7 ways to improve payments and grow your online marketplace
With global consumers moving online in unprecedented numbers, the growth of digital commerce is increasing the need for marketplaces to process large volumes of transactions more efficiently.
For two-sided online marketplace platforms with both vendors and buyers, the ability to offer a seamless, real-time experience with a payments ecosystem that is fit for purpose is now a key driver of success. Highly effective payment processes attract more vendors and convert customers from browsers into buyers, by giving them what they want as quickly and effortlessly as possible.
To build an extensive network of buyers and sellers, a marketplace payments engine must offer convenience and security and be suited to the specific needs of the business. Navigating the many complexities of multi-vendor payments and accounts payable processes is no easy task, so we’ve compiled a list of essential requirements to help.
1. Process cross-border payments
A truly global marketplace knows no boundaries. To drive success and grow your marketplace, buyers and sellers must be able to participate wherever they live and want to operate.
With numerous vendors each with their own bank accounts, customers must be able to buy from several sellers at once and pay for the whole cart. Therefore, your payment solution should be able to receive and transfer funds across borders and jurisdictions with ease.
2. Make payments in real-time
For marketplaces, being able to automatically distribute the payments received from purchases between vendors as soon as the funds are received is a big advantage.
Similarly, collecting fees from vendors automatically, and being able to document completed payouts and withdrawals, avoids complex manual reconciliation and record keeping.
As each vendor will have their own payment method, any solution must be able to send and receive money via the chosen method.
3. Incorporate mass payments
Traditional transaction flows usually always require separate transfers for vendor payouts, marketplace charges, fulfilment fees and taxes.
Incorporating a mass payments feature allows shoppers to pay for multiple orders with a single payment. When an order contains goods from different sellers, a mass payments system automatically splits and distributes the payment to all vendors.
By instantly splitting vendor commissions, automated payout triggers save time by reducing manual effort in tracking every sale and manually paying vendor commission.
4. Give vendors better information
By allowing vendors to access information on payouts, fees, refunds and chargebacks you increase loyalty by helping them manage their sales activity better.
When it comes to tracking revenue, discounts and commission for individual vendors, some payment solutions offer reporting functions that can be used to manage payout preferences and increase vendor trust.
5. Consider tax reporting tools
For vendors operating on your online marketplace, calculating sales tax, collecting forms, issuing tax certificates and generating tax compliant invoices is a major challenge. Tax reporting tools, though they aren’t a core feature of most payment providers, can help you and your vendors when it comes to reporting. Helping them remain tax compliant can add extra value.
6. Manage currencies and FX risk
Operating in multiple locations means dealing with multiple currencies, conversions and money transfer issues like international banking fees.
Currency fluctuations and international payment costs present operational challenges and financial risks that could increase your costs and reduce your sellers’ profits. Dealing with less familiar currencies can bring operational and liquidity challenges.
It’s likely that you will have to create subsidiaries with local bank accounts for each location to effectively run international payments and limit the costs involved.
However, with a platform such as CurrencyFair, which has local bank accounts across the globe, your international payments are treated as domestic transfers, saving you time and money. Our multi-currency account allows you to securely exchange currencies and transfer to bank accounts in over 150 countries.
7. Pay less for international money transfers
At CurrencyFair, we help businesses of all sizes save money, save time, and stay in control of their businesses. We do this by providing not only bank-beating FX rates but also smart features that streamline payment processes.
With a CurrencyFair business account you can access bank-beating FX rates, low-cost international transfers, and first-class customer support. Features include:
Multiple currencies, one account: hold over 20 currencies and exchange to the currency you need, when you need it.
Quick international transfers: send and receive international money transfers to and from over 150 countries from any device, at any time.
Quick and secure: send and receive over 20 currencies and get same-day transfers on major currencies.
Avoid international banking fees: use our local bank accounts across the globe. By using CurrencyFair your international transfer is treated as a local transfer, saving you time and money.
With CurrencyFair our calculator is available 24/7 to show the best available rates for business customers, including our margin added to the same currency market rate. Typically, the margin charges on money transfers for our business customers average 0.45% meaning better value FX rates and more savings on money transfers.
As every marketplace has its own business model and goals, choosing the right payment features to manage buyer transactions and seller payouts is a complex task. With payment solutions ranging from full or partial automation to wholly-owned solutions or third-party service providers, it's essential you have constant feedback from vendors and customers to help inform iterative improvements to allow you to prioritise what is most useful for them.
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