Matchmaker, Make More Than A Match

http://www.pymnts.com/wp-content/uploads/2016/08/Hyperwallet-Series-1-of-6.mp3

The rise of the 1099 worker, who thrives in what is colloquially known as the “gig economy,” threatens to stand the traditional online marketplace on its virtual head. In an interview with PYMNTS’ Karen Webster — the kickoff to a multi-part series on what truly defines a modern marketplace — Michael Ting, senior vice president for digital markets at Hyperwallet Systems Inc., noted that the age of simple marketplaces and exchanges of goods and services (for payment, of course) is quickly fading into the rearview mirror.

“When we refer to marketplaces,” said Ting, speaking to a broad definition, “[they are] platforms that enable buyers and sellers to connect with each other and transact with each other. We’ve taken that a step further, where we divide that category into subcategories, with on-demand sector companies, like Uber and Lyft, companies where 1099 workers tackle the job by going out in the field and executing on those jobs.”

“We see that differently than the eCommerce marketplaces — more traditional ones, like eBay, where there are actual goods and where buyers are online and there is actual fulfillment between buyers and sellers. We see those as two separate categories that get further subdivided as the technologies and the marketplaces evolve.”

As for the idea that matchmakers must move beyond the match itself, Ting stated: “On-demand marketplaces, by definition, are matchmakers. They are putting together buyers and sellers who would otherwise not be able to find each other. They are taking fragmented markets and making the coordination process a lot simpler and a lot more streamlined.” But, Ting continued, “when looking at the on-demand services, just putting together someone who needs a service and someone who is supplying a service is not sufficient enough.”

A truly efficient marketplace, said Ting, is one that “takes things a step further … to isolate the buyer and the seller from the risks and the anxieties that come with that transaction with one another.” Original marketplaces, such as eBay, he suggested, included lots of disputes over things like fulfillment.

In light of anxieties over security governing the safety of transactions geared to on-demand services, Ting said that security is paramount in order to provide a trust and safety layer. He said that buyers and sellers come to these platforms with the expectation of transacting safely, and it is the marketplace’s job to foster that within the platform with the right technology and employ best practices and secure sensitive data, like credit cards and bank accounts.

The firms that then take and issue payments, said Ting, need to think about how they will use and store that data and the complexities of both taking money in and paying money out. A marketplace can keep that data in its own shop or tokenize that data and store the raw data with someone else who might be better suited to keep it secure.

Even with security concerns at the top of mind — and perhaps even despite the best efforts to ensure transactions go off without a hitch — said Ting, chargebacks and declined cards remain “a simple fact of life.” He went on to explain that there are any number of techniques for mitigating them, but the challenge is to insulate the on-demand marketplace users from that impact. If, Ting said, the notion of the marketplace is being an intermediary in the transaction, that has to be one of the key values it provides.

For instance, Ting said that sellers in the marketplace shouldn’t be impacted if a buyer’s credit card gets declined or if they have fraud or a dispute on the credit card, since the seller did what they were supposed to do and it was the marketplace that put them in touch with those buyers. Ting said that the marketplace has to take some responsibility since it is sitting in the middle of the transaction and pay if the seller has abided by the rules of the marketplace.

The value of being more than a matchmaker becomes apparent as these on-demand players try to keep people active on their platforms. Trying to drive a lifetime value for these customers is hard if the marketplace is not playing a role in ensuring transactions happen smoothly. For a freelance or project worker, added Ting, any experience of friction just means “they are going to go and find another platform to work with, and then, that platform or marketplace must go out into the field and find more people to replace them.”

And as we all know, it’s much easier to keep a customer loyal than to replace them.