Marketplaces are a great way to connect buyers and sellers, but they can also be a missed opportunity for monetization. By offering a white label payment wallet, online platforms that facilitate transactions between buyers and sellers can give their users a convenient and secure way to pay for goods and services, as well as generate new revenue streams.
What is a white label payment wallet?
A white label payment wallet is a digital payment solution that enables businesses to offer their own branded financial services (e.g., credit and debit cards, bank transfers) without developing the technology themselves. Developed and maintained by a third-party provider, these wallets help businesses cater to the diverse payment preferences of their customers and personalize solutions according to specific corporate identity requirements.
How does a white label payment wallet benefit marketplace users
1. Increased customer engagement
A white label payment wallet makes it easy for buyers to pay for purchases, which can lead to increased customer engagement and loyalty. For instance, a stored value wallet can facilitate buyers in accumulating points during the purchase of products. Accumulated points can subsequently be utilized for future purchases exclusively on a marketplace and affiliate websites. This concept is comparable to the approach employed by PayPal’s branded solution, wherein users are empowered to determine the portion of accumulated points to be spent at checkout.
Incentive models
There are numerous incentive models that can be further explored. Consider the possibility of issuing credits ranging from $5 to $10 to users’ wallet balances on your marketplace in anticipation of peak sales seasons, such as Black Friday, to incentivize spending volume on specific dates. Issuing modest dollar incentives can be a potent tool for targeting specific user segments and promoting the sale of particular goods. For example, in a marketplace with a network of third-party sellers, these suppliers can procure customized campaigns from the marketplace to promote their brand and products. Sponsored incentives from third-party sellers can be directly transferred to wallet users and restricted for use on specific merchandise from a sponsoring third-party brand.
Additional services
Offering additional user-facing services through a white-label wallet can further enhance the time spent on your marketplace. For instance, users can access financial services advertised in their wallet that they may require for other purposes, such as currency conversion, supplier payments, cash advance loans, and more. These services can facilitate easier access to financial services, reduce the number of offline steps required to complete working capital applications with lenders and provide an entirely online experience for traditional banking products offered by financial institutions that lack online platform capabilities.
2. Reduced friction
A white label payment wallet eliminates the need for users to create new accounts or enter their payment information each time they make a purchase. One-click payments and transactions for buyers, suppliers and creators on your marketplace will ensure less drop offs and seamless money movement. Furthermore, a white label payment wallet obviates the necessity for users to establish new accounts or input their payment data every time they make a purchase. Expeditious payments and transactions for purchasers, vendors, and creators within your marketplace will minimize attrition and facilitate seamless monetary
3. Improved security
A white label payment wallet can provide a more secure way to pay for purchases, as it can be integrated with a marketplace’s existing security measures. Instead of allowing third-party entities to manage your Personally identifiable information (PII) data, user information will never leave the wallet ecosystem.
Mitigating risk
By refraining from sharing PII data and payment method details with external entities, you will be able to mitigate the risk of exposing user data via downstream partner platforms such as third-party payment gateways, money remitters and smaller partner companies with less control.
Reducing fraud risk scenarios
When users’ digital wallets are established on virtual bank accounts issued by the same banking partner who manages the majority of your treasury operations, fraud risk scenarios will be significantly reduced, allowing you to simultaneously minimize the burden of chargebacks.
Introducing tokenized wallet IDs
Implementing an additional layer of security in the form of tokenized wallet IDs for each user can further assist in obscuring user-wallet information, rendering it useless in the event of exposure through insider fraud.
4. A new revenue stream
A white label payment wallet can generate new revenue streams for marketplaces through additional fees, interest, and data monetization. Here are some examples worth exploring:
Fees
A premium charge for embedded services previously offered by third-party wallet apps e.g. faster payouts, transferring funds to local bank accounts, payments to suppliers, or currency conversion operations to hedge against macroeconomic risk. In-house wallet solution gives marketplace sellers and opportunity to remit payouts settlements to offshore parent company and this use case will likely drive majority of cross-border business case that includes currency conversion play. When a marketplace wallet is paired with credit cards, an interchange fee opportunity opens up with markup on various forwards and reverse money movement transactions. Up to 30% of marketplace users will simply prefer to store funds within a marketplace wallet at all times and use this similar to a bank checking account, where markup fees might be applied each time.
Interest
Flat interest on the funds held at a marketplace wallet can be earned on wallets. Additionally, for marketplaces with physical merchandise listings, the sellers looking for working capital solutions will need to finance inventory, ads and ongoing operations. When sellers in need of capital are presented with embedded lending products e.g. cash advances, an additional revenue stream opens up with markup on capital origination fees, as well as APRs.
Data monetization for white label payment wallets
Many solution providers are interested in offering additional services to both buyers and sellers on marketplaces. For buyers, solution providers might want to tap into information on past purchases and resell this information to producers who in turn might provide most sought-after goods in higher volumes. Buyer data enables solution providers to help sellers with more targeted campaigns and better conversion rates via ads, newsletters and other notifications.
Sellers, on the other hand, can benefit from third-party solution providers accessing their data to provide enterprise resource planning (ERP), analytics and accounting services, logistics and digital marketing campaigns. There are some solution providers with embedded financial services like payouts, cross-listings on multiple marketplaces, and a full suite of banking services to be offered. For example, a fintech lender is interested in offering business term loans and cash advance products to a large marketplace seller and would like to leverage data points on current inventory levels, the last six months of sales history, return rates or customer ratings. All this will help with seller underwriting in the credit application process and strengthen future operations with working capital options to finance inventory, ads and ongoing operations.
When monetizing data services on your platform you will want to provide the latest standards of OAuth, which ensure fully controlled and auditable data access and ownership by your users who are entitled to access revocation at any time.
Use a white label payment wallet to drive your business
The global ecommerce market is expected to reach a value of $6.3 trillion USD this year, up from $5.8 trillion USD in 2023. By 2027, its total worth is projected to exceed $7.9 trillion USD, according to data provided by Emarketer (formerly Intelligence Insider). Implementing white label payment wallet solutions can help businesses stand out in a competitive and ever-growing industry.
Marketplaces interested in monetizing financial services should explore the option of using a white label payment wallet. This is a convenient, protected, and profitable way to enhance user experience and create new revenue streams. By opting for a white label payment wallet, you can reduce the time and costs associated with developing a payment platform and provide businesses with a ready-to-use, scalable, and secure solution.
If you want to learn more about how a white-label payment wallet can benefit your marketplace, contact our experts using this form.
About the authorTomasz Krakowczyk
General Manager
An IT manager with over 15 years’ experience, Tomasz has built and developed cross-functional teams of experts for international clients in the financial services, real estate and information technology industries. A background that includes working as an Agile coach and as a program and transformation leader enables Tomasz to coordinate the work of technical teams with business strategies. A firm believer in continuous learning, Tomasz serves as Software Mind’s Head of Guilds, which has enabled him to create over a dozen competency-based guilds and for whom he helps develop and implement strategies that increase the skill sets of over 700 employees around the world.
