The Concept of Online Marketplace

Written by

James Davis

Written by James Davis

Senior Technical Writer at United Thinkers

Author of the Paylosophy blog, a veteran writer, and a stock analyst with extensive knowledge and experience in the financial services industry that allows me to cover the latest payment industry news, developments, and insights. Read more

Reviewed by

Kathrine Pensatori

Reviewed by Kathrine Pensatori

Product Specialist at United Thinkers

Product specialist with more than 10 years of experience in the Payment Processing Industry. I help payment facilitators and PSPs solve their various payment processing issues. Read more

The concept of online marketplace became relevant after rapid development of companies, which chose online marketplace model as their basic business model. The most well-known examples include Uber, eBay, as well as Amazon.

In the online marketplace model credit card processing has its peculiarities. Transaction processing mechanism, used in marketplaces, has to be capable of splitting the overall transaction amount into several (more than two) parts, which are then deposited to different entities. Beside the merchant and the processor, these entities can include marketplace owner, online marketplace software vendor, and different types of affiliates.

Partnership With a Payment Platform

In order to be able to effectively distribute the amount of every transaction among multiple parties, the company, which follows online marketplace business model, needs to implement split funding functionality. Consequently, if you decide to provide online marketplace services, you need to partner with a payment platform, which supports split funding logic.

More detailed information on online marketplaces can be found in the respective article on Paylosophy.