How to optimize your marketplace payments and power your growth.
Marketplaces are a powerful force in today’s commerce landscape. They have disrupted several verticals, including retail, accommodation, transport and business services. And they have kick-started a sharing economy that has left many traditional industries reeling.
As a marketplace, this is an exciting time, especially as you gather speed. But of course with growth comes complexity. To begin with, the very nature of a marketplace is complicated; you have all the challenges of an ecommerce store, plus a whole lot more. You don’t just have customers to take care of, you have sellers as well – that’s twice as many stakeholders.
And, as you expand internationally, things become even more complicated. Each new market comes with its own set of challenges, from regulations to cultural nuances and payment preferences.
When you reach this stage of your business growth, optimization is everything. It is time to drill down into every component of your business, including marketplace payments, ensuring it’s performing at its best. This is the foundation for sustainable growth. And this is what will keep you competitive well into the future.
Here are 3 areas that hold the key to the next phase of your marketplace growth:
1. Global reach: Make each new market a success story
So you’ve expanded to several regions, but you’re still only accepting credit cards. This is fine for initial growth, but you’ll never reach your full potential if you don’t offer the payment methods expected by local buyers.
Diversify your payment method mix, and tailor it to local preferences.
For example: Did you know Boleto accounts for 15% of ecom payments in Brazil? Qiwi accounts for 26% in Russia? And Alipay and WeChat Pay account for 50% of China's online payments?
Your next step is to diversify your payment method mix and tailor it to local preferences. But managing multiple payment methods can become unwieldy, especially if you have separate agreements, integrations and reporting for each one. The best solution is to connect via a payments partner like Adyen, which lets you manage everything in one place. That way you can see at a glance how different payment methods are performing in different markets, and optimize for the best results. or the best results.
In addition to easy marketplace payments for your buyers, you need to consider fast payouts for your sellers. This is easily achieved by working with a global payments service provider (PSP) with local coverage in all key markets. With our marketplace payments solution Adyen MarketPay, you can pay out to sellers, via their preferred method. Through our international network of local bank accounts, we have excellent coverage, giving you faster payment times with local rates.
2. Regulations: Make sure your platform is watertight
Regulatory bodies have recognized that marketplaces are not only here to stay, but are also becoming the new normal. Consequently, new regulations are being written with marketplaces specifically in mind.
Work with a PSP that can process and hold funds in a compliant manner.
This means that in Europe, the days of marketplaces easily achieving exemptions from marketplace compliance are over. The new PSD2 mandates dictate that marketplaces, which accept marketplace payments from buyers and pay out to sellers, are faced with two choices:
1. Take on the lengthy, and costly, task of applying for a payments license.
2. Work with a PSP that can process and hold funds in a compliant manner, taking on the regulatory burden on your behalf.
The US is also no exemption to growing regulatory requirements and you need to work with a partner that has a Money Transfer License in each state.
Adyen has a European banking license, meaning it has very strong ties with EU regulators, guaranteeing watertight compliance. On top of that, it has local knowledge of the diverse regulatory environments in Europe and the US. This frees you up to focus on your continued growth, safe in the knowledge that your business is compliant in all markets. Adyen can also take care of all Know Your Customer (KYC) requirements, from identity verification to tax filing.
3. Scalability: Lay your foundations now
Getting your processes right now will serve you well into the future.
With the right tools, you can quickly onboard new sellers, increase conversions and payout swiftly, splitting payments as needed. All the while keeping a laser focus on optimizing your card approval rates and blocking fraud.
Onboarding sellers can be a pain point for all concerned. Sellers balk at lengthy onboarding forms, the need to submit ID or share bank details. And manually vetting each seller is a daunting task. However, compliance and KYC checks are necessary to ensure you’re not inadvertently supporting terrorism or money laundering.
The trick is to make the process as frictionless as possible. Automate as much as you can, and use an API-powered provider like Adyen that lets you integrate flows, which never leave your site.
It’s crucial that your PSP adapts to your needs, not the other way round.
When it comes to onboarding, be pragmatic; get new sellers up and running quickly with low entry barriers that require minimal seller information. Then, increase the required details as their volume ramps up.
Of course, no two marketplaces are the same. While ecommerce sites tend to operate with a similar buyer flow, each marketplace has its own way of doing things. It’s crucial that your PSP adapts to your needs, not the other way round. For example, perhaps you have a complex beneficiary flow and you need to move funds around to multiple accounts, or you need to deduct commissions or payment fees.
Everything you need for marketplace payments
Whatever your needs, Adyen MarketPay provides you with a flexible toolkit of features that fit around your business.
So you can maximize your conversions while paving the way to future growth.