Marketplace Payment Gateways: A Complete Guide to Payments, Compliance and Profitability
Marketplace Payment Processing
Running a successful online marketplace involves more than connecting buyers with sellers. Behind every transaction, there’s a complex payment journey that needs to be fast, secure, compliant — and ideally, profitable.
Whether you're launching a multi-vendor platform or scaling one that’s already live, choosing the right marketplace payment gateway is one of the most important decisions you’ll make. In this guide, we’ll explore how marketplace payments work, what features matter most, how to remain compliant with evolving regulations, and how some platforms are even generating passive income by earning interest on held funds.
Let’s unpack what this all means...
What Is an Online Marketplace?
An online marketplace is a digital platform that allows multiple sellers or service providers to list and sell their products to a wider audience. Buyers browse, compare and purchase items — all from a single site or app — and the marketplace facilitates the transaction.
Unlike traditional ecommerce websites, marketplaces:
- Do not sell their own products (though some hybrid models exist)
- Host multiple vendors, each with their own listings
- Collect payments on behalf of sellers, then distribute funds after deducting commissions or fees
This model supports a wide variety of industries — from physical goods (Etsy, Amazon, eBay) to services (Fiverr, TaskRabbit), experiences (Airbnb, GetYourGuide), transport (Uber, Bolt), and digital products (Creative Market, Envato).
What unites them all is the need for efficient, transparent and compliant payment flows.
What Is a Marketplace Payment Gateway?
A marketplace payment gateway is the system that processes payments between buyers, sellers, and the platform itself. It acts as the engine room of the marketplace, securely handling:
- Customer checkouts
- Payment authorisation
- Fund collection and distribution
- Refunds and disputes
- Compliance and verification processes (e.g. KYC/KYB)
These gateways often work alongside payment service providers (PSPs) to ensure that every transaction is processed according to regulatory standards while offering features like split payments, payout scheduling, currency conversion, and localised payment options.
Why Are Marketplace Payments Different?
In a standard ecommerce setup, a buyer purchases an item from a single business. But in a marketplace model, things get more complicated. A customer might buy products from several different vendors in one transaction — or book a service where the seller won’t be paid until it’s fulfilled.
This introduces several unique challenges:
- Split payment logic is needed to divide funds accurately.
- Commission collection must be automated and trackable.
- Held funds must be stored securely, and often regulated.
- Payout timing may vary based on delivery, refunds or dispute windows.
- Multiple currencies may be involved when selling across borders.
A dedicated marketplace payment gateway handles all of this behind the scenes, enabling your platform to scale without becoming a payments company.
How Do Marketplaces Accept Payments
To offer a smooth, secure checkout experience, marketplaces typically support a wide range of payment methods. These may include:
Credit and Debit Cards
The backbone of online transactions globally, card payments are familiar, fast, and supported by virtually all PSPs.
Digital Wallets
Options like Apple Pay, Google Pay, and PayPal add convenience, particularly on mobile devices. Many digital wallets use biometric authentication, making checkout even faster.
Local Payment Methods
If you're serving international customers, offering localised payment options can significantly improve conversion rates. Examples include:
- iDEAL (Netherlands)
- Blik and Przelewy24 (Poland)
- MB WAY (Portugal)
- Vipps (Nordics)
- Sofort and Giropay (Germany)
Modern gateways can dynamically present the most relevant methods based on customer location.
How Do Marketplace Payments Work Behind the Scenes?
Let’s walk through a typical transaction on a marketplace platform:
- The customer makes a purchase involving multiple vendors.
- The payment gateway collects the funds and holds them in a secure account.
- The platform calculates commissions and vendor shares.
- Funds are split according to predefined rules.
- Payouts are scheduled or triggered, either instantly or after a waiting period.
- Refunds, chargebacks and promotions are tracked and reconciled automatically.
This process ensures a transparent, traceable and scalable payment flow — essential for maintaining trust with sellers and customers alike.
Split Payments: A Marketplace Essential
Split payments allow you to automatically divide a single transaction between multiple sellers (and the platform itself). This is particularly useful for:
- Multi-vendor carts
- Booking platforms with service providers
- Revenue sharing models
With split payments, the gateway handles the calculation and disbursement of funds, ensuring each party receives the correct amount after fees, taxes, or promotions have been applied. This helps prevent errors, delays, and disputes.
How Do Marketplaces Earn Interest on Held Funds?
In many cases, marketplaces delay payouts until:
- A product has shipped
- A service has been fulfilled
- A refund window has passed
During that time, the money is held in a secure, ring-fenced account by the PSP. If the PSP is a licensed Electronic Money Institution (EMI), these funds may be placed in an interest-bearing account, including those at central banks like the Bank of England.
Here’s where it gets interesting:
Some PSPs share this interest with marketplaces — and sometimes, even with sellers.
This turns a regulatory requirement into a revenue opportunity. Depending on the volume of payments and average delay period, the extra income can be significant.
If you’re using a PSP that holds funds in central bank accounts, ask if they:
- Generate interest on those funds
- Offer interest-sharing arrangements
- Provide clear reporting or dashboards
It’s a simple way to boost platform profitability while maintaining financial best practices.
Commission Models: How Marketplaces Get Paid
To monetise your platform, you’ll typically collect a commission on every transaction. The main options include:
Fixed Commission
A flat fee per transaction (e.g. £1 per sale). Simple and predictable.
Variable Commission
A percentage of the total transaction value (e.g. 10%). Scales with order size.
Compound Commission
A mix of both (e.g. £1 + 5%). This balances fixed costs and value-based earning.
The right model depends on your audience, pricing strategy, and the average transaction size. Some platforms even offer tiered structures or promotional rates for top-performing sellers.
Tracking Balances, Refunds and Promotions
An often-overlooked part of marketplace payments is balance management. You’ll need to track:
- Earnings
- Pending payouts
- Refunds and chargebacks
- Promotional discounts
- Credits or vouchers
This ensures sellers understand how their balance is calculated and builds trust. A strong PSP will provide real-time dashboards, transaction histories, and reconciliation reports to make this easy.
Marketplace Compliance: Regulations You Must Follow
Handling money for others is a regulated activity — especially in the UK and EU. As a marketplace, you’ll need to ensure your platform meets the following requirements:
KYC – Know Your Customer
Verifies the identity of individual users, especially sellers.
KYB – Know Your Business
Checks the legitimacy of the businesses selling on your platform.
AML – Anti-Money Laundering
Prevents criminal activity by identifying suspicious transactions and users.
SCA – Strong Customer Authentication
Required by PSD2 (and soon PSD3) for certain types of payments.
Working with a regulated PSP often automates most of this — saving you time and reducing risk.
Marketplace Payout Options
Payouts can be scheduled or triggered manually, depending on your platform’s rules and the seller’s preferences. Common methods include:
- Bank transfers – Secure and reliable
- Card payouts – Funds sent directly to a debit or prepaid card
- Digital wallets – Fast and flexible
- Real-time payouts – Near-instant payments for maximum seller satisfaction
Offering a mix of options gives sellers more control and improves the overall user experience.
Wrapping it up: Choose the Right Payment Gateway for Your Marketplace
Marketplace payments are complex — but with the right tools and partners, they don’t have to be overwhelming. A good marketplace payment gateway will:
- Support multiple payment methods
- Handle split payments and commissions
- Automate KYC/KYB compliance
- Offer real-time or scheduled payouts
- Provide transparent reporting
- Allow you to earn interest on held funds (where possible)
When evaluating providers, look beyond just transaction fees. Consider features, flexibility, regulatory standing, and how well they support your growth.
With the right foundation, your marketplace can offer a frictionless, scalable and profitable payment experience — for you, your sellers, and your customers.
Need Help Choosing a Payment Gateway?
At Merchant Advice Service, we know that figuring out marketplace payments can feel like a bit of a maze — especially with so many providers, features, and regulations to think about. That’s why we’re here to help. Our team offers friendly, unbiased advice to help you find the right payment solution for your platform. Not sure where to start? Take a look at The Payments Directory — it’s packed with hand-picked providers, all clearly listed by what they offer and who they work best for. Whether you’re after split payments, fast payouts, or something fully compliant out of the box, we’ve made it easy to compare your options and make a confident choice.
