We consistently receive interest from developers looking to build a marketplace. We're really only a good fit with one type of marketplace, which I'll discuss below. 

First let's talk about marketplaces overall. In many ways this post is an update to one we did a while back

Defining a Marketplace 

There are 3 or 4 major functional components to a marketplace

  • Easily create a merchant account when onboarding a new seller to the marketplace
  • Take a percentage of each transaction as a fee¬†while the transaction is occuring
  • Accept payments in the marketplace any way possible¬†but mostly via credit cards
  • Pay out to sellers, once the money has been collected and the marketplace has taken its share, via ACH/bank transfer (cost savings)

Why are marketplaces so popular? 

The ease with with anyone can now accept credit cards (immediate onboarding) has allowed marketplace services to rapidly onboard all types of sellers that previously couldn't accept online payments or were forced to only use PayPal as a payment method. What took someone like Etsy many months of development work can now be achieved in days. 

 Global 

We should point out that right now, July 2014, no one is doing marketplaces globally. PayPal has adaptive payments (which we don't support) but that is fairly complex and has never really taken off. There are some good U.S focused offerings (Balanced Payments, Stripe and Braintree) and there is a rumor that PayPal is launching something soon that will be global. PayMill in Europe also talks about having marketplace support. However, these are very regional options. You can't (easily) create a global marketplace today like you can a U.S one. 

Spreedly as a marketplace offering 

Spreedly has some characteristics that are useful for marketplaces. Card storage and tokenization means that once a buyer is set up in your marketplace they can buy from other vendors in your marketplace without re-entering data. 

Secondly, we support a wide range of global payment gateways. But our model differs in three critical ways: 

Existing merchants. We service marketplaces where the majority of sellers already have a merchant account and expect to use that merchant account in your marketplace. That's where our support for 60 + gateways/PSP's comes in to play. Imagine a marketplace for beach rental properties. Chances are, people who already rent their beach house are accepting credit cards. If you'd like them to list in your marketplace it would help to let them keep using their primary merchant account. That does not mean you can't use us with someone like Stripe or Balanced to quickly enable new sellers who don't have a merchant account. You just have to decide whether support for existing merchant accounts is going to be important to your marketplace. It's certainly easier in many ways to not provide that choice. 

No ACH disbursements: Due to the fact that your sellers have their own merchant account ACH disbursements are redundant. So we do not have support for ACH disbursements. One upside here is you're free from the flow of funds and therefore the risk of chargebacks.

 Revenue Model: Lastly, and this is the big one, we don't support taking a % of the transaction unless the underlying gateway also supports it. Some like Balanced and Stripe do. However, most don't. So it's unlikely you can default to that model for how you get paid if you are using Spreedly. You could track the overall revenue and charge a seller separately on a transaction or monthly basis. Or you could just have a flat monthly fee to be in your marketplace. 

So in summary, Spreedly is really only viable as a marketplace platform if you expect the majority of your sellers to already have, or easily get, their own merchant account and use it on your platform. Current industry trends might mean that's going to be a more viable approach than a single vendor executing on a global strategy. Time will tell.  

More from Our Blog

Recent Posts You Might Like

No items found.
See All Posts