How to manage payments for your online business


The incredible growth of online marketplaces like Amazon and eBay has led to the necessity to pay for goods in large quantities. Traditional payment systems weren’t efficient enough for handling marketplace transactions, so new payment systems have been created. In our article, you will learn:

the difference between single- and multi-vendor marketplace payments, the main features to look for in payment solutions, the benefits, and limitations of the five best marketplace solutions, tips to choose the right solution for you.

What is the difference between single-vendor and multi-vendor marketplace payments?

Depending on the number of vendors, online marketplaces are divided into single- and multi-vendor platforms. The type of marketplace platform determines the way payments for orders are placed on its work. For a single-vendor marketplace, all purchases made from buyers will be processed by a sole seller. In this case, the responsibility is only upon the owner to establish the payment details for each order.

For marketplace businesses using Shopify, there are a couple of things to keep in mind. First of all, there are multiple vendors with multiple accounts. Secondly, it is important to make a profit from managing the marketplace itself. Finally, you should allow customers to make one payment for their entire cart even if they’re buying from multiple sellers on your platform. This feature makes paying easier and more convenient for your shoppers.

As an entrepreneur, you’ll need to be able to accept money in multiple ways for your marketplace. Whereas in the last section we talked about how important it is for a platform to have several different payment solution options, in this section we’ll talk about some specific features they should have.

What to look for in a marketplace payment gateway

Although modern payment systems may seem similar, there are many factors to consider when choosing the best payment solution.

Let's talk about how to make a wise decision between marketplace payment systems and what you should look out for when making such a choice.

  • Availability in your target markets can impact how many opportunities you have to collect payments in the markets where your business operates. Additionally, you should pay attention to what currencies are allowed to be processed through a payment solution - because if the solution only allows you to process certain currencies but not others, this could be detrimental to your business strategy. The more currencies that are supported by a particular payment solution the more opportunities you’ll have for growth and further expansion through new areas and locations.
  • Complying with customer requirements ensures that a payment solution will stick to industry standards, laws, and regulations. This applies especially to the customers' Know Your Customer (KYC) and Anti-Money Laundering (AML), as well as to the General Data Protection Regulation (GDPR), and the Payment Card Industry Data Security Standard (PCI DSS).
  • A mass payments feature available for buyers enables them to make payments for multiple orders with one payment, which if a customer includes products from different vendors will automatically split the payment among those different vendors.
  • Most payment providers already provide tax report generation features. This is usually an extra bonus rather than core to their service and for this reason, we don’t list it as a key differentiator for any of our reviews. However, sellers who work with third-party partners such as us should take into account that having seller tax information available could be helpful in the event that they need to get sales tax reports from one of their partners.

The best marketplace payment solutions

There are hundreds of payment solutions worldwide. Most of them target limited regions and currencies, but there are some exceptions like PayPal for example. PayPal is among the top five companies you should consider when starting up your marketplace because its worldwide popularity, with market coverage spanning more than 200 countries and in-demand payment methods (credit cards, bank transfers, etc.).


Stripe is a technology company that aims to revolutionize online transactions via economic infrastructure. Founded in 2010, Stripe has grown rapidly and now offers a variety of services to help businesses succeed. Companies use Stripe to receive payments easily, manage risk and pay their suppliers promptly, among many other uses.

Benefits of Stripe Connect

  • A Marketplace seller is the merchant of record. An MoR is a party that accepts payments and is liable for payment processing. A Marketplace seller’s administrative responsibilities include ensuring the safety of transactions, dealing with taxes, complying with laws, managing refunds, etc.
  • Three-stripe accounts. Stripe Connect for marketplaces offers Standard, Express, and Custom accounts. Each has different terms of use, so you’ll definitely find one that suits your business needs.
  • Easy integration is possible with well-designed SDKs and clear API documentation. Once you decide to implement Stripe in your marketplace, you can be sure you’ll have all the necessary tools, libraries, documentation, and code samples for seamless operation.

Limitations of Stripe Connect

  • No mass payment system. Mass payments allow marketplace buyers to purchase from different vendors and pay them with a single transaction. With a mass payment system, a buyer simply places an order, presses the Pay button, and waits for the order to arrive - How awesome is that? If you have a possible way to incorporate it in your product, you should go for it! But if not, don't do so with regrets since mass payments might be unavailable in some countries (like India).
  • A developer's assistance is needed. Although Stripe's documentation is well-written, you can't implement Stripe in your marketplace with one click. Without knowledge of coding, you'll need to hire a developer to do it for you.


Dwolla API is a payment-solution API that helps developers build payment experiences for online businesses by processing payments directly via the existing bank accounts of customers.

Benefits of Dwolla

  • The automated clearinghouse is a popular electronic payment system used by millions, most of whom have never heard of ACH. It's a way banks transfer money from one account to another. ACH involves an awful lot of accounting finesse which means it can take significantly longer to process than money remitted through something like Bitcoin.
  • Low fees. Although ACH transfers are free, Dwolla needs to make a profit, so it charges fees for its services. However, these are kept relatively low at 0.5% for both sending and receiving transactions which is much cheaper than the costly fee structures implemented by other payment platforms.
  • Free trial. You can try Dwolla for free to see whether it meets your business requirements before committing to using this service.

Limitations of Dwolla

  • Long money transfer times. Money transfers via Dwolla take at least 1-2 days. The ACH network, which is the underlying technology behind Dwolla, isn't particularly fast. However, the platform offers a Same-Day ACH service to speed up money transfers for your customers.
  • The Marketplace Owner is the Merchant of Record. In this case, being a MO he or she will have to take on a number of administrative responsibilities that we’ve covered above.
  • The only issue is that Dwolla can be used in the US for American businesses and doesn’t support international payments. This won’t be an issue if you start your marketplace in the US, but if you want to scale your business over time and enter the international market, Dwolla won’t suit you.


Launched in 1998, PayPal is the oldest and most experienced payment solution. Since then, PayPal's operations have surged all over the world and its popularity has dramatically increased. With this in mind it might come as a surprise to learn that PayPal for Marketplaces is actually one of the new ETF payment solutions. However, we'd like to show you why it still deserves your attention and why you may want to keep on track with it on your journey along with the online market!

Benefits of PayPal

  • Widespread availability. PayPal has the widest availability among all payment solutions we’re comparing, operating in 161 countries if your marketplace will be targeting multiple markets. Enhanced security.
  • Unlike other marketplace payment systems like Stripe, PayPal doesn’t require its users to reveal their sensitive information like credit card numbers on their accounts which ensures better data protection.
  • Transfer money without an account. Buyers who come to your marketplace and purchase via your platform don’t need to have an account with PayPal to use this service

Limitations of PayPal

  • Outdated checkout page. Some potential customers settle for out-of-date websites simply because they take too long to load. Our website's response time is 1330ms, which may be slow.
  • Account freezing. If PayPal notices suspicious activity on your account, it can freeze your account without warning. Any fraudulent activities you are involved in will surely make a dent in the reputation of your business, so be careful to avoid any situations that could get you into trouble with them!


Braintree was formed initially as an independent payment system, but it's been a PayPal subsidiary for quite some time now. Braintree shares some of the characteristics of PayPal, but it also has its own unique features. What are those?

Benefits of Braintree

  • Integration with PayPal will give users a choice for which payment provider to use when buying from your marketplace. This may be convenient for those who have accounts in various payment systems and don't want to create one just for your marketplace.
  • Supporting over 100 currencies is a great advantage to your site by giving the buyer the freedom to pay with any preferred currency - it gives you an advantage of course as well if you're likely to sell more!

Limitations of Braintree

  • Not as secure or full-featured as competitors. Customers complain that they experience breaches from time to time and that Braintree management doesn’t always prevent fraudulent transactions.
  • Lack of support. Although Braintree claims they have 24/7 support, there are cases when customers can’t reach out to Braintree for assistance.


Mangopay is a solid alternative to those who operate marketplaces or crowdfunding platforms with international ambitions. Mangopay is accepted worldwide and has a presence in 125+ countries, which shows entrepreneurs that it can handle worldwide transactions flawlessly enough for their own needs.

Benefits of Mangopay

  • Customized payment flow. In addition to preset payment options, you can use the Mangopay APIs to create your own payment flows. This will help you customize Mangopay to better meet your business needs.
  • Mangopay has a few features that can help you to manage payments in your marketplace. Mangopay allows you to track all financial activities that occur in your business. It is also easy to view payment reports via the Mangopay dashboard.
  • Mangopay is an escrow service that temporarily holds money that a buyer owes a seller. This helps safeguard buyers and sellers from fraud because they are ensured the money is deposited without any issues or mishaps for both parties involved in their transaction.

Limitations of Mangopay

  • No free trial. You can’t assess whether this payment system is appropriate for your needs. Limited currency support.
  • Mangopay only supports 15 currencies which may be an issue if you're running a business with an integrated currency conversion functionality or you want to allow buyers to pay in their native currency even if the currency your marketplace uses doesn't integrate with the currency they use!

How to choose the best marketplace payment processing system

Since every marketplace has its own business goals, you should select a payment provider that best aligns with your core strategies. There are a few steps you can take to help make a decision:

  • Update your calendar and check availability with your target market. You simply won’t be able to use services that don’t operate in your target markets.
  • Prioritize your payment systems based on what fits most appropriately with your goals for the business. Security standards and providing support for multiple currencies may be at the top of your list, but you might choose to sacrifice this for faster processing times or more favorable fees that will allow you to reach more customers while remaining competitive.
  • Find out which of your partners boasts an easy-to-use SDK, APIs, and most importantly, if they are free. While the majority of payment providers boast modern SDKs and APIs that are easy to implement, you may also want to consider how much integration will cost and how long it will take.

Summing up

If you are running an online marketplace, you have to choose a payment provider that is suited to the needs of your business.

Stripe could be a great choice because it doesn’t have a mass payment feature. If you are based in the US market, you might want to consider Dwolla since it’s a US-only payment provider with the lowest fees available.

PayPal and Braintree work well if your target customers are all outside of the US market.