Payments Explained

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A regular question we’re asked here at WC Vendors is which payment gateway is supported? The quick answer is all WooCommerce gateways are supported for payments from customers however there is confusion between what payments are and how they are supported.

In WC Vendors there are two kinds of payments that can happen.

  • Payments from customers for orders
  • Payments to vendors for commissions

How and when you pay your vendors will affect your business decisions in choosing how to configure your marketplace payments, policies and procedures. Whether those two payments happen at the same time or separately is where the confusion can lie. Do you want to pay your vendors instantly when the order has been placed or do you want to have a regular payment schedule to your vendors ?  (weekly, monthly, quarterly). First I will explain the difference between each payment type.

Payments from customers

Whenever an order takes place there is a payment from the customer for their order. This is transaction is by default completely separate from the transactions with your vendors. This transaction is between your marketplace and the customer only. Any payment gateway that has been written for WooCommerce can be used to process this transaction.

How does this work?

  1. A customer browses your marketplace and adds products to their cart
  2. They proceed to checkout where they are provided a list of payment gateways to pay (Stripe and Paypal)
  3. They pay with Paypal and the order is marked as processing
  4. As payment is confirmed the system will then be triggered to calculate and store the commission due for the vendor
  5. The transaction with the customer is now complete
  6. You have the payment for the total order in your account

The payment gateway available above could be any WooCommerce compatible payment gateway, I only selected Stripe and PayPal as they come with WooCommerce and are available in a lot of places around the world. This could be any number of other payment gateways depending on your location.

At this stage you now owe the vendor their commission.

Payments to vendors

Once your customer has paid for their order you may owe a commission to the vendor(s) for the products in that order. How you pay your vendors is up to you. The methods of payments to vendors depends on how and when you want to pay your vendors. Do you want to pay them through the marketplace or do you want to pay them externally of your marketplace?

Through your marketplace

Your ability to pay your vendors on your marketplace limits you to just 4 different payment methods.

Externally of your marketplace

There are no limits to how you pay your vendors using this method. We provide the ability for you to export all commissions due for the vendors to give you a list of the payments you are required to pay. You can pay them via bank transfers, checks, scheduled payments on PayPal or other payment gateways.

Commission Payments

How and when you pay your vendors will define and possibly limit which payment gateways you can use. You can choose to pay your vendors instantly or you can choose to pay them on a schedule. This is a business decision for you, however I will outline the advantages and disadvantages for each.

Paying vendors commission instantly when the customer purchases

Advantages

  • Vendors are paid instantly
  • Easier for your vendors
  • Don’t have to track and then payout your vendors

Disadvantages

  • Limits which payment solutions you can choose
  • Refunds and disputes can become an issue
  • Need to trust your vendors to deliver their products
  • You are responsible for any disputes

Paying vendors on a schedule

Advantages

  • Can ensure vendors have shipped their products before paying their commissions
  • Save on fees when sending payments
  • Can bulk pay your vendors via any method you choose
  • You can pay vendors differently
  • You can use any payment gateway you like
  • You are able to handle disputes easier with customers

Disadvantages

  • More work for your business to track and pay vendors
  • Vendors may not like your payout schedule

From my experience most marketplaces choose to pay their vendors on a schedule and off marketplace as this gives them far greater control over the business

Payment Solutions for Commissions

If you choose to pay your vendors on your marketplace then you have just 4 available options to you.

Stripe Commissions and Gateway

This is our product that allows you to use Stripe Connect to pay your vendors at the point of sale. This is also the payment gateway that will process credit card payments from your customers. This option is only available to those that have Stripe and Stripe Connect in their country. At the moment that is just 25 countries available.

 

Payouts for WC Vendors

Since the depreciation of PayPal Adaptive payments there have been no easy solution available for paying your vendors via PayPal. Now this new extension from The Plugin Pros is a Commission only payment solution. This is not a payment gateway but rather a way for you to pay your vendors on a schedule or instantly via PayPal’s new Payouts system. This still requires that you install and configure a regular PayPal gateway, such as the one that ships with WooCommerce.

 

MangoPay WooCommerce

MangoPay is an option for our European users as this provides a Gateway and Commission payment in one that is compatible with WC Vendors. They have worked with me to ensure that it is compatible with WC Vendors. This allows you to process credit card payments using an alternative method. This also will only pay the vendors when they have marked their items as shipped. Giving you extra piece of mind with possible disputes.

 

Escrow for WooCommerce

The developers over at Escrow.com have worked to make their payment gateway compatible with WC Vendors. This is another alternative to taking payments from customers. This is available wherever Escrow.com is available.