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MenuWe are planning to start an freelance service platform having global sellers. Can anyone suggest how to setup the payment flow structure?
We require to understand the pay in and pay out process for a freelance service marketplace. we have read that the funds must not be transferred to our marketplace bank account and if we do so it requires a money transmitter licence. We need help to understand if this is true and the options we might have to pay our global freelancers.
Answers


There are a many ways to setup payment in online marketplace. Here are a few examples:
1. Use a credit card processing service - This is the most common way to handle payments, and it's easy to set up. You just need to sign up with a reputable company and enter your billing and shipping information.
2. Set up a gateway account - A gateway account is a type of payment account that allows you to take credit or debit card payments online. This is a good option if you want to accept payments from a large number of customers simultaneously.
3. Use PayPal - PayPal is one of the most popular payment methods online, and it's easy to set up. Just sign up for an account, add your business information, and start accepting payments.
Whatever payment method you choose, make sure to keep your billing and shipping information accurate so that customers have an easy time paying for your services. And last but not least, remember to keep your business running smoothly by keeping an eye on expenses and making necessary adjustments as needed!


You could opt for an escrow service wherein the money can stay for the duration the project is being completed by the freelancer and post completion gets transferred to the freelancer from the client
OR
You can block a certain amount from the client's wallet for the duration they are engaging a freelancer
Legislation varies across different countries. When you hold other people's money you become a custodian, in the early days of a startup you can do it without a license, but at some point you would probably have to become compliant. That's why for early stage startups I recommend using payment gateway providers like:
- PayPal Commerce Platform for platforms and marketplaces: https://www.paypal.com/en/business/platforms-and-marketplaces
- Stripe for marketplaces: https://stripe.com/en-es/use-cases/marketplaces
- MANGOPAY (only in Europe): https://www.mangopay.com/pricing/
All these providers count with licenses and compliance teams to ease you the task of having to deal with it on your own.
I'll be happy to share with you some examples of what I've done with my startups and with the companies I consult.
Related Questions
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What is the best pricing (business model) to apply to a marketplace?
I like to separate your question into 2 sub-questions: #1 How do we determine which side to charge? #2 How much is the right amount to charge? On #1, my answer is that you can charge the side(s) for whom you add the most value. In your examples, Uber really solves a big problem for drivers, it's that they sit idle for a good part of the day, so are willing to pay a lot for new leads. (their alternative is no work) Consumers are charged more for the convenience of a private car but they are probably not so much willing to pay more for a taxi, even if they can hail one from their phones. For AirBnB, it's a mix, it's a way for landlords to monetize idle capacity which they are willing to pay for, but it's also a way for a renter to pay less than they would normally pay for a hotel. On #2 (how much), I like to triangulate a number of factors: - What's the maximum amount I can charge one side, while still being a good deal for them. - How much do I need to charge so that I can become profitable? (the economics are quite different if you charge 3% vs. 12%) - What are comparable services charging for substitutes/competitive offerings? I will just add that there is no formulaic way to determine pricing strategies (curated vs. open), and it's a lot more about what's the comparable and what the value delivered is. That's how I approached the question while deciding the business model at ProBueno.com (my startup)
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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.
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When working on a double-sided marketplace how do you work out cost of customer acquisition?
I'm the CTO of https://3dagogo.com a marketplace of proven to print 3D designs. We look at the two sides differently. There's not a single customer. In our case you have designers and purchasers ( sometimes the same person can be both ). Cost and methods for acquiring designers are very different than those to attract purchasers. I would clearly separate the sides and come up with separate cost structures. In my opinion when you're looking at the marketplace from the purchaser perspective, the other side's acquisition costs can be seen as fixed marketing costs.
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What support software do most marketplace startups use? Is it custom, or a SaaS product like Zendesk, Desk.com or Uservoice
Your support software should cater to your needs, depending on how your business operates. Fiver uses Vanilla forum and Zendesk. Thumbtack uses Zendesk. Not sure about AirBNB, their help center seems to be custom. Depending on how well funded your are, I would recommend starting with a free plan with one of the help desk SaaS products, or even using open source ticketing platform. Then, as your needs grow and you need integration with your marketplace, there's no reason you can't scale and migrate.
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How to attract users to both sides of a double-sided marketplace (legal Q & A)?
You could try a "widget" on the lawyer's site which facilitates getting generic questions answered for free. The idea being that in each practice area, there might be a handful of questions that they get asked frequently, and would commit to answering one-time. It could be used to qualify the web visitor (always a good thing) while satisfying the visitor by providing them an answer. Of course, the challenge here is that most lawyers might only be comfortable providing such watered-down generic advice, that the answers themselves wouldn't be very useful. But this way, you could provide value to lawyers somewhat comfortable with online discourse, while building up content. With enough lawyers and content, you could then expand the service to build towards your larger vision. But as John has mentioned, many entrepreneurs have and are actively trying to win with this type of idea and have often struggled. CaseText is a recent YC grad that is doing some interesting work in this area. Happy to talk through your product implementation.