Online Marketplace Payment Solutions Part 1 – Why Are Payment Solutions Important to Marketplaces

Today, buying and selling goods in online marketplaces is no longer a new problem for vendors and customers.

Some big online marketplaces as Amazon, Alibaba in China, and Lazada in Southeast Asia are even so successful that they make customers change their daily shopping habits when with just a few clicks they can buy items in a faraway place without having to go directly to the store.

In this article, let's join FinFan to learn about payment solutions for online marketplaces and how they can support marketplaces on the purchasing step of customer journey.

First of all, let's learn more about the online marketplace.

What is the online marketplace?

Like a physical market or shopping center, an online marketplace is a place where small businesses gather to set up online stalls/shops for their products at no or very little monthly cost for the creator.

Here, shop owners can post photos or videos and articles about their products and can also promote their products to more customers on the platform. Currently, we can name some major online marketplaces on the market such as Amazon, Alibaba, eBay, Lazada, etc.

What are the differences between an online marketplace site and an e-commerce site?

Here are 3 differences between an online marketplace site (e-commerce exchange) and an e-commerce site (often created by an e-commerce platform):

The online marketplace is like a market and the e-commerce site is like a shop.

The following example will help you imagine the difference between them:

A famous fashion brand like Zara, H&M often choose to build an e-commerce site to introduce their products and do branding more about them to customers who have loved and followed the brand for a long time. Furthermore, an e-commerce site is a way for them to freely assert their image and brand value in their own way, not according to the online marketplace's regulations, and when they buy, customers will clearly know that they are buying products from Zara or H&M.

On the other hand, some local brand fashion shops choose the online marketplace as a place to reach potential customers and have their e-commerce site for branding.

The local brand must comply with the trading regulations of the online marketplace. At the same time, when customers buy, it will be difficult for them to realize which brand they are buying from but only know that they are buying on the online marketplace for instance Amazon.

When selling on the online marketplace, sellers do not need a warehouse.

When opening an online marketplace, founders must always think about warehouse management and shipping teams for vendors participating on the platform.

If there is a problem during storage or transportation, leading to loss or breakage of goods, the company taking over the online marketplace must bear part of the costs and reimburse the shop owner. Meanwhile, e-commerce site owners have to take care of their own warehousing and shipping costs.

Cost and time to set up the booth.

When setting up an e-commerce site, the seller has to pay all the costs such as website design, hosting, domain, etc, so the time to complete the site is longer and the fee will be more expensive.

On the contrary, when setting up a store on the online marketplace site, the seller only needs to complete the registration form, and then perform simple operations to be able to post products according to the correct brand on the e-commerce platforms as above.

Online marketplace payment solution

After learning about the online marketplace, let's continue to dig deeper with FinFan about online marketplace payment solutions and some typical types and trends of online marketplace payment solutions. Then we will share our thoughts on whether online marketplaces should integrate blockchain pay.

What is an online marketplace payment solution?

Imagine an online seller on your online marketplace has taken all the necessary steps to promote its products well to potential customers from posting good quality photos and videos to advertising, and SEO product keywords to the top of the page's search engine.

However, at the final stage, their order is still canceled by the customer because you cannot meet the payment needs of that shop's customers (they often pay by e-wallet because of the incentives their wallet, for example).

It leads to this customer not being able to make the final payment step for the product and will have to cancel the order and choose a more suitable payment solution.

Then if you do not quickly update, improve, and upgrade your payment solutions system, sellers will immediately leave your online marketplace and choose another competitor, which has a fuller range of payment methods suitable for their potential customers.

Currently, combining with an online payment solution provider is also a solution to support you in providing the most correct and complete payment methods to final customers through API connection. This provider is called Online Marketplace Payment Solution.

How do payment solutions help online marketplaces?

The convenience that online marketplaces bring to users and vendors has contributed to creating countless difficulties for them in setting up all payment-related issues, which come from the following 3 issues:

Problems arise when the buyer uses a different bank than the seller.

This often happens with international online marketplaces because their buyers come from many different countries and will therefore use different local banks.

So how can we connect 2 banks in 2 different countries so that transactions can take place immediately or in the shortest time?

Different merchants around the world use different banks.

Not only do the final buyers use many different local banks, but each individual seller in the online marketplace is from a different country, where local banks are different and forex exchange rates are constantly fluctuating. The exchange rate is only a small part for 1 or 2 orders. However, the story will be completely different if you look at the broader perspective of millions of orders arising every day.

So how can these online marketplaces both solve the problem for end customers and pay vendors participating in the market most conveniently and quickly with the lowest exchange rate?

The third problem occurs in the above case, users can use another payment method such as an e-wallet or cryptocurrency.

Like the above situation when explaining the online marketplace payment solution, this time customers use electronic wallets to conduct transactions. At this time, the task of the above online marketplaces is to link the bank of the selling shop with the e-wallet account of the last buyer.

So how can the online marketplaces handle this conversion when they not only have to face the problem of changing banks and exchange rates between currencies but also have to solve other problems related to different transaction methods?

All three questions above will be solved by payment solutions service providers for the online marketplace.

The operational process of payment on the online marketplace

Although it is only displayed on the user's screen through a few inputs and mouse clicks, the final customer payment process on online marketplaces will take place as follows:

Step 1: The customer enters payment information on the online marketplace page including card number, name, CVV code, etc.; besides, customer can choose their own payment method such as e-wallet, cryptocurrency, or BNPL (buy now, pay later).
Step 2: The online marketplace's information system receives and forwards information about the customer's bank account/e-wallet/non-custodial wallet/ etc. to the payment solution/gateway and responds after receiving whether the linked account information is correct or not.
Step 3: The payment solution/gateway service sends the amount of money of the customer's bill and this above information to the payment processing system to see if the customer's information is suspected of money laundering, politics, or fraud, then will respond to the payment solution/ gateway.
Step 4: The payment processing system will send information about the transaction and the amount of money to the online marketplace seller's bank.
Step 5: The seller will receive the customer's payment on the online marketplace.

Are payment solutions and payment processors the same thing?

Payment solutions and payment processors are two different steps in the payment process in the online marketplace. However, they can be performed by the same service provider company.

As the images and illustrations of the steps above show, payment processors specialize in more legal roles as they are one of the important steps to be able to check whether the seller or payee belongs to the following 3 groups of suspects:

Money laundering,
Fraudulent appropriation of assets,
Corrupt or politically involved.

Read more:

. E-commerce Payment Processing

Choosing the right marketplace payment solution provider for your business

Now, you understand entirely “what is the marketplace payment solution”. We can also see that although they only contribute to one intermediate step in the payment process, these payment solution services are also very important.

So, the next thing marketplace sites need to do is find the right related service provider. Just like choosing the remittance company for sending money to Vietnam, to choose a suitable service provider, marketplace sites need to pay attention to the following 7 criteria:

1. Has extensive partnerships around the world to be able to convert currencies quickly with the most reasonable exchange rates.

For businesses or business owners wishing to expand their markets internationally, choosing a payment gateway capable of processing international payments will help businesses more optimally reach customers worldwide.

At the same time, when payment solution companies have global payment capabilities, they will easily be able to provide you with the most suitable exchange rate possible, which will help your customers feel comfortable and not think it's too expensive to pay for an item but have to pay so much difference in cost.

2. Has the appropriate fee.

Tariff is an important factor when businesses decide to choose a payment gateway solution because this is the cost related to using the service.

Businesses need to compare fees and costs between different payment intermediaries to ensure a reasonable balance between service quality and cost for each transaction through the Payment Gateway.

Additionally, consideration should be given to how fees are calculated (per transaction, prorated or flat fee) and additional fees such as international transaction fees.

3. Provide a variety of payment methods.

Today's leading online payment gateways will mostly support a variety of payment methods, including ATM cards, credit cards, debit cards, e-wallets, bank transfers, QR-codes, and other popular online payment methods. This will help meet all customer payment needs and increase transaction completion rates.

4. Extensive security features

Security when connecting with payment intermediary partners is extremely important. It is necessary to evaluate the security level of the payment gateway system and consider expanded security features in terms of checking and controlling fraudulent transactions, data encryption and security, and preventing attacks from hackers.

Before choosing a payment gateway solution, evaluate the security level of the system. Ensure that the payment gateway service provider complies with international security standards and has strong authentication measures in place to prevent fraudulent activities.

FinFan payment solution currently meets top security standards such as: PCI DSS, 3D-Secure, TLS.

Businesses can refer to details about FinFan's payment services and solutions. We are ready to advise and implement when receiving business cooperation contacts from partners wishing to integrate payment solutions.

5. Flexible integration and connection for businesses

For a system to operate smoothly, integration between payment services and intermediaries is needed. By integrating and connecting with the business's management system, it will help businesses have a basis and visual data about online payment transactions.

This will help businesses stay proactive in the transaction processing process and customer care and consulting.

Integration capabilities need to ensure API integration capabilities, plugins, and solutions are compatible with the business's existing platform and technology. Flexible integration helps meet diverse payment needs and expand payment capabilities of businesses and customers.

6. Statistics and reporting

Detailed statistics and reporting features, an overview of customer transactions and payment activities through the Payment Gateway will help businesses have a closer grasp of their business activities, and quickly make decisions. Analyze data and make sound business decisions.

7. Customer service

Processing services and technical support for businesses and customers is an essential element for the post-integration phase. A reputable payment gateway solution provider will always be able to support customers and businesses in a professional and friendly way.

To specifically evaluate customer service, businesses need to evaluate online support, quick response time and problem solving ability.

Easy-to-find contact channels and hotlines, professional support team to answer all questions and resolve problems quickly.

For businesses and individuals interested in optimizing online business, choosing a payment gateway solution is an essential step to optimize customer experience and achieve business efficiency on today's digital platforms.

Conclusion

So FinFan has helped businesses understand what a marketplace is, the application process as well as the difference between a marketplace payment solution and a payment processor.

Is a fintech company providing services related to cross-border payment. FinFan always tries to improve and become a support unit for businesses in business payment issues (especially business payment solutions related to the marketplace).

FinFan is a cross-border embedded financial services company that focuses on mass disbursement, fund collection, card processing, IBAN, digital APMs solutions, can provide valuable input and integration on and for the same.

FinFan already integrated with almost the world's well-known MTOs, PSPs, switch and core fintech platforms as Money Gram, Thunes, Qiwi, Remitly, World Remit, Bancore, PaySend, Terrapay, Ria Financial (Euronet), Dlocal, Ripple, TripleA, FoMo Pay, Wings, ... or MoMo, Zalo, VNPay, VNPT, ...etc.

For more information please contact us through:

🌐https://finfan.io

📞(+84) 2866 85 3317

✉ support@finfan.vn

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