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Payaut: THE PAYMENT SOLUTION FOR ONLINE MARKETPLACES & PLATFORMS

Online-Marketplaces are booming. This article covers essential information on developments in the Payments industry, that are relevant for every Marketplace in 2020.

What should market places focus on?

These days marketplaces have a huge share in online business. At the same time marketplaces have challenges keeping up with changing regulations, and scaling up their operations. We believe that they should focus on their core business to be successful over time. Sometimes we notice that there is a lack of focus on what matters.

For example, payments can be very important, but they are, in most cases, not part of the core business and more importantly, very time-consuming. How to attract more sellers and buyers to your platform is a key challenge for most of the marketplaces. What we see is that because of regulations and lots of manual processes in payments, the marketplaces spent too much time on that versus core business opportunities.

PSD2 is an important regulation that has a huge impact on marketplaces. The Dutch National Bank -DNB- is also enforcing these regulations, chasing marketplaces who are in the money flow, and demand them to apply for a payment license or another solution. We see a lot of the marketplaces ignore these signs and continue doing business as usual but it’s a matter of time before DNB will come to them. It’s time to act.  

On top of that, platforms should be ready for the future. Automating manual processes is part of this journey and the key to success is how easy they can scale their business.

Where is Payaut positioned in the money flow from a Marketplace to a PSP?

Payaut is positioned between the PSP and the sellers on the marketplace. Normally the PSP settles funds to the platform (in the money flow), but with Payaut the funds are settled to our Foundation bank account. We receive funds from one or multiple PSP’s depending on the setup of the platform. Based on the instruction we get from the platform we pay out to the seller and the platform itself.

With Payaut, the marketplace is out of the money flow and compliant under PSD2 regulations.

How does this benefit a Marketplace?

With Payaut, the marketplace is out of the money flow and compliant under PSD2 regulations. Payaut is also automating the whole seller onboarding and payout process which saves time and costs. On top of that, the platform remains flexible to choose their pay-in structure, now and in the future.

Let me explain you a bit more about this flexibility. There are still many payment service providers that are not offering a marketplace payment solution. Platforms that are using the services of one of these PSP’s  have two options to become compliant under PSD2: 1) they need to integrate with another PSP with a marketplace product, or 2) request a Payment Institution License (PIL).

Moving to a new PSP is a very time consuming and costly exercise and requesting a PIL is for most of the platforms not realistic. For those platforms, Payaut can be a pragmatic solution to become compliant. Flexibility for those platforms means they can keep their payment integration as it is.

Then there are also platforms using multiple payment service providers. For those platforms, flexibility means they can keep this multi PSP setup as it is. Especially for big successful international platforms, this is very common. As no single PSP has the perfect global solution, they leverage the strengths of a combination of providers to offer the best payment product against the lowest costs. For those platforms, working with Payaut means they can maintain the current PSP setup and remain flexible in the future to continue optimizing their Pay-In structure.

What are the most important implications for marketplaces since PSD2?

PSD2 means for marketplaces that they can only be IN the money flow of a transaction between a buyer and seller, if they have a Payment Institution License. If they choose not to apply for this license, moving out of the money flow is the way to move forward.

How do you see the future of Marketplaces develop over the years?

Marketplaces are leading global eCommerce growth and this growth will continue over the coming years. It could be that some of the smaller marketplaces will merge and that there might be a place for only a couple of giants, but we also see plenty of room for niche marketplaces who have a very specific focus. Take a look at Barqo, one of our clients who are boat sharing. It’s the community effect driving the long term success of these specialized marketplaces.

Why is a good KYC & onboarding experience of utmost importance for buyers and sellers on a marketplace?

KYC checks and similar processes are always a key barrier for purchases, driving conversion down. If a seller has a bad experience doing the KYC check, it could be that he never completes the onboarding process. Having a good experience and process in place will lead to more sellers on the platform, ultimately driving the success of the platform.

What is Payaut in brief and how did the Payaut idea get started?

Payaut is an online payment solution for marketplaces providing 3 services: 1) Onboarding & verification of sellers 2) Split payments 3) Payout to the sellers. Ernst, our CEO, built a similar product for Adyen and decided there was still a huge opportunity to launch a similar product but decoupled from a PSP. So he took the chance, found a co-founder and funding, today we work with 8 colleagues on the product, primarily engineers with a strong background in payments.

How do you envision Payaut services being used in the coming 2-3 years?

Our mission is to connect more sellers and buyers at online platforms, we enable growth for platforms, not only in NL. At the end of the year, we will be ready to process across Europe. The plan is that we add at least 10 more platforms in 2020, and then in 2021 we are ready to add some of the larger leading international platforms.   █


The role of Payaut in Payments

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