Powering Marketplaces with Embedded Finance Solutions (Part 1)

Growing businesses often evolve as multi-party ecosystems where a consolidated payment management system is crucial to long-term scalability. Powering your marketplace with innovative Embedded Finance solutions from J.P. Morgan Payments can help streamline backend payments, grow revenue potential, and help create experiences that drive customer satisfaction.

In this blog, we’ll introduce how the power of marketplaces forms digital commerce, and how J.P. Morgan can be the engine powering payments for these ecosystems – giving them access to the bank’s global financial infrastructure to build innovative, revenue-generating tools for their end users in a controlled, secure manner.

Enable end-to-end business growth: the potential of marketplaces

As we evaluate growth opportunities across industries, we uncovered that 35% of all online shopping globally occurs in curated marketplaces where businesses, their customers, and third-parties converge. With high transaction volumes, increased consumer demand, and limitless shoppers to onboard; the revenue opportunity in a marketplace is enormous with embedded payments projected to reach $16 trillion in market size by 2030. 

The shift to an increasingly online, digital economy is creating new opportunities and considerations for treasury operations. If your business already has a stake in the marketplace arena, then you’re familiar with the ebbs, flows and challenges associated with third-party money (3PM) transactions and holding cash that belongs to another entity, like customers, sellers, or merchants.

The challenges of 3PM transactions include:

• Decentralized payments limit visibility and scalability.
• Differing backend management systems can drive up costs.
• Fewer payment options mean less satisfied customers.
• Fraudsters undermine payment security.

In the ever-evolving landscape of digital commerce, you understand that the question isn’t whether to embrace marketplaces, but how to master them. As you evaluate your business’ need to join this ecosystem, it’s important to navigate the complexities of delivering streamlined payments experiences without sacrificing security or scalability. Discover how our clients are leveraging our end-to-end payments solutions to solve the multifaceted challenges of money movement and how these tools can help your business grow.

Reducing complexity to streamline management

The strategic use of marketplaces can propel a business to new heights – with new revenue streams, increased reach and efficient digitization all on the line. However, without the right payment infrastructure in place, a marketplace can quickly become a complex challenge for technology and product professionals to juggle.

A client of J.P. Morgan Payments with extensive retail commerce expertise recognized the potential of a digital marketplace for their business. As they curated third-party sellers – many of whom were small businesses that lacked the resources to establish the online presence – they realized that insourcing payouts laid the foundation for the organization, creating additional opportunities to generate value from the marketplace. However, they also discovered that managing transactions with third-party merchants created bottlenecks, which slowed down these same customer payouts.

The team at J.P. Morgan Payments strategized with the client and provided tailored services that addressed their unique challenges. Using a hosted payments solution, we enabled the client to efficiently manage many third-party suppliers, and their bank account details on a single platform.

This approach can help:

• Support tokenization, helping to ensure the protection of sensitive payment account information for both consumers and sellers.
• Utilize a single-API integration to meet the ever-evolving expectations of participants.
• Enhance the user experiences, empowering the client to manage the seller experience for onboarding and payouts.

Our collaboration also addressed the complexities associated with third-party merchants. The key opportunity lay in leveraging our expertise to manage millions of transactions and the flow of funds between the client and its partners – a complex process that involves navigating state-specific nuances. 

Conclusion

The dynamic landscape of digital commerce presents both challenges and opportunities for businesses operating within marketplaces. By leveraging innovative payment solutions, such as those offered by J.P. Morgan Payments, businesses can effectively navigate the complexities of third-party money transactions, enhance customer satisfaction, and unlock new revenue streams. The strategic integration of a robust payments infrastructure not only streamlines management but also ensures scalability and security, empowering businesses to thrive in an increasingly digital economy. As demonstrated by our clients, embracing these solutions can transform potential bottlenecks into opportunities for growth, enabling businesses to master the marketplace ecosystem and achieve long-term success.

Where to go from here

In a follow-up blog we will explore how another client leveraged Embedded Finance solutions from J.P. Morgan Payments.