how select psp
Thu, Jun 4 2020

How do you choose a payment service provider for your marketplace?

It is one of the most important issues when setting up your platform or marketplace: how do you decide which payment service provider you want to work with? Different from what is often said, online payments are not a commodity. Selecting a payment service provider (PSP) is not just a matter of making a shortlist and selecting the cheapest provider. It is about evaluating the criteria of each provider that are important to you.

There is a big difference between payment service providers that focus on web shops or specialised PSPs for platforms and marketplaces. If you have a webshop, you are responsible for the delivery, the quality and service of goods. A platform or marketplace provides others with the opportunity to offer products and services and thus brings supply and demand together. This means that your platform or marketplace has several different needs and requirements that a PSP will have to meet.


What should you pay attention to when selecting a PSP for your platform / marketplace?

As the owner of a platform or marketplace, your first question must be what payment methods the PSP offers and whether these will satisfy the needs of the users of your platform. In the Netherlands, iDEAL is indispensable, in Belgium it is Bancontact and in China you can't do business without Alipay. Furthermore, when choosing a particular payment service provider it is very important to ensure that you comply with the applicable laws and regulations (PSD2). This also means that you are not responsible for the delivery and warranty of the goods and services that are traded on your platform. If you choose a specialised platform PSP, it will also carry out the required customer due diligence (KYC) for you and be able to guarantee that the selling party is a verified Merchant of Record.


Multi-split payments and escrow

Another element which is essential for the user-friendliness of a platform or marketplace, is the ability of a PSP for multi-split payments. This allows users to pay at once instead of six times when they have products from six different vendors in their basket. In order to safeguard payments and limit the risks associated with transactions on your platform, it is a good idea to ensure that a PSP also offers an escrow solution. This means that the money paid by the users of your platform is held safely on an account of the PSP, until certain obligations have been met by the seller.


Evaluate pricing PSP

When evaluating the price of a PSP for your platform or marketplace, it is important to get a transparent picture of how the pricing is structured. Do not limit yourself by solely looking at the cost per transaction, but also ask which services are included and which are not. For example, do you have to pay a monthly fee for the number of active sellers, are there setup costs and are there perhaps additional costs for the total payment volume on your platform? By thoroughly researching this, you may discover hidden costs and make a proper assessment without any surprises later on.


What support does the payment service provider offer?

For marketplaces and platforms, a PSP that provides good support is crucial. If something goes wrong in the payment between the seller and buyer, you want this to be resolved as soon as possible. After all, there is a good chance that users will express their complaint on social media, which could entail reputational damage for you. Is the support department of the payment service provider you have in mind sufficiently equipped to help both companies and consumers with whom you do business? And do they meet the requirements according to the AVG/GDPR? Do customers have the ability to make contact via different channels such as telephone, e-mail or a chatbot? If users are provided with all the tools to be helped as quickly as possible, they are also more likely to become ambassadors for your platform.


What insights do you want about your platform?

To make the right decisions for your platform or marketplace, you need data. In order to find out which payment service provider can best help you, it's very wise to think about what payment insights you will need. Almost every PSP offers a dashboard to see the number of transactions, what people use to settle. But as an owner of a platform or marketplace, you probably want more, such as insight into the sellers on your platform. How much volume do they run on your platform? How many new sellers are added daily? How many are rejected and why? Make sure that the interface offered by the PSP of your choice can deliver these specific, rich insights so that you can focus and continue to optimise.

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