What is the difference between a webshop PSP and a Platform PSP?

The Netherlands ranks number one worldwide in the United Nations eCommerce ranking. Every day, we are all buying online on many different webshops and platforms. Especially the last category of platforms and marketplaces is growing rapidly. This growth is partly because of developments in what we call the sharing economy and platform economy. The payment service provider (PSP) behind such a platform is providing other services than a PSP for webshops.

Difference between a webshop and a marketplace/platform

All products and services offered on a webshop are sold by a single vendor that also takes care of debtors, warranties and delivery. Everything is focused on satisfying their customers, the buyers. These buyers wish to use their preferred payment method. The primary wish coming from webshops, is the ability to offer as many payment methods as possible.

A marketplace or platform however, is bringing supply and demand together. The money will flow to the account of the recipient, the seller (merchant). In this case, there is not only one sole webshop connected, but hundreds or perhaps thousands of sellers. Furthermore, a platform represents the interests of both buyers and sellers.

Features of a platform PSP 

The difference between a webshop and a platform calls for a number of specific features when it comes to the possibilities of a PSP.

• Onboarding merchants to the payment system

The thousands of sellers are required to become customer of payment services from the PSP. This is because a platform is not allowed to offer payment services without a license. For more information about this regulation around payments on marketplaces and platforms, read the white paper below.

The onboarding of users must run as simple as possible, but at the same time must comply with requirements of rules and regulations. Preferably, the entire process is integrated in the platform. For this, other tech is required such as API functionalities.

• Consumers and commercial sellers

Webshops are always commercial sellers, but on platforms and marketplaces there are often many consumers trading. Supporting consumers has a big impact on a PSP. You will need different licenses, but also a different framework for your helpdesk and processes.

• Escrow services

Trust and security are extremely important for a platform. Often used are services in which funds are held by the platform PSP after the payment, if the seller delivered the product or service the funds will be released. This is called escrow. Besides the required technology to offer these services, a platform PSP also needs a team to settle problems or discussions between buyers and sellers.

• Multi Split payments

A platform hosts multiple suppliers, sometimes you would like to purchase from multiple suppliers. You will make a single transaction, thereafter the platform PSP must ensure that the paid funds will be delivered to all parties for their rightful share.

A webshop PSP is not immediately suitable for a platform or marketplace

The foundation of a PSP must actually be different already. The platform is a third party, whilst a webshop is the beneficiary. The PSPs designed for facilitating webshops are often not designed to offer platform functionalities. Some webshop PSPs do provide several solutions, but they lack focus and perhaps more importantly, the knowledge and experience to properly facilitate platforms.

Are you looking for a payment service provider for your platform or marketplace? Then make sure to select a platform PSP with capabilities to support you in finding and providing the best experience for both your buyers and sellers.