Payment processing in MultiMerch
MultiMerch powers online marketplaces where customers purchase products from sellers in a marketplace.
This guide covers the MultiMerch payment system in detail.
MultiMerch payment system – the basics
In a regular online store, your customers purchase products from you, the store owner - and make order payments to you.
The case is different in an online marketplace, though – since your customers purchase products from your sellers.
Generally, there can be a number of different payment flows in online marketplace:
- direct customer to seller payments
- payment aggregation by the marketplace
- split/parallel payments
Direct payments
When purchasing products using a direct payment, the customer will pay the seller directly, as if it was a regular online store purchase.
In this case, the marketplace does not take part in the transaction - even though it may provide the actual payment processing feature.
For the marketplace owner, the benefit of direct payments is that the marketplace does not have to deal with taxation, invoicing, shipping and other accounting, as well as with disputes and refunds.
Since the transaction happens between the customer and the seller, it is up to them to handle their accounting.
The drawbacks are that this makes it inconvenient or impossible to make purchases from multiple sellers at once in a single order and that it makes it difficult to collect sales fees.
Because of this, MultiMerch currently does not support direct payments - although we have plans for direct payment support in MultiMerch 9.
Payment aggregation
Payment aggregation is another common way of handling payments in an online marketplace.
In this case, the marketplace collects order payments from customers and then distributes them between sellers as payouts while keeping the commission.
Aggregating payments makes it easier for the marketplace to collect sales fees, accept a wide array of payment methods and allow customers to purchase products from multiple sellers within a single order.
The drawbacks are higher risk and more complex accounting since the marketplace has to deal with the tax calculation and offer invoicing features to both the customer and the seller.
Aggregated payment flow is currently the default payment flow in MultiMerch.
Parallel (or split) payments
Split, parallel or chained payments are a combination of direct and aggregated payment flows.
With parallel payments, the marketplace handles direct or aggregated payments through a third party payment processor.
In this case, while the marketplace does offer payment processing between customers and sellers, it is essentially handled by a third party platform, which provides secure payment data processing, fraud prevention and invoicing services.
The main drawback is the limited number of payment processors that support split payments.
MultiMerch currently supports PayPal Adaptive for parallel payment processing.
Payments from sellers
In addition to processing customer payments, MultiMerch also makes it possible for the marketplace to accept payments from sellers.
This system is used to collect sign up and product listing fees from sellers.
Payment architecture in MultiMerch
Since payment aggregation is the default way of processing payments in MultiMerch, the payment architecture of MultiMerch consists of two separate parts – payments from customers and payouts to sellers/payments from sellers.
Payments from customers are handled via OpenCart's default payment method system while payouts to sellers are done using MultiMerch payment plugins.
This makes it possible for MultiMerch to use any of the hundreds of OpenCart payment extensions to accept customer payments to make it as available for marketplace owners as possible.
Payment configuration in MultiMerch
Configuring OpenCart payment extensions to accept customer payments
MultiMerch uses the default system of OpenCart payment extensions to accept customer payments.
These can be configured through Admin > Extensions > Extensions > Payments.
OpenCart offers over 50 payment extensions by default and can be extended with hundreds of others.
Some of the popular payment methods that come with OpenCart by default are PayPal, manual bank transfer instructions and cash on delivery.
Each payment method has its own configuration screen – here's PayPal Standard, for example.
As the marketplace owner, you can enable and configure as many payment methods as you need to accept customer payments.
Remember that you will be able to use these to accept payments from customers, but not from and to sellers.
Configuring MultiMerch payment plugins to process payments from and payouts to sellers
Since OpenCart doesn't have the concept of sellers, MultiMerch has its own payment plugin system specifically for marketplace payments from and to sellers.
By default, MultiMerch comes with two payment plugins – PayPal and Bank Transfer (manual instructions), which can be found via Admin > MultiMerch > Marketplace > Payment methods.
As the marketplace owner, you can decide whether to enable each particular MultiMerch payment plugin to accept seller payments, make payouts to sellers or both.
For example, you won't need to enable any payment methods for accepting seller fees if you don't have sign up and listing fees enabled.
MultiMerch's default PayPal payment plugin lets you accept fee payments from sellers and make individual payouts to sellers via PayPal Standard or make mass payouts to sellers via PayPal MassPay.
When you enable a payment plugin for seller payouts, your sellers will be able to specify their payment details for each individual payment gateway in their settings.
These payment details will then be used by MultiMerch when you're ready to make a payout.
Configuring PayPal Adaptive for a parallel payment flow
PayPal Adaptive for MultiMerch is designed as a regular OpenCart payment extension and can be enabled via Admin > Extensions > Extensions > Payments > [MultiMerch] PayPal Adaptive Payments for MultiMerch.
The Adaptive Payments extension lets your marketplace process payments from customers to sellers through the PayPal Adaptive API.
The plugin lets you choose one of the three Adaptive payments flows:
- parallel
- chained
- preapproval
You can also specify PayPal's "fees payer" parameter, which determines the party responsible for paying PayPal fees for adaptive payments:
- sender
- primary receiver
- each receiver
Enabling PayPal Adaptive will let MultiMerch sellers specify their PayPal addresses and accept customer payments directly.
Accepting and making payments
Accepting customer payments
Enabling at least one OpenCart payment extension lets you start collecting order payments from customers.
Once your customers add one or more products from your sellers to their cart and get to the Payment method step at checkout, they will be presented with a payment method selection form.
Depending on the payment method used, the customer may or may not be redirected to the payment gateway to complete their payment.
Once the payment is completed, a new order is created – you can see and manage orders in your marketplace administration panel.
Your sellers will also see the new order in their seller accounts.
If you're using the aggregated payment flow, MultiMerch will store the information about the payment as a transaction record in the database.
Transactions are what forms seller balances, which make it possible for you to make payouts to sellers at a later date.
Making payouts to sellers
When a new order is created using an aggregated payment flow, customer's payment is transferred to your – marketplace owner's – payment account.
To simplify the process of making payouts to sellers, MultiMerch generates transactions that form seller balances.
Seller's balance is the amount owed by the marketplace to the seller minus fees.
Both you as the marketplace owner and your sellers can see current balance statements and the transaction history through a few different MultiMerch pages, such as Transaction history and Reports.
When you're ready to make a payout to one or more sellers, you'll use the Admin > MultiMerch > Finances > Payouts > Begin new payout interface.
Here, MultiMerch displays all sellers with non-zero balances and lets you choose one of more sellers and generate a payout with a specific cutoff date.
When you select one or more sellers and click the Begin payout button, MultiMerch will prompt you for confirmation.
Confirming the payout creates a new Payout record which you'll always be able to access via the Payouts page.
In MultiMerch, a payout is basically a group of invoices that are to be paid to your sellers by your marketplace.
To view and pay the invoices, click the View payout button in the list of payouts.
This displays the collection of all invoices that belong to this specific payout.
Here, you can choose to either pay all of them or pay different invoices via different payment methods.
After selecting the invoices and clicking the Pay button, MultiMerch will display the payment method selection and confirmation interface.
Depending on the payment method you're using you'll either be able to pay all invoices at once (MassPay) or will have to pay them one by one.
Note that MultiMerch will only display individual payment methods (such as Bank Transfer) if you have a single invoice selected.
When selecting multiple invoices at once, you'll only be able to make the payment if you have one of the mass payment methods enabled, such as PayPal MassPay.
Confirming the payment will either redirect you to the payment gateway or create a manual payment record for you to confirm.
It will also deduct the payment amount from seller's balance – making a payout essentially zeroes out seller balances.
You can view and manage payments via Admin > MultiMerch > Finances > Payments and view additional reports in Admin > MultiMerch > Reports > Finances.
Accepting seller fee payments
If you have sign up or listing fees enabled, MultiMerch will let you collect payments from your sellers for signing up and listing products at your marketplace.
When sellers sign up and list products with fees enabled, MultiMerch will display a notice about sign up and listing fees being enabled in the marketplace.
You can choose to either collect fees from sellers directly or deduct them from seller balances.
If direct fee collection is enabled, MultiMerch will generate an invoice when a seller signs up or lists a product.
Sellers will then be able to make a payment for one or more invoices using one of the MultiMerch payment methods.
After the invoice is paid, MultiMerch will automatically activate seller's account or any products that required a listing fee payment.
Processing Adaptive payments
Apart from the initial configuration, Adaptive payments don't require additional actions on your behalf.
When PayPal Adaptive is enabled in your marketplace, sellers will be able to specify their PayPal addresses in their payment settings.
At checkout, the new payment method will appear to the customer as PayPal Adaptive and use a regular PayPal payment flow.
PayPal will then instantly split customer's payment between all sellers and your marketplace account if selling fees are enabled.