Stripe Connect is a payment solution for marketplaces that lets you process customer payments to multiple vendors.
It is specifically designed to make your life as an online marketplace owner easier (at least when dealing with payment processing).
Today, we're releasing MultiMerch 8.20 that extends Stripe Connect capabilities to support Direct and Destination charges.
Considering automating your platform with Stripe to build a sustainable business model? Here's what you can do with MultiMerch 8.20 and Stripe:
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Automatically transfer customer payments to vendors' Stripe accounts
When you're running a multi vendor marketplace, processing customer payments and paying your vendors is one of the more complex processes you'll deal with.
MultiMerch supports two different payment flows:
- aggregated, where you collect customer payments and pay your vendors later via manual payouts
- automated, where the payment processor automatically splits customer's payment and distributes funds between vendors
Since we've first introduced Stripe Connect for MultiMerch, it's been steadily gaining in popularity among our marketplace owners.
The reason is simple – Stripe Connect lets your vendors connect their accounts to your platforms' account and start receiving order payments automatically:
With MultiMerch 8.20, we extend our Stripe Connect system to support 3 types of payment processing and distribution:
- separate charges/transfers
- direct charges
- destination charges
Here's how each of these payment flows works:
Payment distribution via separate charges & transfers
Here's what Stripe's documentation tells us about separate charges and transfers:
For platforms that desire more flexibility in how funds move, a more manual option is to create the charge on your platform account and separately transfer funds to the connected account. Using this approach, the platform is responsible for the cost of the Stripe fees, refunds, and chargebacks by default.
- The customer makes a single payment to your platform
- Your platform is responsible for distributing the funds between the vendors
The benefit of this payment flow is that you get to decide how and when to distribute customer's payment to your vendors.
The drawback is that this mode is only supported if your marketplace, your customers and your vendors are located within the US or the EU (which isn't too useful for international marketplaces).
Right now, MultiMerch will automatically distribute customer's payment between your vendors as soon as it is received while retaining your selling fee.
Payment distribution via destination charges
The second Stripe Connect payment flow is called Destination charges.
In short, it works like this:
- The customer (still) goes through a single checkout – even when ordering products from multiple vendors
- Stripe splits customer's order into multiple individual payments to your platform
- Each payment is then automatically transferred to the respective vendor's Stripe account (minus your selling fees)
- If you're collecting a marketplace shipping fee or taxes, Stripe then makes a separate payment to your Stripe account
The main benefit of this flow is that Destination charges are supported in all countries where Stripe is supported, not just within the US or the EU.
You also have a much more direct relationship between the charge from the customer and the transfer to the vendor.
Payment distribution via direct charges
Finally, MultiMerch now supports Direct Stripe Connect charges.
It works in a similar manner to Destination charges, but with one major difference: customer's funds go directly to vendors' Stripe accounts and not through your platform.
Here's how Destination charges work:
- The customer goes through a single checkout – even when ordering products from multiple vendors
- Stripe splits customer's order into multiple individual payments from the customer to each respective vendor
- Stripe then makes a separate payment to your Stripe account consisting of your selling fees
Of course, if you don't have any selling fees specified in MultiMerch, you won't be receiving any payments at all – less headache for you.
Destination charges are a great way to run a fully-automated online marketplace with customers paying your vendors directly without your involvement.
In this case, you will most likely monetize through sign up and listing fees or vendor subscriptions.
Use Stripe for vendor subscriptions
Don't want to force Stripe on your vendors? No problem!
You can still collect Stripe subscription fees in your marketplace from your vendors via regular credit/debit cards.
That's right – you only need a Stripe account for your platform to collect subscription payments, no Stripe is required for your vendors to subscribe.
This hasn't changed in MultiMerch 8.20, but we plan to extend the system further to support one time sign up fees and product listing fees via Stripe.
How to use Stripe with MultiMerch
Here's how you can use Stripe with your MultiMerch setup:
Sign up for a Stripe Connect account
To use Stripe Connect, you'll need to register your Stripe account as a platform for your sellers and create a set of API keys.
When you have your platform account ready, you can proceed to configuring Stripe in MultiMerch.
Configure Stripe Connect in MultiMerch
The upcoming version of MultiMerch introduces Stripe Connect payment plugin, which handles all Stripe payments in your marketplace.
Here, you'll specify a few of your basic Stripe account details – such as the API keys and signing secrets.
You can also assign specific Stripe payment statuses to your custom order statuses if needed.
Your sellers can now connect their Stripe accounts to your marketplace
When all's ready, your sellers can connect their Stripe accounts to your marketplace platform via their payment settings.
Connecting a Stripe account allows your sellers to receive customer payments through your Stripe platform account automatically.
At checkout, MultiMerch uses Stripe to process customer payments
At checkout, your customers will now be able to place orders and instantly pay using their credit and debit cards through Stripe.
We use Stripe Checkout for a simplified payment experience.
This saves you the trouble of going through a manual PCI compliance (who likes going through PCI compliance processes anyway?)
Sellers instantly receive their earnings while you retain the commissions
All customer payments in your marketplace are instantly transferred to your sellers – and you retain the sales fees.
MultiMerch will display all Stripe Connect payments in your admin area so you can browse them and run all of the regular reports.
You and your sellers can also view and manage all of the payments via your Stripe Dashboards.
Your sellers will also see all of their Stripe orders in their MultiMerch Dashboards – as usual!
In addition to MultiMerch 8.20 introduces multichannel notification, holiday mode for vendors and a few other exciting things that I covered in a separate blog post earlier.
The update is now available for download in your accounts – go check it out and spread the word!