Use this planning section to identify the decisions and considerations for defining a seller marketplace. Refer to the Seller management onboarding guide for information about onboarding with the Pismo team.

1. Build the business case for the marketplace

Create a business plan that outlines your goals, target market, revenue model, and growth strategy. You may find that you want to configure a few different marketplaces to meet business requirements.

Considerations

Which country is your marketplace located in?

• Research the country’s tax laws affecting marketplace agreements.
• Determine which currencies you’ll support in the marketplace.
• Define which time zones your marketplace operates within since each time zone requires a program.

Who are your target merchants and what rates will you charge for the marketplace?

• Understand your merchants. Research their marketplace options and the merchant's competition to identify a new niche, create practical solutions, or leverage an existing business.
• Define your go-to-market strategy for adding merchants to the marketplace.
• Define your Merchant Discount Rates (MDR), whether they are flat fees, percentages on sales, and any defined tiers for higher-performing merchants.
• Determine a schedule that can handle settlements for all the merchants that belong to the marketplace.

What's your model for communicating with and supporting merchants in the marketplace?

• Determine how you’ll manage incoming merchant inquiries or disputes. Will you use a call center, web-based chat, conversational chatbots, or some combination of these support tools?
• Determine how you’ll communicate information and updates to merchants, such as settlement dates, receivables schedules, merchant discount rates, tiered promotions, and any required notifications.

2. Ensure you meet regulatory, legal, and compliance requirements

All countries have specific laws and regulations governing financial services such as marketplaces. There may be global rules as well. You must ensure relevant authorities have approved you for running a seller marketplace where you plan to operate.

3. Define your marketplace strategy

Determine whether your marketplace represents a single merchant or a group of merchants that share the same tax structure and setup. You also may consider creating multiple seller marketplaces to meet business requirements.

4. Discuss your creditor operations rules and Merchant Discount Rates (MDR)

How do you want to operate your marketplace?

• Pismo has standard processing codes that are specific to seller marketplaces. Determine any additional processing codes your business needs to support. Refer to Step 3: Define processing codes for details.
• What discount rates will merchants incur on sales? The charges may be different for each transaction type.
• Will charge rates differ based on transaction type, such as debit or credit, or whether the card is present? In Seller Management, these are configured inside the marketplace creditor operation object.
• What merchant settlement schedules do you expect to adhere to? You define those in Step 4: Running seller marketplaces.

You may want to set different Merchant Discount Rates for different merchants, with these factors as considerations:

• Transaction volume: Merchants with higher transaction volumes often have more negotiating power and may warrant lower MDRs.
• Risk level: Different industries have varying levels of risk associated with transactions. Higher-risk industries might face higher MDRs due to the increased likelihood of chargebacks or fraud.
• Merchant's creditworthiness: A merchant’s financial stability and credit rating can influence the MDR. Merchants perceived as lower risk may receive better rates.
• Transaction methods: The method by which you conduct transactions affect the MDR. For example, card-present transactions typically have lower MDRs than card-not-present transactions due to the reduced risk of fraud.
• Type of card used: Different types of cards such as credit, debit, or premium may carry different interchange rates, which can affect how you want to set up MDRs.
• Geographic location: Regional differences in banking regulations and market conditions can lead to variations in MDRs. Time zone differences affect settlement completion.
• Promotional or introductory rates: You can give some merchants temporary promotional rates that are lower than the standard MDR, particularly if they are newly joining a marketplace.