MarketPlace Payment Solutions
MarketPlace Payment Solution Challenges
What are the challenges in MarketPlace Payments
Payment processing is inherently risky. Non-payment of fees, chargeback exposure and fraud are all areas where there can be potential $ loss.
In most marketplaces non-payment of fees is not an issue as the platform seller is funded the sale price less the typical 3-4% plus per transaction fee. So if Suzy Jones sells a $50 ring she may be funded $48.
But you still have potential chargeback exposure. Someone buys earrings from Suzy and upon receipt is not happy. If they can’t resolve the issue with Suzy they could initiate a chargeback. When that happens the platform eg Etsy sees a debit to their business bank account from their credit card acquiring bank.
Etsy in turn would debit ABC Jewelry. If that debit was not successful Etsy potentially eats the $ loss. This risk is fairly small but certainly has happened.
The fraud risk has the biggest loss potential. Someone applies to Etsy and sets up a bogus store. They have 100 stolen credit cards and place orders for fake goods. Etsy funds the fake business. The fake business withdraws all the money from their bank account and disappears. Those stolen cards charges are all likely to come back on Etsy as the entity that loses the money.
There are also compliance requirements. MarketPlace Payment Solutions must offer PCI compliant solutions and some are subject to obtaining a Money Transmitter License.
So there are definitely challenges in the MarketPlace Payment Solution space. Contact us for more info or a consultation.