Leveraging the power of services is an ideal way to grow your marketplace, while staunchly maintaining a core service is the best way to stay still, lose competitiveness, and deteriorate.
Your platform has thousands of users. You’re keeping them happy and engaged, they’re finding lots of great services or products, the experience is nice, and they’re visiting regularly.
What next? How can young and established marketplaces break through that common growth plateau?
First, define how your platform is vastly different from the typical Craigslist model, or any other online platform. Then, determine whether you have the resources to transition your information or matching platform into something truly unique and useful – a veritable one-stop-shop within your niche.
Add 'on platform' payments
Implementing on-platform payment options is big growth-step forward. If you’re not ready to hire an entire engineering team then simply outsource payment experts, risk experts, and customer service reps that understand payments because it’s incredibly hard trying it solo.
There’s plenty of great examples where DIY payments on-platform have worked wonders, but in most cases it takes years to reach that point. In the past eBay purchased and helped ramp up PayPal while the rest of the market fumbled to find an easy way to pay.
More recently looking at behemoth successes like Uber and AirBnB, it’s taken years to get the model right which is indecently costly to run. Then, once the first barrier is cleared – making the decision – there’s all sorts of other hurdles waiting around the corner.
Will a bank accept your model and if they do will they require huge upfront deposits to cover perceived risks?
Payment Integration Process
It can take serious testing and development to build the payment integration itself, but risk management tools are another level of work. Not only do they have to be implemented, but also tuned and operated by staff who know what they’re looking for.
Even if risk is not a great concern for your product or service, can you leave it to your payment service or will they leave chargeback responsibility to you?
A well-known example is 99designs. Having taken on the task of payments over a two year period, co-founder Mark Harbottle was convinced that had a service option existed this would have been the better choice. A few years later he hired the Zai's team to do just that for his juggernaut marketplace for websites, domain names, and apps, Flippa.com.
The PaaS model
While a SaaS model works for business apps, PaaS (payments as a Service) model works for platform payments.
Like most businesses you’ll have multiple software applications for various purposes. Take a moment to assess how many of them are core to your operations, then consider how many are service-based, licensed or even self-built.
Whatever the answer at this point, chances are this has shifted to SaaS decisions, whether that’s the plan or it’s already happening.
Using nimble purpose built solutions can save serious development and deployment effort, deliver elegant solutions quickly, and build credibility and security into a service without having to start from the ground up, make your own mistakes, and be left with technical debt, real debt (or tied up capital), and potentially a stack of chargebacks.
A good SaaS solution grows with the business and this should be no different with payments on your platform. The more you can limit the number of platforms to integrate with, the involvement of treasury, and the approvals you need to go through, the quicker you can return to focusing on the core customer experience, growth, and added value.
Taking on payments is a worthwhile undertaking, even if difficult.
- Improve customer loyalty.
- Increase user legitimacy & engagement.
- Unlock potential for value-adds or referrals.
Depending on your approach you might find it’s one that can put serious brakes on the growth or stability of the business.
At Zai, we’re excited about helping lift great businesses into the next phase of their journey and helping them do that with minimum outlay, maximum customer satisfaction, and far fewer headaches.