The restriction of brick-and-mortar in 2020 has led many brands to consider alternative and additional sales channels. Some brands have reevaluated vendor relationships and established new partnerships with online marketplaces, which offer a wider audience — but also a more complicated payment system. Card issuing platform Marqeta offers a way for every purchase to be completed in a single transaction, no matter how many merchants are involved.
When a consumer visits a retail marketplace, like Amazon or eBay, there is added value in the ability to browse and shop multiple brands and merchants at once. But unlike traditional multibrand retailers, marketplaces don’t hold any inventory; they act as a platform for individual sellers, who they pay separately for each order. This can create friction at the point of checkout, when coordinating how to pay out a multiseller order.
“In an e-commerce marketplace, there are multiple transactions taking place,” said Vidya Peters, chief marketing officer at Marqeta. “The consumer pays for items from many different sellers, and the marketplace needs to pay those sellers or suppliers individually. For companies using drop-shipping methods, getting payments out quickly to multiple suppliers can be difficult, and delay order delivery.”
Without the support of a card issuing solution, many e-commerce marketplaces must manually pay each seller, which can increase the chance of fraud. The large number of payments, combined with the sharing of bank account information that’s needed for some transactions, can open the marketplace up to fraudulent activity and potential purchase cancellations.
At best, there may still be a considerable delay for the merchants in receiving their sales revenue. This can be particularly detrimental to the smaller sellers that frequently use these platforms, as they may rely on quick access to cash flow and the ability to respond quickly to the market. This delay in payment can also result in delayed shipping of the order, which can create a poor customer experience that reflects badly on both merchant and marketplace.
When marketplaces use a tool like Marqeta, they can automate this payment process. When a multiseller purchase is initiated, the company instantly issues virtual cards to pay merchants individually, for a small fee per transaction. These cards are processed in the same way the merchant would process a consumer’s card payment; no additional infrastructure is required. Cards are verified before payment and can be set for one-time use, adding a further layer of security for all involved.
Companies that use Marqeta’s suite of solutions such as its open API and webhooks to manage payment programs include Klarna, Afterpay, Uber and Square as well as Instacart, Brex and Affirm.
“Businesses that were once limited by slow legacy platforms, that did not allow for customization, are now allowed to instantly issue physical, virtual and tokenized cards with more flexibility, control and scale,” Peters said. “Marketplaces that leverage payment cards with Marqeta can replace existing check or ACH payment methods that may be used to pay sellers, to offer a more seamless payment experience.”
Implementing such a system can help marketplaces win favor from their retail partners, who are critical to the platforms’ success. Merchants who receive fast payments and ship goods quickly are more likely to earn repeat business, which in turn encourages them to continue to work on that platform.
For the consumer, the effects are mostly experienced second-hand, in the form of faster shipping and improved seller options on the platform. But critically, there is no impediment to the checkout process; in most cases, the use of Marqeta will be invisible on the consumer end.
“The consumer-to-marketplace payment is not necessarily impacted by Marqeta, unless this enables the marketplace to now offer a single cart experience or avoid pushing the consumer directly to a seller checkout page,” Peters said. “Consumers benefit from the ability to work with fewer merchants to get the products they want.”