Global payment industry revenue growth surpassed a pandemic-driven decline, registering a new high of over $26 billion in 2021. And it is expected to reach a valuation of $106.4 billion by 2030.
The digital advances in the industry and new payment gateway software helped streamline online transactions. This led to a significant surge in the popularity of online payments worldwide.
Based on FinancesOnline statistics, 63% of digital payment transactions came from eCommerce and online marketplaces.
In the meantime, cashless payments have become an option for marketplaces to adjust to the latest development and make payments faster and more convenient for customers.
To help companies remain competitive and better match customer needs, we have compiled a list of top payment solutions for marketplaces.
What is a Payment Solution or Payment Gateway for the Marketplace?
A payment gateway is a tech solution that connects a marketplace and the bank that processes a buyer’s credit card payment.
Its major goal is to securely transmit the users’ sensitive data, like credit or debit card details to the bank and other entities involved in the transaction. The payment gateways receive replies from issuing banks regarding whether a transaction is accepted or declined.
All in all, marketplace payment solutions foster communication between banks.
Payment Gateway Methods
Many companies have already invested in modern instant-payment systems. They implement different available methods or use ready payment solutions. Let’s focus on the current payment getaway methods below.
Wire Transfer is an easy solution for marketplace startups. The idea behind this method is simple: businesses send an invoice and accept money via direct bank transaction.
However, banks usually charge large fees. The average commission may fall between 15% and 35% per transfer.
In addition, payments can be processed for about a week. For a marketplace similar to Airbnb, this option is inappropriate.
Some companies still consider using checks as the simplest way to transfer money. These businesses prefer to do things the old way and have a checking account.
They rely on checks, first of all, because they are universal. There is no need to gather information to send a check and pay the processing fees of accepting credit cards.
However, sending and receiving a check is slower and more troublesome than other methods.
Custom Payment Gateway
Innovative marketplace startups usually choose custom development for their projects. For example, Sloboda Studio has recently integrated a payment processing system for one of its clients. The development team built an MVP app for scooter rides.
The client needed the platform’s basic functionality to prove the relevance of such services and check the viability of their hypothesis without any extra integrations.
Yet, the custom development cost might be higher than paying a commission to use an external payment gateway.
The development process takes time and requires additional investments, such as a PCI DSS Certificate for own pay integration.
By opting for this option, companies usually invest in a long-term product that will be optimized to meet specific business needs.
As a rule, enterprises consider it as a custom gateway that becomes part of the company’s growth.
However, every tech solution changes quickly. And companies investing in custom development should also keep up with these changes. Otherwise, they will lose relevance.
When using ready-made solutions, providers take care of it. Plus, businesses can cancel the subscription or choose a cheaper option.
By analyzing all these factors, companies should weigh the risks against the benefits of building their solution.
With so many payment gateways in today’s market, startups or SMBs need to compare offers and choose the solution that best suits their exact needs.
Marketplace Payment Gateway
For most marketplace startups, using an online payment gateway remains the most reasonable option. The industry market shows strong growth potential, offering a lot of choices.
These online remittance gateways provide enough unique features with clear documentation. They are easy to integrate. The security tools often include PCI, SSL, 3D Secure, escrow payments, tokenization, and anti-fraud tools.
As a rule, the providers charge a commission of about 2,9% + $0,30 for transactions. Depending on the country, payment solutions may be restricted or unavailable. So it is recommended to check the geography of the provider.
Top 5 Marketplace Payment Solutions
No matter the company size, online payment solutions are suitable for both startups and larger businesses. There are hundreds of payment gateways that marketplaces can use. Some of them are local, while others operate worldwide.
PayPal and Stripe are considered market leaders.
As bitcoin gains acceptance, alternative payment technology like cryptocurrency gateways appear. They allow marketplaces to accept transactions of cryptocurrencies as payments from clients. Below, let’s look at the most popular options for marketplaces to integrate.
PayPal is one of the major payment operators, with a net payment volume of about $339 billion.
PayPal provides a fast and secure way to send money, accept credit card payments online, and host checkout pages on marketplaces, websites, mobile apps, or directly through email addresses.
In the case of marketplaces developed with Sharetribe’s platform, the PayPal payment gateway is already present as an essential functionality.
Based on Sloboda Studio’s experience while building Greater Vacation Rentals Inc., an online rental marketplace, PayPal and Stripe external APIs for payments were integrated fast. Quick integration allowed the client to decrease the time-to-market and cost.
Stripe is a cloud-based end-to-end payment provider that allows individuals and different-sized businesses to accept payments online and on mobile apps.
In addition, Stripe has numerous applications that help prevent fraud, manage revenue, and drive global business growth.
As of now, Stripe supports payments in 47 countries. Marketplaces choose Stripe as it provides the simplest merchant onboarding: sellers connect their accounts to the platform to start. With Stripe, each seller can customize invoices and adapt them to their brand.
Sloboda Studio has recently integrated Stripe’s custom account with the Foody platform. A recipe marketplace includes Stripe Account Link Integration. It helps users automatically fill in the Stripe form even if they entered incorrect or incomplete data.
The client chose this payment solution as Stripe helps a company expand its market reach to countries supported by the Stripe system.
Braintree is an online payment gateway platform that accepts payments in over 130 currencies and is available in over 45 countries. It is designed to accept payments and enable commerce, helping companies create payment experiences and scale them worldwide. In 2013, Braintree was acquired by PayPal.
MANGOPAY is a comprehensive marketplace payment processor that provides users with a convenient API. The solution is available in 30 European countries and easily adapts to the EU market needs.
Also, MANGOPAY accepts multiple currencies and online payment methods, storing funds in segregated accounts and automating payouts.
Alternative Payment Technology
The list of alternative and cryptocurrency payment systems for marketplace businesses isn’t as broad as traditional payment gateways.
Coinbase Commerce marketplace payment service can be an example of a cryptocurrency alternative technology. This system allows businesses to accept Bitcoin, Litecoin, Bitcoin Cash, Ethereum, Dai, and USD Coin.
In terms of implementation, NFT marketplaces are a great area where alternative payment services can be used. But, instead of a payment gateway, there is another option – an FCL wallet.
For Works of Art, an NFT marketplace, Sloboda Studio developers selected FCL. This is a multicurrency wallet where users can store money in the form of cryptocurrency inside the platform and transform currency into a crypt. Plus, they can sell and transfer payments to the card at a favorable rate.
The table below compares the most popular payment gateways:
Online marketplace payment solutions offer security and convenience for marketplace payment processing.
Choosing the right payment solution depends on many factors, including the marketplace business’s needs or location.
PayPal, Stripe, Braintree, and MANGOPAY are gateways that operate almost in every region. Coinbase Commerce and an FCL wallet are the best for NFC services helping sell and get payments using cryptocurrencies.
That said, partnering with a reliable and experienced vendor like Sloboda Studio, the Clutch TOP 40 custom development company, can simplify the process of selecting the perfect payment processor and starting a marketplace business faster.
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