How to choose the best payment solution for your Business?

Posted by John Lee on December 3rd, 2019

The prime component of a rental marketplace is the booking and transaction process. Hence, the successful implementation of the payment solution finishes the jigsaw of the marketplace puzzle. When you are implementing a payment solution, the dimensions which apply to every type of marketplace is Time, Location and Pricing. Time regards when the service occurs – whether it is on-demand or scheduled. Location means the place the service planned to happen – whether at virtual or at a specific location. Pricing can be either fixed in advance or negotiated based on the type of online marketplace one wants to establish.

Designing a Booking Flow:

A rental marketplace categorised as proving the rental service scheduling the date and time and providing the rental service on-demand. When it comes to scheduling the rental service in particular day and time, the booking flow that follows:

1. Customers search for the perfect service on the website.
2. Select a suitable service matching your requirements.
3. Choose the date, time, and the number of persons(if necessary) and book the service.
4. Pay the price of the service.
5. The owner accepts the booking
6. The amount deducted from the customer.
7. The booking confirmation.
8. After the service, the platform owner charges a small commission and the remaining amount paid to the seller/owner.

When it comes to booking an on-demand rental service, the booking flow goes by:

1. Customer post/search their required service on the website.
2. The website allocates it to the respective owners/provider who is available to the service.
3. The marketplace owner assigns the service to a suitable service provider and the requirements got executed.
4. Payment made by the customer.
5. The provider gets their share after deducting the commission of the website.

Things to consider when choosing the payment solution

Splitting Payments

A marketplace service revolves around three people – provider, customer, and an intermediary. The payment made by customers split to give providers and a small commission to the platform owners. Stripe, MANGOPAY, and Braintree offer split payment options to help small business marketplace owners.

Tax deduction

Service Provider of the marketplace has to pay taxes to the local bodies and the government of the country if they earn a high income. The Provider has to manage the personal taxes of their income through the marketplace. Having a Stripe ease your tax reporting as they provide U.S tax reporting facility to automate ‘Form 1099-K’.

Delayed Payout

A few online marketplace companies delay the payments until the customers are fully completed the marketplace service. They hold the money until the customers finish using the service. This process termed as Escrow. But delaying the payments be liable to credit card disputes and in some countries, you need to have a license to delay the payments. To escape from these kinds of difficulties, choose a payment gateway who offer escrow kind of service. MANGOPAY, Stripe, Paypal, and Braintree provide the option of holding the payment.

Based on the geographical area

Choose a payment gateway which is regularly used by the customers and popular in the area where the marketplace business is in operation. The well-known payment gateway preferred by customers all over the world is PayPal, Stripe, MANGOPAY and Braintree. When it comes to the Asia-Pacific, Australia prefers PinPayments and Transferwise. The South Africa region prefer Flutterwave. Mercado Pago is very famous in Argentina, Brazil, Chile, Colombia, Mexico and Venezuela for their marketplace payment solution.

Offering multiple payment methods

The design of the marketplace payment solution has to offer various payout methods for their convenience. Keep all payout methods: credit card payment, debit card payment, e-wallets, and bank transfer. Also, design the payment gateway to adapt any number of payment methods for fast money transfer. RentALL helps entrepreneurs to implement any specific payment gateway in their rental marketplace platform. Since RentALL is the readymade Airbnb clone script, it’s inbuilt with payment gateway(PayPal & Stripe connect) which facilitates the seamless transaction of the marketplaces.

Pricing

Payment gateway provider charges a small transaction fee when a transaction takes place between a service provider and the customer. The transaction fee differs for each payment gateway and each different transaction. For example, Stripe has a transaction fee of 2.9% + --content--.30. Each transaction charged 2% if currency conversion takes place. Normally, the payment gateway provider charges a transaction fee based upon:

• The country of the service provider.
• The country of the customer.
• The fee charged based on the volume of transaction

Ease of Integration and Customer Support

When it comes to developing your marketplace website, developing a payment solution is crucial and is a challenging task to developers. Stripe and Braintree save the day any time for developers as their API are easy to integrate and offers client libraries in multiple languages. Stripe has an IRC channel where technical questions and query posted, which get responded swiftly. PayPal provides multiple APIs depending upon which service you use. But PayPal provides customer service through email, phone call or ask questions in an online forum.

Regulatory risk

Few entrepreneurs are aware of the payment regulations implemented in a marketplace business. European Union has introduced the PSD2 (Revised Payment Service Directive), making the marketplace acquire payment license from a regulator for the transaction to take place between provider and customer. Otherwise, a marketplace goes through heavy fine or for worse, shutting down.

Conclusion

Designing the payment solution is a crucial task for any marketplace. Analysing various factors and coming to the right solution is one of the challenges any startup or entrepreneur comes across. Do market research and consider the above factors before finding the right payment solution. I hope this blog helps you in choosing the right payment solution to your marketplace. In RentALLScript - Airbnb clone, we have integrated Stripe Connect and PayPal. Also, it’s compatible with any 3rd party payment gateway.