With online marketplaces predicted to own 40% of the global ecommerce market by 2020, it is unsurprising to see that Payment Service Providers are keen to capture their business. What is surprising, however, is that few PSPs offer marketplace-specific payment solutions that are up to scratch.
Marketplaces that do business in the EU also have to deal with new legislation, the PSD2 that further regulates and complicates how they handle funds. As their transactions become more complex, the message to all marketplaces should be clear: you need to find a PSP who designs its solutions with your processes in mind.
A unique payment situation
The reason marketplaces need a unique payment solution is that marketplaces are in a unique payment situation.
A typical marketplace transaction will see cash being split between several parties, often requiring each portion to be converted into a different currency before being released at different times. This process is time consuming and error-prone when handled manually.
PSD2: an inhibitor to growth
Then there is the issue of PSD2. This EU-wide directive, which will be implemented in all 28 member states by January 2018, demands that any intermediary party handling funds from a seller or a buyer must hold a payment institution licence.
To get a licence, a marketplace will require, amongst many other things, a Money Laundering Officer, a Compliance Officer, a Risk Monitoring Officer, an Underwriting Department, an Internal Audit Department, a cap on bonuses and a cap on offering equity to staff.
The entire application process can take as long as 18 months and cost up to EUR 350.000 to complete.
When you add in all the more typical payment issues faced by nearly every cross-border merchant (the need for alternative payment methods, the risk of fraud, the need for high quality reporting, etc.) you quickly see just how much support modern marketplaces require in the area of payments.
Yet, as it stands, they are not getting the right solution.
The marketplace’s view
Perhaps the best way to illustrate my point is to defer to the experiences of a recently signed Acapture client, CROWDYHOUSE, the premiere launch platform for the world’s best designers and makers. When it began to scale internationally, CROWDYHOUSE went searching for a PSP that matched its ambition.
“Though we needed alternative payment solutions to target new markets,” Mark Studholme, CROWDYHOUSE Co-Founder, told me, “we also wanted a PSP that truly supports marketplaces and understands our business model and the operational payment challenges that come with it.
“We spent over a year meeting with a long list of leading international and local PSPs and none of them offered everything we needed at our preferred rate.”
A flexible solution
The only answer to this common problem is for PSPs to craft a solution that is flexible enough to cover all of the issues each marketplace faces. At Acapture, we are not tied down to any legacy platform and so built our payment solution from scratch to suit the modern ecommerce market. We paid close attention to what marketplaces demand from their payment solutions and adapted our service to suit it.
That’s why we could offer Mark a solution that took care of each of the specific payment issues CROWDYHOUSE and other marketplaces face, including split settlements. Also, as we are a licenced payment institution, none of our marketplace clients need to worry about getting ready for PSD2.
As multi-vendor online retail sites grow in popularity, size and ambition, their payments become more challenging. If you run a marketplace and want to be sure you meet these challenges, don’t settle for a generic ecommerce payment solution. Be sure you choose a PSP who built their platform with your processes in mind and is focussed on maximising your revenue.
About John Snoek
John Snoek, VP Ecommerce at Acapture, has over 20 years of go-to-market experience in product development, management and launch. Prior to joining Acapture, John was responsible for global marketing and product management, being also one of the pioneers in the field of alternative payments at GlobalCollect. Before this, John had successfully designed and marketed various knowledge base online tools, business benchmarking and e-learning products for companies and trade associations. He was also a consultant on ecommerce strategy for the Dutch government. John is a graduate of Business Administration and Political Science from Leiden University, Erasmus University, and of Political Philosophy at the University of Barcelona. He received his Masters degree at Leiden University and has been working in the Internet and ecommerce industry since 1994.
About Acapture (A Payvision company)
Acapture, a global omnichannel PSP, specialises in maximising revenue for merchants and marketplaces with international ambitions. Acapture’s system features SlicePay for simplified allocation of funds to multiple parties from a single transaction, a one day integration using one RESTful API, flexible, consolidated reporting, a streamlined reconciliation process and the ability to handle 60+ of the most popular alternative payment methods and 160+ transaction currencies.
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