The complexities enabling money movement can make life challenging for CFOs and treasurers.
If they sit at the helm of marketplace businesses, well, that’s when things get interesting, and where technological sophistication butts heads with the need for simplified use and reporting.
While marketplaces and aggregators have revolutionized the way consumers and businesses interact, simplifying transactions and bridging gaps between buyers and sellers across an array of industries, beneath the surface of this streamlined experience lies the complexity of managing payments and ensuring smooth financial flows.
The innovation, as Cindy Turner, chief product officer at Worldpay, told PYMNTS’ Karen Webster, lies in recognizing that payments are fundamentally about ledger management.
“Marketplaces are running a business based on unique transactions — whether it’s a ride, a handyman service, or a vacation booking,” Turner explained, noting that payment providers must deliver not only the funds but also the structured data that allows marketplaces to track these transactions.
“The payments decision is one of technology as well as the actual finance ecosystem,” she said. “Every time that I’m talking to a CFO treasurer about their choice on payments, there’s a technology piece of that decision on the integration, an operations piece of how the reporting and reconciliation flows, and then the actual payment rails and the breadth of offerings and the overlap of them within that ecosystem.”
When it comes to handling payments, marketplaces don’t just need the cash — they also need data tracking every transaction that can tell the whole story. Payments are no longer just a process, they’re a gold mine of insights fueling multiple operations.
Turner explained that a rideshare service, for example, isn’t just processing payments; it’s collecting information on location, time, user preferences and more — data that structures their algorithm and streamlines their operations. The same goes for travel platforms, which now rely on payments to provide a view of a guest’s experience from booking to checkout.
As marketplaces redefine commerce across industries, from travel to food delivery to trade services, having a payment system that can adapt to the needs of each marketplace is critical.
“The most underappreciated part of any one of these finance organizations is the controller’s office and the back end of treasury, where they need to be able to take in reporting at the end of every day, be able to close the books in two or three days at the end of a month,” said Turner, noting that CFOs and treasurers tasked with overseeing these flows must navigate a multitude of decisions that influence compliance, competitiveness, customer satisfaction and, ultimately, cash flow.
The rise of digital wallets has also added complexity to marketplace payments. Turner drew a distinction between staged digital wallets, such as Apple Pay and Google Pay, and wallets that sit in the flow of funds, like PayPal. While the former are simply a different interface for card-based transactions, the latter can introduce new rules and requirements for dispute management, fraud prevention and fund flow timing.
“Eighty percent of the build associated with a new payment method is about managing non-happy paths,” Turner said, referring to the exceptions that arise when things go wrong — such as a failed delivery or a fraudulent seller.
One of the most critical decisions for marketplace CFOs and treasurers is where to sit in the flow of funds. Marketplaces can either handle the flow themselves — becoming the merchant of record (MOR) — or rely on a third party to manage this on their behalf.
“The decision isn’t black and white,” Turner said, emphasizing that marketplaces don’t have to choose between being fully regulated as an MOR or completely out of the flow of funds. She pointed to a spectrum of options, where marketplaces can take on parts of the payments experience without bearing the full burden of regulatory compliance.
For example, Turner noted that some providers offer solutions where they act as the payment facilitator (PayFac) on behalf of the marketplace, handling the regulatory and compliance aspects, while allowing the marketplace to maintain control over the customer experience.
Still, for many, it’s a question of when, not if, they will fully enter the flow of funds.
For scaling organizations, the goal is often to gradually take on more of the payment process as they grow, Turner said. However, the regulatory burden — including acquiring money transmitter licenses and adhering to banking regulations — can be daunting, and can often fall on treasurers and CFOs to manage.
“The delivery risk is another big concern,” she added.
After all, if one provider along the chain goes bankrupt, the marketplace or aggregator may be liable for refunding the customer.
That’s why Turner emphasized the importance of payment timing, recommending that marketplaces push out payments to service providers as close to the delivery date as possible to minimize risk.
With marketplaces handling growing volumes of daily transactions, from hundreds to thousands or even tens of millions, compliance and fraud prevention depend heavily on the details inside these payments. A payment provider that can’t supply structured data is a liability in this complex ecosystem.
As payment providers focus on helping marketplaces manage their ledgers, the line between traditional payment processors and comprehensive financial service providers may blur, Turner said, noting that one of the key challenges in marketplace payments is aligning the interests of different stakeholders.
“There’s an integration decision,” Turner said. “Developers care about seamless integrations and will often resist working with complicated systems.” In such cases, the payment provider must offer a highly flexible and easy-to-integrate system, often focusing on a seamless front-end experience.
In contrast, other organizations may be led by more operational concerns, such as financial reporting or managing multiple business units. These marketplaces may be willing to deal with more complex integrations if the back-office functions — such as reporting and reconciliation — are handled efficiently.
Depending on the organization, Turner said, either developers or CFOs may have a louder voice in the decision-making process. But that doesn’t change the fact that, ultimately, marketplaces must ensure they are relying on a robust, flexible and scalable payment infrastructure.
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