New business models for marketplaces and how PSPs are adapting

Marketplaces have become key parts of the digital economy. They are now changing their business models to meet users' growing expectations and strengthen themselves in the market. These new approaches, including subscriptions, freemium models, and auctions, are changing how these platforms make money and how users experience them. 

This also forces payment service providers (PSPs) to rethink their solutions. As the key players in ensuring smooth and secure transactions, they need to adapt their technologies to support these changes while complying with regulations.

The changing business models of marketplaces

Subscription model: building loyalty and anticipating revenues

The subscription model is one of the most popular marketplaces seeking to stabilise revenues while building lasting relationships with users. This predictive model is based on billing users regularly for exclusive services or products. For example, some B2B marketplaces that supply industrial goods or software as a service (SaaS) use this system to offer benefits such as preferential rates, faster delivery or priority access to customer support.

There are many advantages:

• Financial predictability: subscriptions guarantee a regular flow of funds, which improves strategic planning.

• Increased loyalty: by tying users to a subscription, the marketplace builds a long-term relationship with its customer base and reduces the number of customers who leave.

This model is particularly suited to B2B sectors, for customers looking for reliability and efficiency in their day-to-day operations.

Freemium model: attracting to convert

The freemium model is based on a mass acquisition strategy. Users access a limited version of a service free of charge, with the option of subscribing to premium options. Digital service platforms widely use this model and are beginning to find their way into marketplaces.

For example, a freelance platform may offer a free interface for creating a profile or responding to simple offers. Still, advanced features such as analytical tools or improved visibility require a paid subscription.

However, this model requires sophisticated payment management to optimise the conversion rate of free users to premium offers while guaranteeing a seamless experience.

Many marketplaces are adopting a hybrid approach, combining subscription and freemium, to cater for different customer segments and maximise revenue opportunities.

Auctions and private sales: making the most of perceived value

The auction model is particularly relevant for rare or high-value-added goods. For example, B2B marketplaces for industrial equipment allow companies to bid for specific equipment. This system encourages fair pricing while increasing margins for sellers.

On the other hand, private sales are mainly aimed at premium consumers and play on the feeling of exclusivity. Marketplaces for top-of-the-range fashion or products regularly offer this service to build loyalty among their most committed customers.

These models require high-performance payment solutions to manage complex flows, prevent the risk of fraud and secure what are often significant transactions.

New challenges for payment service providers

Adaptability of payment solutions

The evolution of business models has led to a variety of needs in terms of payment. For example, the subscription model requires automated renewals management, the ability to split funds between several beneficiaries, and robust tools to manage recurring flows.

One effective response to this problem is IBANisation, which generates virtual IBANs for each payment account. This functionality simplifies and speeds up transfers, ensuring better availability of funds for sellers while eliminating human error and strengthening traceability.

Security and regulatory compliance (DSP2 & DSP3)

Payments must be secure and follow the rules, especially with systems like PSD2 and the new PSD3. These rules say that PSPs must ensure that payments are safe by using strong authentication and KYC (Know Your Customer) management for buyers and sellers.

These rules are essential for auction or freemium models, where there are many different profiles and transactions, which increases the risk of fraud.

Managing international payments

As marketplaces expand internationally, PSPs need to integrate multi-currency solutions and local payment methods. As marketplaces expand into new markets, they must offer appropriate options, such as local e-wallets or SEPA credit transfers. Lemonway, for example, offers modular solutions that facilitate these cross-border transactions and meet the expectations of global marketplaces.

How are PSPs adapting to these new realities?

Advanced features to support growth

To meet the needs of marketplaces, PSPs are innovating by integrating advanced functions such as:

• E-wallet management for transparent fund tracking

• 3D Secure V2 authentication for optimised transaction protection

• Automatic payment breakdowns, making it easier to manage commission and payments. This modularity means that marketplaces can adopt various business models without fear of technical limitations.

Integration of the right payment methods

Innovative payment methods are playing a key role in the modernisation of marketplaces. Launching solutions such as Apple Pay which makes transactions via a smartphone quick and easy, or direct debit, illustrates this trend. These options meet consumers' growing expectations and integrate with the specific needs of different business models.

Payment by direct debit, for example, offers invaluable flexibility for marketplaces operating on subscription models, private sales or recurring services. Lemonway helps its customers set up SEPA (Single Euro Payments Area) direct debits in two ways:

• Core mandate: for private individuals and companies, which can be challenged up to 8 weeks after it is set up or up to 13 months if there is no mandate.

  • B2B mandate: for companies only and is more secure as no challenges can be made after the 3 working days it is set up.

These solutions can be used in several ways:

• Instant payment: perfect for one-off transactions.

  • Recurring payment: great for managing subscriptions, with automatic renewals.

  • Scheduled payment: adapted to pre-defined payment schedules, offering simple management of instalments.

Thanks to these options, marketplaces benefit from a comprehensive and adaptable payment solution that meets their requirements while guaranteeing an optimal user experience.

Customisation for an optimised experience

Finally, PSPs are investing in customising their solutions to adapt to the specific characteristics of marketplaces. Flexible APIs enable platforms to easily integrate services that enrich the user experience while ensuring optimum security.

These new business models for marketplaces, whether based on subscriptions, freemium or auctions, are redefining user expectations and posing new challenges for payment service providers. As strategic partners, they play an essential role in guaranteeing transaction security, fluidity and compliance.

Want to know more about payment solutions for your marketplace? Contact Lemonway to benefit from solutions tailored to your needs.