Recurring payment: how to better manage it on your marketplace?

To answer buyer practices, marketplaces must equip themselves with a certain number of essential functionalities. Among them is the variety of payment methods. In B2B, as in B2C, purchases are made by credit card, bank transfer or direct debit. As a marketplace operator, you need to cover as many practices as possible and adopt a recurring mode to facilitate bank transactions. But how does recurring payment allow you to manage your marketplace well?

Recurring payment on the marketplace: what is it?

Who initiates the recurrence?

The marketplace, whether B2B or B2C, is the site of a tripartite relationship: the marketplace operator acts as an intermediary in the transaction between the final buyer and the seller. Therefore, two transactional relationships can be distinguished:

• The one between the marketplace operator and the seller: the latter pays a subscription or membership to the former.
• The one between the marketplace operator and the end customer: the operator collects the buyer’s payment on behalf of the seller.

In both cases, all calls for funds are initiated by the marketplace operator.

Recurring payment: how does it work?

Recurrence can be by credit card or by direct debit. While buyers on B2C marketplaces tend to pay by credit card, those on B2B marketplaces prefer direct debit. However, B2B marketplaces increasingly tend to offer both methods to provide more payment flexibility.

In concrete terms, implementing recurrence on a credit card payment requires an initial registration of the card with a certain amount and then a 3DS-V2 verification by the operator. The marketplace operator then recalls the card, only for this same amount, according to a periodicity planned initially. It should be noted that Lemonway facilitates the registration of bank cards and allows them to be recalled for given amounts.

What are the advantages of providing recurring payments on your marketplace?

There are many advantages to direct debit or credit card registration:

• Simplicity: managing recurring payments is straightforward, especially regarding subscriptions or memberships.
• Control: since payments are initiated by the beneficiary (marketplace operator) and not by the payer as with a bank transfer, managing receivables is ensured, and cash flow forecasting is facilitated.
• Speed: once the payer has signed the SDD mandate or registered his bank card information, he will not have to do anything else. The recurring payment then simplifies the customer journey.
• In the case of direct debit, improved retention rate compared to card rebilling, where expiry dates and spending limits need to be considered.

It should be noted, however, that these payment methods require that the payers communicate their bank details to the marketplace and notify their bank so that the direct debits can be carried out without any problems.

Recurring payment on the marketplace: the Lemonway method for direct debits

As a PSP, Lemonway manages direct debits from accounts in the SEPA zone (Single Euro Payments Area). A distinction must be made between the classic SEPA mandate, known as the SDD core mandate for private individuals, and the SDD B2B mandate dedicated explicitly to business-to-business relations.

In both cases, the payer (the seller or the marketplace customer, depending on the relationship concerned) must sign the mandate and agree to the terms and conditions. For the core SDD mandate, the marketplace operator is responsible for registering the mandate, whereas the B2B SDD mandate must be provided to the payer’s bank before the first DD. In both schemes, Lemonway issues direct debit orders and submits them for debiting to the seller’s or end-buyer’s account with their prior agreement.

To help you maximise your conversion rates, Lemonway covers the main recurring payment methods. As a payment institution with passports in 30 countries, Lemonway offers you dedicated and personalised support to identify and implement the most suitable payment methods for your B2B or B2C marketplace project. Contact us now!