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MenuIs it possible to add money to the balance on the two-sided marketplace platform?
Based on the information and my understanding, most often the money on the two-sided marketplace goes directly to the seller's bank account (minus the fees of the provider) after the buyer received service/product.
Is it legally possible to add money to the balance so the seller can later buy someone else's service/product with the money he earned?
Image: http://s23.postimg.org/uug89unnv/two_sided_marketplace.jpg
Answers
There are legal, regulatory and risk implications to retaining and handling funds as a marketplace.
The good thing is with marketplace platforms becoming more mainstream, the payment solutions ( such as Stripe, BrainTree, WePay etc) have also evolved to support their unique needs/services provided.
Depending upon your marketplace model you could choose to just transfer funds to the Seller minus your fees/commission OR hold onto funds (for a certain period) giving your users the ability to withdraw funds upon their choosing.
The payment solutions you choose vary by the use case, and the solution providers take responsibility for legal, regulatory and risk implications.
I have experience in payments for maketplaces and would be happy to share more feedback and suitable solutions over a call.
Yes, it is possible to add a balance feature to a two-sided marketplace. This feature allows users to deposit money into their marketplace accounts, which they can later use to pay for goods or services. Here’s how it typically works:
1. For Buyers/Service Seekers
Buyers can add money to their accounts in advance. This balance can then be used to pay for bookings, products, or services without the need for repeated transactions.
Use cases:
• Streamlined payments.
• Prepaid bookings or purchases.
2. For Sellers/Service Providers
Sellers can also use balance features for:
• Receiving payments directly into their marketplace account.
• Using the balance for subscription fees, promotions, or purchases within the platform.
Steps to Implement
1. Payment Gateway Integration
Implement trusted gateways (e.g., Stripe, PayPal) to enable users to deposit funds securely.
2. Digital Wallet System
Create a digital wallet where balances are displayed and transactions are tracked.
3. Transaction Rules
Define rules for adding, withdrawing, or holding balances. Example:
• Refund policies.
• Minimum withdrawal limits.
• Fees for transactions (if applicable).
4. Legal Compliance
Ensure compliance with financial regulations like KYC (Know Your Customer) and AML (Anti-Money Laundering), especially if handling user balances or payouts.
5. User Experience
• Provide clear options for balance top-ups.
• Offer transparency about deductions (e.g., service fees).
Would you like detailed recommendations for integrating this into your marketplace idea?
Related Questions
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When creating a marketplace, does it make more sense to focus on stimulating demand first or supply?
Focus on the more difficult side of the marketplace. For instance, if you think it'll be easier to get suppliers, then focus first on getting buyers - always be working on your toughest problem (aka your biggest risk). You'll find some great blogging on Marketplace and Platform topics here http://platformed.info (read the ebook too!)CM
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Freemium v.s. free trial for a marketplace?
It depends on a number of factors but I'd boil it down to two key things to start: 1) What is your real cost to provide a free plan or trial? 2) Who exactly is your customer and what are they used to paying and who and how do they pay today? When you say "online workforce marketplace" it sounds as though you're placing virtual workers. If that's the case, or if you're paying for the supply side of the marketplace, the question is how much can you subsidize demand? Depending on where you're at in the process, I'd also question how much you can learn about the viability of your marketplace by offering a free version, assuming again, that free is actually a real cost to you. I was part of a SaaS project that started charging people for early access based mostly on just a good landing page (we clearly stated they were pre-paying) and were amazed at the response. I've also run a SaaS product that offered free trials and realized that the support costs and hand-holding and selling required to convert from free trial to paid wasn't worth it, this despite the product's significant average ARR. You might be better off providing a "more information" sign-up form (to capture more leads) and let them ask for a free trial while only showing your paid options. I've been amazed at the lead capture potential from a simple "have questions? Click here and we'll contact you" This is all the generalized advice I can offer based on the limited information I have, but happy to dive-in further if you'd like on a call.TW
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Holding funds in a 2-sided marketplace?
Check out https://www.balancedpayments.com/ They are made for marketplaces. Airbnb CEO among others invested in them and they have some of the best pricing/payout fees. Also some good info on http://www.collaborativeconsumption.com/2013/10/08/online-marketplaces-are-hard/ One of Balanced Payments co-founders is writing this blog series on marketplaces.MA
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Broad niche or Targeted niche which way to go?
I always suggest going "uncomfortably narrow" initially so that you can really dial in the user experience and build liquidity first. Going broad will be tougher as there's too much noise to signal. Also, it's best to fake the supply side initially of you can to improve the buyers side first, then figure out supply & quality afterwards if customers are buying and you've proven out a demand strategy that will work.DM
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When recording income for a marketplace startup, is it typical to use the gross transaction or just the fees collected per payment?
You would include all those lines in your revenue. Typically this looks like: Receipts: [full cash inflows] Fees: [payouts to vendors] Gross Receipts: [subtract] This ALL does into the Revenue category, so that your stated revenue is indeed net of fees, but you can see how it breaks out to understand how money is moving. That's if the margin there is very slim. If the margin is pretty good, and if you believe you can increase that margin materially over time, you can consider putting those fees into your gross margin instead of in your income.JC
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