Online marketplaces may have created digital refunds and other disbursement processes for their consumers, but many seller payments are still conducted with the same outdated, time-consuming methods that they seem to always have used.
As a result, most sellers often find themselves facing waiting a long time to receive outstanding payments from their marketplace sales. In fact, 27% of them say it takes two to three days for them to receive outstanding payments from digital marketplaces, according to the “Disbursements Tracker,” a PYMNTS and Ingo Money collaboration.
Get the report: Disbursements Tracker
“Outdated payment methods like physical checks and slow-to-settle [automated clearing house transfers] put sellers in a bind,” Ingo Money CEO Drew Edwards told PYMNTS. “Waiting an average of three days for funds to clear means missing out on potential revenue opportunities, something that sellers will not stand for as marketplace competition increases.”
Complexity Slows Disbursement Process
B2B payments are still complex on many online marketplaces, especially when platforms attach chargebacks, fees and other costs to purchase orders before the payment can be reconciled —cutting into profits and slowing down the overall disbursement process.
This is true even though many businesses — especially smaller companies — are coming to value payment speed and efficiency just as much as consumers, if not more so.
This waiting game can hurt small- to medium-sized businesses (SMBs) financially, so a large number are seeking marketplaces that offer faster payments, especially as shopping on these platforms becomes more popular.
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Marketplace sellers are aware of the benefits of instant payments. Sixty-three percent of SMBs indicated they would switch to offering their goods on other marketplaces if it meant getting faster access to funds, according to PYMNTS data, and 61% of individual sellers echoed the sentiment.
A Key Opportunity for Marketplaces
Integrating instant payments thus represents a key opportunity for marketplaces. Failing to offer attractive disbursement options is likely to be one of the quickest ways to alienate sellers as the shift to buying and selling online continues. Marketplaces must look to adjust their payout options and processes accordingly to stay competitive in the days ahead.
Instant disbursement options are becoming must-haves for marketplaces as the eCommerce marketplace heats up. Enabling mass payouts via instant payments could be one way to help mitigate the challenges sellers face — and in turn propel future growth in the marketplace economy.
“Providing immediate disbursements to sellers in their payment method of choice — whether to a bank account, prepaid card, mobile wallets, credit cards or more — sends a strong signal that marketplaces understand the importance of cash flow in uncertain times and want to create the best experience possible for sellers,” Edwards said.
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