Below are some of the common payment structures for Online Marketplace
Commission
The operator may take a commission payment as a percentage of the money paid from one party to the other, or as a fixed fee for each transaction.
One should note that the rate or amount of commission would affect the quantity of transactions e.g. a lower commission would encourage customers to make a bigger purchase.
Commission may be relative to the value you provide as an introducer or as a site where a transaction can take place.
Membership or Subscription
The operator may require the customers or providers or both to pay a subscription or membership fee to sign up to the marketplace or platform. It can be a one-off, upfront payment made when signing up or it may be a regular payment.
Listing fees
The operator may charge a fee for listing on the website or for paid promotion.
Some online marketplaces may also combine a membership fee with listing fees or commissions.
No matter which payment structure is used for the online marketplace, it is important to streamline the sign-up or purchase process to encourage users to continue to use the marketplace to proceed with and complete their purchases.
Some suggested ways:
1. To have clear terms and conditions in place to intervene a dispute between the parties when one arises
2. Integrate a payment and booking system into the website so that transactions stay within the website
3. Use an escrow or credit-card pre-authorisation functionality to ensure that suppliers are paid at an appropriate time. This may be once a booking is made, at the start of the service or at the end of the service
4. User friendly website which allows one or both parties to indicate that the transaction is completed
5. Curate the onboarding process of suppliers and providers to ensure that they meet an appropriate standard to sell through the website
6. Provide a messaging service or chat box for parties to communicate
For E-commerce or online business legal services, please contact Chow & Cheung, Hong Kong Solicitors & Notary Public (E-mail: cac@ccsn.hk).
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