The quickest way for a store to go online and start collecting payments.
Online payments have become a crucial aspect of businesses in today’s digital age. Traditional methods of accepting payments online require merchants to go through a long and tedious onboarding process with a payment gateway, followed by getting the merchant onboarded with a payment processor to obtain a merchant account. This process not only consumed a lot of time but also prevented many merchants from conducting business online.
To resolve this issue, payment gateways introduced the concept of marketplace payments, allowing merchants to onboard with a marketplace payment provider. The marketplace payment provider acts as the Merchant of Record (MOR) for the merchant and takes the responsibility of onboarding themselves with a payment processor. This reduces the burden on merchants and eliminates the need for merchants to undergo the onboarding process for each account.
The MOR acts as an intermediary, accepting payments from the customers of the marketplace merchant. The customers, in turn, will see the name of the marketplace payment provider on their transaction statements. This eliminates the need for merchants to openly share their wire transfer details and accept payments directly, which could result in higher transaction fees, inefficient reconciliation, delays in processing, manual refund requests, and lengthy accounting processes.
Payment gateways and providers offer a variety of payment solutions and methods, including digital wallets, e-commerce payment gateways, ed tech payment solutions, online payment solutions for government, insurance, and NBFC sites, online travel payment solutions, OTT platform payment solutions, and more. These solutions aim to make online payments quick, secure, and efficient.
Moreover, payment providers offer options like creating payment links, buy now buttons, payment forms, QR codes for payments, and smart payment buttons, among others. These options make it easy for merchants to accept payments online and provide a seamless experience to their customers.
In conclusion, online payments have come a long way and have become an indispensable aspect of modern businesses. Payment gateways and providers have made it easier for merchants to conduct business online by offering various payment solutions and methods. This has eliminated the need for merchants to undergo a lengthy onboarding process and made online payments quick, secure, and efficient.
Integrating with a Marketplace payment provider has many benefits for the merchant
- Easy onboarding for a seller/ merchant
- Accept payments by any payment mechanism that the marketplace payment provider offers
- Receive payouts to seller/ merchant bank accounts directly from the marketplace payment provider
- Share a small portion of the order amount as a transaction fee to the marketplace payment provider
- Get a comprehensive view of the transaction data with advanced analytics
Risks involved for Payment providers
- Since the KYC process is curtailed, riskier merchants can get onboarded
- By being a Merchant of Record, the provider becomes liable for payment frauds and chargebacks
- The provider needs to have a strong AML and automated KYC process in place to reduce risks
Benefits for Marketplace Payment providers
- High merchant onboarding rate
- High transaction volumes as merchant risk is reduced
- Better commission rates
- Lower commission rates from payment processors due to category specific Merchant Accounts and high volumes
Which businesses can benefit from Marketplace Payments
- Small stores/ businesses wanting to go online
- Freelancers and service providers include electricians, plumbers, contractors, carpenters, interior designers etc.