five stages:

1. The client enters their super secret payment information (card number, expiration date, and so on).
2. Then an order is formed, and the seller's website sends the information to the payment gateway.
3. The gateway redirects the request to the company that issued the credit card of the user.
4. After that, the gateway receives confirmation of authenticity and authorises the payment.
5. Finally, the payment gateway sends the money to the merchant.

Payment methods primarily aim to address multi-party transactions, while they have some specific challenges, which include:

• fraud protection;
• multiple marketplace payments handling;
• funds division between merchants;

Make sure you have verified providers who cope with all this well. Knowing who will perform as a Merchant of Record (MOR) in transactions is also vital. That means either you or your merchants will assume financial and legal liabilities. To help you make the right choice, let's look at the key traits of some top payment processors for two-sided marketplaces.

The best payment gateways for two-sided marketplaces

Stripe

Stripe is a payment provider for any size individuals. For now, Stripe supports online payments in 39 countries. In addition, stripe Connect powers payment processing on two-sided marketplaces and crowdfunding platforms.

Stripe has the most straightforward merchant onboarding compared to other payment methods for marketplaces. And yes, this is indeed a true story based on my experience. Of course, your sellers need to connect their accounts to your marketplace to start, but this is about it! Stripe also provides split marketplace payments and allows to set a service fee for each sale. Beyond that, your vendors can act as MoR.

Furthermore, Stripe allows each seller to customize an invoice depending on the consumer and adapt it to a particular brand.

Stripe Connect comes with a wide range of benefits:

• 135+ currencies;
• multiple payment acceptance;
• high-level security compliant with Payment Card Industry Data Security Standard (PCI DSS) (+ Stripe’s original tool, Radar);
• developer-friendly documentation and clean API;
• quick onboarding for merchants;
• dashboard for management to control your business.

Stripe has a wonderful API docs, and it has official support for nearly all programming tools and frameworks!

Adyen

Adyen is a flexible, functional, and secure payment utility. It provides a standardized experience for all customers and is available in 18 European countries. Moreover, this tool is also available in Brazil, Mexico, China, and Southeast Asia.

Adyen secures customers with the embedded Revenue Protect solution, a practical risk management toolkit against fraudsters. In addition, revenue Protect keeps customers’ credit card info safe.

Adyen provides marketplace payments with such essential features:

• bank transfers in 180+ currencies;
• no monthly, integration, setup, or closure charges;
• multiple payment acceptance;
• the smooth onboarding process for new users;
• high-level security compliant with PCI DSS (+Adyen’s tool, Revenue Protect).

Uber, eBay, Etsy, and many other popular marketplaces already use Adyen. This tool is also suited for small startups thanks to the security and optimization tools, plus zero monthly and setup fees.

Braintree

Braintree processes payments in 46 countries. As a result, it is competitive among other payment solutions for online marketplace businesses. In addition, Braintree Marketplace supports split payments, a practical option for building a two-sided marketplace. The system breaks your merchant payments and automatically sends a commission fee to a marketplace owner. It’s also good news that your vendors can perform as MoR in transactions.

Braintree Marketplace provides you with some other benefits:

• 130+ currencies;
• multiple payment acceptance;
• advanced SDK (software development kit) features (Drop-in and Custom-UI integration options);
• high-level security compliant with PCI DSS (+ Braintree’s Fraud Management Tools).

However, it has crucial geographical limitations. For example, a Master Merchant (marketplace owner) and all the vendors must have a U.S registration, and it does not support international platforms.

How to choose the right payment solution for an online marketplace?

Choosing the right technology stack has always been complicated for developers. The same applies to selecting the proper payment solution for an online marketplace, as you have to pay attention to many factors:

1. Make sure your payment provider supports payments in your region. Stripe and Adyen are flexible at this point, as they have global coverage for partners. In turn, Braintree is more suitable for US marketplaces.
2. Check international marketplaces' support if this applies to you. For example, Stripe and Adyen fit if your sellers and buyers live in different countries.
3. Opt for your appropriate Merchant of Record strategy. In this view, Braintree, Adyen, and Stripe allow your sellers to be legally responsible for transactions.

A detailed comparison table would help consider the main features of the above-discussed marketplace payment methods. Now you can choose the best payment processing gateways when preparing to launch a two-sided marketplace platform!

Summary

As we now have evaluated the most popular online marketplace payment options, you can select what best applies to your marketplace. They all offer seamless security and additional opportunities for marketplace payment processing.

As we now have evaluated the most popular online marketplace payment options, you can select what best applies to your marketplace. They all offer seamless security and additional opportunities for marketplace payment processing.

Braintree could be a great choice if you have a US-oriented platform, while Stripe and Adyen are better gateways for international online trading. Apple Pay and Google Pay are one of the best NFC services globally.

Follow our blog and learn more about Blockchain and Mobile payment solutions in the upcoming series!