Lemonway and PayPal join forces to optimise payments for B2C marketplaces

Marketplaces have transformed the way people buy and sell online. At the heart of this experience, payments represent a significant challenge for these platforms. Unlike e-commerce sites, transactions on marketplaces involve three parties: the buyer, the seller, and the platform. This tripartite configuration brings significant challenges relating to the fluidity of payments, transaction management, security, and compliance.

To optimize these processes and improve user experience for all stakeholders, Lemonway and PayPal have formed a partnership.

Payment on behalf of third party: what you need to know

Managing transactions on a marketplace is a regulated activity that involves collecting funds on behalf of third parties. This system generates technical and organisational constraints to secure flows, meet regulatory obligations (Know Your Customer), and improve the payment experience. The collection of funds on behalf of third parties is considered to be a payment service, requiring authorisation as a payment service provider (PSP) and strict compliance with legal frameworks such as PSD2 (Payment Services Directive), LCB-FT (Fight against Money Laundering and Terrorist Financing) and the RGPD (General Data Protection Regulation).

• KYC (Know Your Customer) refers to the obligation for regulated institutions such as Lemonway to collect information relating to the integrity of their users. This procedure helps to prevent the risks of fraud, identity theft, money laundering and the financing of terrorist activities.

To be authorised to collect payments on behalf of third parties, or to avoid collecting payments directly, the marketplace can use an approved PSP such as Lemonway. In this case, the PSP takes charge of all payment-related services and is responsible for all the required controls (KYC and origin and destination of funds, for example). 

Aside from the regulatory aspects, collecting funds for third parties generates new technical and organisational processes. Whether it's to save time or ensure the security of all transactions, it's essential to surround yourself with the right partners to have the best tools at your disposal (Pay-In and Pay-Out modules, for example). Against this backdrop, Lemonway and PayPal have joined forces to simplify payment and provide a better experience for all those involved in B2C marketplaces.  

PayPal and Lemonway join forces for an optimal online experience

As one of the most popular payment methods in Europe, PayPal's integration offers B2C marketplaces the opportunity to accept a trusted and widely-used payment method. This partnership helps marketplaces expand their payment options and cater to the needs of customers who already trust PayPal.

What is PayPal for online marketplaces?

PayPal is a popular digital wallet and a trusted payment method for marketplaces (and e-commerce websites). By integrating PayPal, a marketplace gains access to a reliable and widely-used payment platform, processing a very large amount of payments. This solution allows buyers to make payments quickly and securely without entering their credit card details, using their existing PayPal Balance or linked debit cards. The system also supports bank transfers, making it easier for sellers to receive payments directly into their bank accounts.

Better results for merchants

Offering PayPal as a payment method can improve conversion rates. According to a Nielsen study, this means:

• 17% increase in the number of regular buyers
• 12% increase in the average shopping basket
• 14% increase in the satisfaction rate

Offering PayPal as a payment option enables B2C marketplaces to extend their reach while offering users a popular method that inspires confidence. This is an essential lever for improving customer relations and encouraging purchases.  

For buyers: a better customer experience on the platform

Speed, fluidity, ergonomics... Users' expectations are constantly evolving. B2C marketplaces need to adapt to meet them effectively. Consumers are looking for simplicity and autonomy and are demanding an ergonomic, intuitive interface. Just as smooth browsing is vital, so too is the payment process, which raises issues of flexibility and security. 

According to a study conducted by Storyblok, 37% of consumers cite limited payment options as one of the main reasons for abandoning a purchase on an online sales site. For marketplaces, the stakes are even higher: 52% say they would like to add more payment options to improve their site's conversion performance. This criterion comes ahead of reducing loading time (47%) and improving the visual appearance (46%). 

On both sides, the variety of payment methods is essential. The reputation of the PayPal brand is a reassuring factor for customers, enabling them to make their purchases with complete confidence. They are twice as likely to complete a purchase when PayPal is offered as a payment solution. By using their existing account, PayPal allows shoppers to place an order securely in just a few clicks without entering their credit card details. All they must do is enter their telephone number or e-mail address, and that's it! 

What's more, PayPal guarantees solid protection for buyers. If a customer purchases via PayPal and delivery does not materialise or the item differs from its description, the buyer can request a refund. It is important to note that this option only applies to eligible purchases with certain limitations indicated in the GTC. However, where all the required criteria are met, the buyer is entitled to a full purchase price refund. In a sector experiencing strong growth and new needs, the integration of PayPal represents an opportunity for marketplaces to stand out by providing one of Europe's most popular payment methods. This helps to provide users with a smooth, easy, and hassle-free payment experience.  

PayPal’s role in streamlining payments

A complet streamlined payment process with PayPal

Streamlining the checkout process via PayPal reduces cart abandonment, increases conversion, and keeps customers returning. This method ensures fast and transparent payments thanks to secure billing information storage. Initially, PayPal had to make the transfer to the marketplace's account. From now on, it will be paid directly to Lemonway, which will collect the funds and distribute them to the merchants' accounts. In practice, this operation involves the following steps:

1. The buyer places an order and purchases on the marketplace via PayPal;
2. The money is received by Lemonway, which credits the corresponding amount to the merchant's payment account in its books, after deduction of a commission in certain cases;
3. Lemonway keeps this money in a "block account" in its name in order to secure the merchant's funds;
4. The seller fulfils the order and delivers the goods;
5. The buyer confirms that he has received the product and that it conforms to the specifications;
6. According to the payment terms agreed with the merchant, the money is transferred from the merchant's Lemonway payment account to the merchant's bank account.

Does PayPal protect marketplace purchases?

Yes, PayPal offers protection for both buyers and sellers on marketplaces. For buyers, PayPal ensures a refund if an item doesn't arrive or is not as described, under its Buyer Protection policy. This policy builds confidence in completing transactions. For sellers, PayPal provides protection against unauthorized transactions and disputes, safeguarding their interests. This protection is key to reducing fraud and fostering trust in the marketplace.

An easier API integration for split payments

The partnership between PayPal and Lemonway makes integration easy and unique. Previously, the marketplace had to handle PayPal and PSP integration, which entailed additional constraints and costs. Today, with the Lemonway environment, all that's required is to add a single line of code or make a few adjustments to the dashboard. As a result, merchants can easily extend their reach and convert new users.   

What's more, by integrating PayPal with Lemonway, businesses can kill two birds with one stone: offer a reliable payment method without having to carry out separate integrations. Combining these two online payment players makes it possible to optimise financial transactions for merchants and buyers in a secure and compliant environment. 

As a PSP, Lemonway is fulfilling its mission to simplify payment for B2C marketplaces, offering them the best and simplest features. Would you like to integrate PayPal as a payment solution on your B2C marketplace? Our team can help!