Marketplace Payment Gateways: A Complete Guide to Payments, Compliance and Profitability

Marketplace Payments: Gateways, Seller Onboarding, Payouts and Merchant of Record

Marketplace payments become complicated very quickly.

A conventional ecommerce business normally takes a payment for something it sells itself.

A marketplace may instead have:

customer → marketplace → seller or service provider

The marketplace may take a commission, several sellers may be involved in the same order, the seller may not be paid until a service is completed, and the customer may expect the marketplace to handle the refund if something goes wrong.

That introduces questions an ordinary ecommerce gateway does not necessarily have to solve:

• Who is actually selling to the customer?
• Who is accepting the card payment?
• Who is the merchant for acquiring purposes?
• Does each seller need to be verified?
• Can the marketplace hold seller money?
• How is commission deducted?
• When should sellers be paid?
• What happens when an order contains several sellers?
• Who funds a refund?
• Who carries a chargeback if the seller has already been paid?
• What happens if a seller develops a negative balance?
• How are hundreds or thousands of seller payouts reconciled?
• Does the proposed payment flow create FCA regulatory obligations?

For established platforms, marketplace payments can also become a significant commercial issue.

Once gross transaction value reaches hundreds of thousands or millions of pounds each month, processing costs, payout fees, foreign exchange, authorisation rates, seller onboarding and reconciliation can materially affect platform profitability.

This guide explains how marketplace payment gateways work, the different ways a marketplace can structure its payments and what businesses should establish before selecting a provider.

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Quick answer: What is a marketplace payment gateway?

A marketplace payment gateway is commonly used to describe the technology that allows a platform to accept customer payments while supporting multiple sellers or service providers.

But a conventional payment gateway alone may not be enough.

A complete marketplace payment solution may need to provide:

• Customer checkout
• Card acquiring
• Digital wallets
• Seller onboarding
• Identity and business verification
• Seller or connected accounts
• Split payments
• Platform commission
• Seller balances
• Delayed payouts
• Refunds
• Chargebacks
• Negative balance handling
• Fraud monitoring
• Reporting
• Reconciliation
• International payouts
• APIs and webhooks

The payment gateway may therefore be only one part of a much broader marketplace payments infrastructure.

Why marketplace payments are different from normal ecommerce

Consider an ordinary retailer.

A customer pays:

£100 → retailer

The retailer sells the product, receives the payment and fulfils the order.

Now consider a marketplace.

A customer pays:

£100

The marketplace may need to:

• Allocate £85 to a seller
• Retain £15 commission
• Delay the seller's payout until delivery
• Refund the customer later
• Recover money from the seller if there is a chargeback
• Reconcile all of this against a specific order

Now imagine one customer basket contains goods from three different sellers.

The complexity increases again.

This is why simply adding a standard ecommerce gateway to a multi-vendor website can create problems later.

Start with the most important question: who is actually taking the payment?

Before comparing providers, document the legal and commercial payment flow.

For example:

Customer → Marketplace → Seller

is not enough.

You need to establish:

1. Who contracts with the customer?
2. Who supplies the goods or services?
3. Who appears on the card statement?
4. Which business is named on the merchant account?
5. Who issues the receipt?
6. Who handles the refund?
7. Who is responsible for the chargeback?
8. Who holds the money before the seller receives it?
9. Who determines when the seller gets paid?
10. Who carries the risk if the seller disappears?

These questions influence both payment-provider selection and regulatory structure.

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Merchant of Record: what does it actually mean?

Marketplace founders often tell MAS:

“We want to be Merchant of Record.”

But the phrase needs unpacking.

“Merchant of Record” is commonly used in the payments industry to describe the entity that sits at the centre of the customer payment and assumes particular commercial and payment responsibilities.

However, businesses should not rely on the label alone.

Different providers may use the term differently.

You should establish specifically:

• Who is contracted with the acquirer?
• Who appears on the customer's statement?
• Who is contracting with the buyer?
• Who is legally supplying the product or service?
• Who sets refund terms?
• Who deals with disputes?
• Who carries chargeback liability?
• Who accounts for relevant taxes?
• Who has the commercial obligation to the customer?

Calling the marketplace “Merchant of Record” does not by itself answer those questions.

MAS insight: Define responsibilities rather than relying on terminology

We increasingly see marketplace and SaaS businesses use terms such as:

• Merchant of Record
• Seller of Record
• Platform merchant
• Connected merchant
• Sub-merchant
• PayFac
• Marketplace account

as though they all describe the same arrangement.

They do not.

When comparing providers, ask for a diagram showing the actual contractual and money flow.

That will usually tell you much more than the product name.

Three common marketplace payment structures

Marketplace payments can be built in several ways.

1. The marketplace genuinely sells as principal

In some business models, the platform buys or otherwise obtains the product or service from the supplier and then sells it to the customer itself.

The marketplace is therefore genuinely acting as principal rather than simply passing money between buyer and seller.

The FCA's perimeter guidance recognises that an ecommerce platform acting as a genuine reseller may not be providing a payment service in relation to that customer payment because it is itself the intended recipient of the funds. 

That does not mean a platform can simply call itself a reseller to avoid payment regulation.

The contractual and commercial reality must support the structure.

2. Sellers are onboarded through a marketplace payment provider

This is common.

The payment provider may create:

• Seller accounts
• Connected accounts
• Sub-merchant accounts
• Payment balances

depending on its terminology.

The customer pays through the marketplace, but the regulated payment provider handles important parts of the underlying flow.

The provider may perform seller verification and then allocate funds between:

seller + marketplace commission

before paying sellers according to the agreed schedule.

This can be considerably cleaner than the marketplace collecting all customer funds into its own normal bank account and manually paying sellers.

3. The marketplace receives customer money and then pays sellers itself

This is the structure that needs particularly careful review.

The FCA specifically warns that an online marketplace may be providing regulated payment services where it receives customer money before passing it to sellers, including where the money enters a bank account, e-money account or merchant-acquiring account in the marketplace's name. 

Providing payment services without the appropriate FCA authorisation or registration can be an offence. 

This is one of the most important issues to resolve before building the payment architecture.

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Does a marketplace need FCA authorisation?

Potentially, depending on what it actually does.

The Payment Services Regulations 2017 cover activities including payment execution, acquiring and money remittance. Businesses providing payment services as a regular occupation or business activity generally need to fall within an appropriate authorised, registered, exempt or excluded position. 

For marketplace businesses, a key question is:

Does the platform receive or control money belonging to sellers before passing it on?

If it does, payment-services regulation needs to be considered.

This is why many marketplaces use regulated payment providers specifically designed to support platform and marketplace structures.

What about the Commercial Agent Exclusion?

You may hear that a marketplace can rely on the Commercial Agent Exclusion.

Sometimes this can be relevant.

But it should not be treated as a generic marketplace exemption.

The FCA says the exclusion applies where the commercial agent is formally authorised to negotiate or conclude the sale or purchase of goods or services on behalf of either the payer or the payee, but not both. 

The FCA also notes that a business receiving money into an account it controls before transferring it to the seller may in some circumstances look like it is acting for both parties. 

Marketplaces relying on an exclusion should establish that the actual legal and operational arrangement supports it.

MAS does not determine whether a marketplace needs FCA authorisation. Complex structures should be reviewed by an appropriate payments lawyer or regulatory adviser.

Seller onboarding: one of the biggest marketplace payment challenges

Taking the customer's card is often the easy part.

Onboarding hundreds or thousands of sellers can be much harder.

Depending on the provider and marketplace structure, seller onboarding may involve collecting:

Individuals

• Full name
• Date of birth
• Address
• Identification
• Bank details

Companies

• Company name
• Registration number
• Trading address
• Directors
• Beneficial owners
• Bank account
• Business activity

The payment provider may also need to understand:

• What the seller sells
• Where the seller operates
• Expected volume
• Transaction values
• Customer countries
• Refund profile
• Risk category

Hosted seller onboarding versus building it yourself

Some marketplace providers offer a hosted onboarding journey.

The seller leaves or partially leaves the platform and completes verification directly with the payment provider.

This can reduce development and compliance complexity.

Other providers offer:

• Embedded onboarding
• White-labelled onboarding
• API-based verification

This can create a smoother seller experience, but generally involves more development.

A marketplace should compare:

customer experience + development effort + compliance responsibility

rather than choosing purely on appearance.

What happens when a seller fails verification?

This needs to be designed before launch.

A seller might:

• Fail identity verification
• Submit incomplete documentation
• Have a prohibited business type
• Operate from an unsupported country
• Fail bank-account verification
• Trigger additional compliance checks

What happens next?

Can they:

• Create listings?
• Accept orders?
• Receive payments?
• Accumulate a balance?
• Receive payouts?

The marketplace's product design needs to work alongside the payment provider's onboarding rules.

Otherwise, you can end up with customers placing orders for sellers who are not actually able to receive money.

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MAS insight: Seller acceptance matters as much as marketplace acceptance

A provider may approve the platform, but still restrict particular seller categories.

For example, a marketplace may have sellers offering:

• Ordinary retail goods
• Cosmetics
• Supplements
• Travel
• Tickets
• Digital content
• Regulated services

These may have very different acquiring and compliance profiles.

Before selecting a provider, tell them:

What can sellers actually sell on the marketplace?

Do not just describe the platform as:

“a multi-vendor ecommerce website.”

A marketplace payment provider needs to understand the seller ecosystem.

Marketplace payments and restricted sellers

Seller control becomes more important as a marketplace scales.

A marketplace may need rules preventing sellers from introducing:

• Prohibited products
• Counterfeit goods
• Unlicensed regulated goods
• Products outside the marketplace's agreed category
• Misleading services
• Activity outside supported countries

This can involve:

• Seller terms
• Listing moderation
• Product controls
• Transaction monitoring
• Ongoing seller reviews

One problematic seller can potentially create disproportionate risk for the wider platform.

How split payments work in a marketplace

A marketplace may need to divide one customer payment between:

• Seller
• Marketplace
• Several sellers
• Service provider
• Affiliate or other permitted recipient

For example:

Customer pays £100

The commercial arrangement might be:

Seller: £85
Marketplace commission: £15

The payment platform applies the agreed allocation.

More complex orders may involve multiple sellers.

The marketplace therefore needs rules defining:

• Seller allocation
• Platform commission
• Processing fees
• Discounts
• Promotions
• Tax
• Refunds

We cover the technical mechanics in more depth in our separate guide to Split Payment Gateways for Marketplaces and Platforms. 

Marketplace payments are not just split payments

This distinction is important.

A split payment is one function.

A marketplace payments system may also need:

seller onboarding + verification + balances + payout controls + refunds + chargebacks + reporting + international settlement

So a provider offering an API that can divide £100 into £80 and £20 is not necessarily a complete marketplace solution.

How marketplaces make money from payments

Marketplace commercial models can vary considerably.

Percentage commission

For example:

10% of each transaction

Fixed transaction fee

For example:

£1 per booking

Fixed plus percentage

For example:

50p + 7%

Seller subscription

A seller pays a monthly platform fee and perhaps a reduced transaction commission.

Different commission by seller

Larger sellers may negotiate better terms.

Different commission by product

The platform may charge different percentages for different services or categories.

The marketplace payment system needs to calculate and report these amounts reliably.

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Who pays the payment-processing fee?

Do not overlook this.

Possible arrangements include:

Platform pays acquiring fee

or

Seller bears the cost

or

Cost is incorporated into the marketplace commission

Different providers handle this differently.

For example, on a £100 transaction:

• £10 marketplace fee
• £2 payment-processing cost
• £88 seller allocation

could be represented very differently in reporting depending on who contractually bears the processing cost.

This needs to be understood before calculating the marketplace's true margin.

Gross transaction value is not marketplace revenue

For high-volume marketplaces, this distinction becomes essential.

A marketplace processing:

£2 million per month

might retain only:

10% commission

Its gross payment volume is therefore very different from its actual revenue.

When comparing marketplace payment costs, understand:

• Gross transaction value
• Marketplace commission
• Payment-processing cost
• Seller payout fees
• FX costs
• Refunds
• Chargebacks
• Platform fees

A small percentage movement in processing cost can become significant at scale.

Seller balances and payouts

A marketplace may not want every seller payment to leave immediately.

Depending on the business model and provider, sellers may be paid:

• Immediately
• Daily
• Weekly
• Monthly
• After delivery
• After a service is completed
• After a cancellation period
• According to a custom schedule

For example:

Customer books service Monday → service completed Friday → seller paid following Tuesday

That requires the platform to track both:

transaction status

and:

payout status

Delayed payouts

Delayed payouts can be commercially useful where there is a genuine future-delivery risk.

Examples include:

• Events
• Travel
• Accommodation
• Services
• Ticketing
• Rentals
• Contractors

The marketplace should understand:

• Maximum payout delay
• Whether payout timing can be changed by transaction
• Whether sellers can select payout schedules
• What happens when delivery is cancelled
• Whether reserves can apply
• When the platform's commission becomes available

What if the seller has already been paid and the customer wants a refund?

This is one of the most important marketplace questions.

Imagine:

Customer paid £100
Seller received £85
Marketplace retained £15

Two weeks later the customer receives a full refund.

Where does the £100 come from?

Possibilities depend on the provider agreement.

The provider may:

• Deduct £85 from the seller's current balance
• Reverse the platform commission
• Deduct the full refund from the marketplace
• Create a negative seller balance
• Recover funds from future seller payouts

This needs to be understood before launch.

Partial refunds become more complicated

Suppose an order contains products from two sellers.

Customer pays:

£150

Then returns only one £40 product.

The platform needs to know:

• Which seller funded the refund
• Whether associated commission is returned
• What happens to processing fees
• What happens to promotional discounts
• How VAT/accounting records are adjusted
• What appears in each seller's report

This is where good marketplace ledger and reporting functionality becomes essential.

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Chargebacks can be even harder than refunds

A chargeback may arrive weeks or months after the original transaction.

By then:

• Seller may already have been paid
• Seller may have stopped trading
• Seller's balance may be zero
• Marketplace commission may have been recognised
• Funds may have crossed currencies

The provider agreement should clearly explain:

Who ultimately carries the chargeback loss?

Possible structures can place liability on:

• Seller
• Marketplace
• A combination

The marketplace should also understand whether it can recover a chargeback from future seller payouts.

Negative seller balances

A seller may move into a negative balance following:

• Refund
• Chargeback
• Adjustment
• Fee
• Seller payout made before dispute

What happens next?

Ask the provider whether it can:

• Offset future sales
• Pause payouts
• Debit seller bank account where agreed and supported
• Place restrictions on seller activity
• Require reserve funding

This becomes particularly important with sellers who transact infrequently.

Marketplace reserves

Payment providers can apply reserves at different levels.

Potentially:

• Marketplace-level reserve
• Seller-level reserve
• Delayed payout
• Transaction-level hold

The provider may consider:

• Seller sector
• Fulfilment period
• Chargebacks
• Refunds
• Average transaction value
• Marketplace history
• Financial strength

A platform should understand whether one high-risk seller can affect reserve requirements across the entire marketplace.

Can marketplaces earn interest on seller funds?

Do not build a marketplace business model around this assumption.

Where relevant funds are being safeguarded by a regulated payment or electronic-money institution, the current FCA safeguarding rules require safeguarding institutions to protect client rights and prevent relevant funds being used for the institution's own account. The current CASS 15 regime has applied since 7 May 2026. 

The treatment of any interest or economic benefit will depend on the provider, account, contractual arrangements and regulatory structure.

So instead of asking:

“How much interest can our marketplace earn on seller balances?”

ask:

“Who legally holds these funds, how are they safeguarded, and what does the provider agreement say about any interest?”

That is a much safer starting point.

Safeguarding is the payment provider's job - depending on the structure

It is important not to confuse the marketplace's responsibilities with those of the regulated payment institution.

CASS 15 applies to specified safeguarding institutions receiving or holding relevant funds, including authorised payment institutions and electronic money institutions. 

It includes requirements around:

• Protecting relevant funds
• Identifying client balances
• Records
• Reconciliation
• Safeguarding accounts

For example, safeguarding institutions must maintain records capable of determining the amount of relevant funds attributable to each client and keep appropriate reconciliation records. 

A marketplace using such a provider is not automatically itself subject to CASS 15 simply because its sellers receive payments through the system.

The exact regulatory responsibilities depend on the structure.

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Seller payout reconciliation

One of the biggest operational headaches for growing marketplaces is often not accepting payments.

It is explaining:

Why did Seller 784 receive £12,437.18 on Tuesday?

The reporting should ideally allow the business to trace a payout back to:

• Orders
• Gross sales
• Commission
• Processing fees
• Refunds
• Chargebacks
• Adjustments
• Reserves
• Previous negative balances
• Currency conversion

Without this, finance teams can end up trying to rebuild marketplace ledgers in spreadsheets.

MAS insight: Reconciliation becomes a payment-provider selection issue

Founders often choose marketplace payment providers based on:

• API
• Checkout
• Transaction rate

Then six months later the finance team discovers that the reporting does not work for the business.

For a marketplace processing substantial volume, we would want to know:

Can every £1 moving through the platform be explained from the original customer payment through to seller payout?

That is a fundamental requirement.

APIs and marketplace payment integrations

Most serious marketplace platforms need API access.

The payment integration may need to:

1. Create seller
2. Check seller verification status
3. Create customer payment
4. Allocate commission
5. Capture payment
6. Update order
7. Release seller payout
8. Process refund
9. Record chargeback
10. Update financial ledger

Webhooks can notify the marketplace when events occur, such as:

• Payment approved
• Payment failed
• Verification completed
• Seller restricted
• Refund completed
• Chargeback created
• Payout sent
• Payout failed

The platform's internal system should not assume that every operation happens immediately or successfully.

Seller onboarding status should feed into your product

For example:

Seller application received

↓

Verification pending

↓

Additional documents required

↓

Approved

↓

Payments enabled

↓

Payouts enabled

The marketplace should know each seller's current status.

This is far better than waiting until a seller asks:

“Why haven't I received my money?”

International marketplaces

Cross-border marketplaces introduce another layer of complexity.

There are two separate questions:

Where are the customers?

A provider may support customer payments from many countries.

Where are the sellers?

The same provider may only be able to onboard sellers in a smaller number of jurisdictions.

These are not the same thing.

A marketplace should document:

• Customer countries
• Seller countries
• Payment currencies
• Settlement currencies
• Seller payout currencies
• Local payment methods

Then compare providers against that exact footprint.

Currency conversion and marketplace margin

International marketplaces should also identify where foreign exchange occurs.

For example:

Customer pays €100

Seller wants:

GBP

Marketplace accounts in:

GBP

Questions include:

• Which exchange rate applies?
• Who pays FX?
• Is the seller paid in euros or sterling?
• Is the platform commission converted?
• Are FX charges visible?
• Can sellers maintain currency balances?

Small FX margins can become commercially important at high volumes.

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Marketplace fraud has two sides

Conventional ecommerce fraud focuses heavily on the buyer.

Marketplace businesses also need to think about seller fraud.

Potential problems include:

• Fake sellers
• Seller account takeover
• Fraudulent listings
• Collusion
• Seller takes orders without intention to fulfil
• Counterfeit products
• Prohibited products
• Rapid volume increases followed by disappearance

The payment provider may offer seller and transaction monitoring, but the marketplace itself may still need marketplace-specific controls.

3D Secure and customer authentication

Marketplace card payments can use 3D Secure and other authentication tools where applicable.

The precise configuration depends on:

• Payment provider
• Acquirer
• Transaction
• Customer
• Applicable Strong Customer Authentication rules

The marketplace should monitor whether authentication settings affect:

• Fraud
• Authorisation
• Conversion
• Customer abandonment

rather than simply turning authentication controls up or down without measuring the effect.

Marketplace payment authorisation rates

Once a marketplace reaches meaningful scale, authorisation performance becomes commercially important.

The business should understand:

• Approval rate
• Decline rate
• Decline reasons
• 3D Secure outcomes
• Performance by issuer
• Performance by country
• Performance by card type
• Repeat customer performance

A provider offering slightly cheaper processing is not necessarily cheaper overall if more legitimate customer transactions fail.

High-turnover marketplaces: payments become part of unit economics

For a new marketplace, the initial question might be:

“Which provider lets us split payments between sellers?”

Once the platform grows, the questions become more sophisticated:

What is our true cost per successful transaction?

What does seller onboarding cost?

How much does each payout cost?

How much are we losing to FX?

What is our authorisation rate?

How much cash is tied up in reserves?

How much finance-team time is spent reconciling payouts?

What happens to our margin when customers refund?

Can our provider support the next countries we intend to enter?

Those are strategic payment questions.

Processing £250k, £500k or £1m+ per month through a marketplace?

This is where MAS would review considerably more than the headline transaction rate.

We would want to understand:

Gross transaction value

How much customer money passes through the platform?

Marketplace revenue

How much of that does the platform actually retain?

Seller count

How many sellers are active?

Seller profile

Are sellers:

• Individuals
• Limited companies
• Mixed

Seller countries

Where are they based?

Payment methods

Cards, wallets, bank payments or other methods.

Processing costs

Including:

• Acquiring
• Gateway
• Platform fees
• Seller-account fees
• Payout fees
• FX
• Refund fees
• Chargeback fees

Authorisation performance

How many genuine customer payments are being declined?

Seller payouts

How often and in which currencies?

Refunds and disputes

Who funds them?

Reconciliation

How much manual work is involved?

Technology

Can the current provider support future product development?

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MAS insight: A cheaper transaction rate can be a very expensive marketplace decision

Suppose Provider A saves a small amount on card acquiring.

But Provider B offers:

• Better seller onboarding
• Better payout pricing
• Easier international expansion
• Automated reconciliation
• Better API support
• Better authorisation performance
• Better handling of negative seller balances

For a marketplace, those differences can outweigh a small processing-rate saving very quickly.

The correct comparison is the whole marketplace payment infrastructure.

How to compare marketplace payment providers

Seller countries

Can the provider onboard sellers where you operate?

Seller types

Does it support:

• Individuals
• Sole traders
• Companies
• Charities
• Other required entities

Sector acceptance

Will it accept what your sellers actually sell?

Onboarding

Compare:

• Hosted
• Embedded
• API
• White-labelled

Payments

Does it support the customer payment methods you need?

Split functionality

Can the platform allocate funds as required?

Commission

Can you configure:

• Fixed
• Percentage
• Different seller rates
• Tiered rates

Payouts

Check:

• Frequency
• Timing
• Cost
• Currency
• Failed payout handling

Reserves

Can reserves apply at seller or platform level?

Negative balances

How are they recovered?

Refunds

Who provides the funds?

Chargebacks

Who carries liability?

Reporting

Can every payout be reconciled to its transactions?

API

Does it support the marketplace workflow you actually need?

Pricing

Compare all fees, not simply acquiring.

Marketplace pricing: what should you include?

Potential costs can include:

• Card-processing percentage
• Fixed transaction fee
• Gateway fee
• Marketplace/platform fee
• Seller onboarding charge
• Seller-account fee
• Payout fee
• Instant payout fee
• International payout fee
• Currency conversion
• Refund fee
• Chargeback fee
• Fraud tools
• Verification costs

A provider quoting a low headline processing rate can become expensive once other marketplace fees are included.

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Switching marketplace payment providers

Switching a marketplace provider is much harder than switching a simple ecommerce merchant account.

You may need to consider:

• Existing seller accounts
• Seller re-verification
• Stored payment tokens
• Recurring payments
• Historical balances
• Outstanding refunds
• Chargebacks
• Pending payouts
• API migration
• Webhooks
• Financial reporting
• Customer checkout
• Seller communications

The migration should therefore be planned as a payments project, not simply an acquiring switch.

Can sellers be migrated automatically?

Not necessarily.

One of the first questions to ask a new provider is:

Will all our existing sellers need to complete onboarding again?

Depending on the circumstances, provider and data arrangements, re-verification may be required.

For a marketplace with 5,000 sellers, this can become a major migration issue.

Ask this before committing to the move.

What should a marketplace prepare before speaking to payment providers?

A simple payment-flow diagram is an excellent starting point.

Document:

Customer → Platform → Seller

and underneath specify:

Customer

• Countries
• Payment methods
• Average transaction
• Maximum transaction

Platform

• Commission
• Legal entity
• Monthly GTV
• Current provider

Sellers

• Number
• Countries
• Business types
• Sectors

Payouts

• Timing
• Currency
• Frequency

Refunds

• Who funds them?

Chargebacks

• Who should carry the loss?

That gives a payment provider something meaningful to assess.

New marketplace? Build the payment model before building the checkout

A common mistake is:

1. Build marketplace
2. Build seller dashboards
3. Build checkout
4. Start integrating gateway
5. Discover payment provider will not support the proposed structure

Payments should be considered much earlier.

Before significant development, establish:

• Provider appetite
• Seller onboarding model
• Regulatory structure
• Payment flow
• Commission model
• Payout model
• Refund process
• Chargeback liability
• Required countries
• API requirements

Changing this after launch can be expensive.

MAS insight: Payments should be part of marketplace product design

For a marketplace, payments are not an add-on.

They influence:

• Seller onboarding
• Checkout
• Seller dashboard
• Refunds
• Customer support
• Finance
• Accounting
• Seller terms
• International expansion

A product team planning marketplace functionality should therefore involve the payments team early.

Marketplace versus platform payments

Not every multi-party business is a conventional marketplace.

MAS also receives enquiries from:

• SaaS platforms
• Booking platforms
• Franchise networks
• Gig-economy platforms
• Creator platforms
• Property platforms
• Professional-services platforms
• Multi-vendor ecommerce sites

The correct payment structure depends on what the platform actually does.

For example, a SaaS platform helping independent businesses accept their own customer payments may have a very different model from a marketplace where buyers purchase products from several sellers in one basket.

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Marketplace payment gateways for higher-risk sectors

Provider choice can narrow considerably when marketplace sellers operate in high risk specialist sectors.

Examples might include platforms involving:

• Travel
• Ticketing
• Supplements
• Financial services
• Regulated services
• Future-delivery businesses

The provider must be comfortable with both:

marketplace structure

and:

underlying seller risk

A technically perfect marketplace product is useless if the underlying acquiring provider does not accept the sellers.

Why marketplace payment applications get declined

Common reasons can include:

Payment flow is unclear

The provider cannot understand who receives the money.

Regulatory position is unclear

The platform appears to receive seller money without a clearly structured regulated-payment arrangement.

Seller categories are too broad

The marketplace says:

“Anyone can sell anything.”

That can create obvious underwriting concerns.

Unsupported sellers

Some sellers operate in prohibited or restricted sectors.

Unsupported countries

The provider supports customer transactions in a country but not seller onboarding there.

Insufficient financial information

Particularly where the marketplace assumes significant refund or dispute liability.

Chargeback exposure

The commercial model leaves the platform exposed after sellers have already been paid.

Technical model does not fit the provider

The platform requires functionality the provider's marketplace product cannot support.

High-volume marketplace? Ask MAS to review the payment architecture

For established marketplace and platform businesses, MAS can review more than provider availability.

A useful review can consider:

• Marketplace structure
• Current provider
• Monthly GTV
• Payment costs
• Seller numbers
• Seller countries
• Seller onboarding
• Payout costs
• Payout timing
• Foreign exchange
• Authorisation rates
• Refunds
• Chargebacks
• Reserves
• Reconciliation
• API requirements
• Expansion plans

The objective may be:

lower costs + better seller onboarding + improved payment performance + easier reconciliation + stronger scalability

rather than simply finding a cheaper gateway.

What should you send MAS?

For an established marketplace, useful information includes:

• Website/app
• Payment-flow diagram
• Current provider
• Three recent payment statements where available
• Monthly GTV
• Transaction numbers
• Average transaction value
• Marketplace commission
• Number of active sellers
• Seller locations
• Customer locations
• Payment currencies
• Payout currencies
• Current payment methods
• Payout frequency
• Refund rate
• Chargeback rate
• Current reserve
• Processing fees
• Payout fees
• FX costs
• Current integration
• Planned countries
• Any problems with the existing provider

Find Your New Processor

How Merchant Advice Service helps marketplaces and platforms

Merchant Advice Service helps businesses understand more complex payment requirements and identify potentially suitable providers.

New marketplaces

MAS can help define the payment requirements before providers are approached.

Split payments

Where customer transactions need to be allocated between sellers and the platform.

Seller onboarding

We can consider whether the payment provider supports the required:

• Countries
• Entity types
• Seller sectors

High-volume marketplaces

For established platforms, we can look at:

• Processing cost
• Authorisation performance
• Payout costs
• FX
• Reserves
• Reconciliation
• Technology

International expansion

A provider that works in the UK may not necessarily support the next seller markets a marketplace intends to enter.

Existing marketplaces looking to switch

The review can include migration requirements and whether existing sellers will need to be onboarded again.

Complex or specialist sellers

Where provider appetite is restricted, MAS can consider the underlying seller activities before identifying possible routes.

Final regulatory assessment, underwriting, pricing and approval remain with the relevant payment provider and professional advisers.

This article provides general payments information and does not constitute legal, regulatory, tax or compliance advice. Marketplace regulatory obligations depend heavily on the contractual and money-flow structure, and specialist advice may be required.