FinTech firms are aiming to serve the payment needs of marketplaces with technology that helps funds flow both in and out of their accounts — a process that meets many challenges when dealing with so many payment services globally, or even in just one country. Modo, in one case, has filled out a product around checkout, which it calls /Checkout, to focus on how money arrives at an organization.
Modo CEO Bruce Parker told PYMNTS in an interview that “the converse” or “the exact opposite flow” is payouts — how money leaves an organization — and there is a very similar set of challenges. The company has provided that sort of solution to banks, where it uses a payment stack that solves the interoperability problem of connecting firms to payment services for money leaving their bank accounts as opposed to funds arriving in their accounts.
In the context of a marketplace, a checkout relates directly to a payout that a company may even want to conduct in one fell swoop, such as the case of ridesharing or other gig economy services. On-demand house rental services and the like are other examples where, from a marketplace perspective, money coming in and going out relate to the same economic activity. Marketplace companies have dedicated time and money to building their payments stacks as well as have excellent payment teams.
They are interested in payments and solve for payments in fairly sophisticated ways, but even some of the larger players struggle to keep up with different connections and payment services. Some longstanding organizations say that adapting a marketplace model would make sense to them — or that they have had that kind of business model for a long time but never called it a marketplace.
Companies that have been slower to adapt payment services may not know if they want to run these processes themselves, or if they would rather have a service that would be in the cloud and have a payment stack that has been developed. They haven’t had the decade or so that other organizations have spent building out the tools to conduct checkouts and payouts in one swoop. But with the help of payments technology, FinTechs have created a consistent set of orchestration services to help funds move both into and out of marketplaces.