WooCommerce Payment Gateways: Marketplace Payments Explained

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. We have found that confusion happens when the next question is “How do I pay my vendors?”

When you talk about payments for marketplaces there are actually two kinds of payments.

• Payments from customers for orders
• Payouts to vendors for their earnings (commissions)

How and when you pay your vendors is a business decision as well as a technical decision. This includes how to configure your marketplace payments, your 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.

How do customers pay?

Whenever a customer places an order they will pay for this at checkout. You can use any WooCommerce payment gateway to process this payment. This will also log all earnings the vendors make into the commissions’ table and they will be listed as due. This means that they have not been paid out yet.

Payment flow explained

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 such as Stripe Connect
3. They pay with their credit card and the order is marked as processing/completed.
4. When the payment is confirmed the system will then be triggered to calculate and store the earnings (commissions) due for the vendor(s)
5. The transaction with the customer is now complete
6. You have the payment for the total order in your account

Now that the customer has paid and you have received the payment from them, you have earnings owed to the vendors.

How to pay commissions to vendors?

Once your customer has paid for their order you will owe a commission to the vendor(s) for the products in that order. How you pay your vendors is up to you. The payment methods to vendors depend on how and when you want to pay your vendors. You have two options for paying your vendors.

• Using the multi-vendor marketplace payment system
• Externally of the marketplace, via manual payments

Use the marketplace to pay your vendors

If you choose to use the marketplace payment system then your options are limited to supported gateways and payout systems. These payment gateways are required to support split payments to be compatible with a marketplace payment solution.

Use external systems to pay your vendors

There are no limits to how you pay your vendors using this method. We provide the ability for you to export all commissions 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 or cash.

Paying your vendors

The decision on how and when you want to pay your vendors will define your payment solution. You can choose to pay your vendors instantly or you can choose to pay them on a schedule or manually. This is a business decision for you, however, I will outline the advantages and disadvantages for each.

Can customers pay vendors directly?

The short answer is no. You cannot have customers pay your vendors directly and skip processing any payments like eBay does. We are at the limitations of the WooCommerce gateway API, which is not built for direct payments. Payments can be split between the marketplace and vendor with the vendor compatible gateways listed below, but all payments must be processed via the marketplace first and then distributed. Even if the entire payment is going to the vendors.

Paying vendors commission instantly when the customer purchases

Advantages

• Saves time
• Vendors are paid instantly
• Easier for your vendors and for the marketplace
• 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 can be responsible for any disputes

Paying vendors on a schedule or Manually

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 each vendor using different methods
• 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 our experience, most marketplaces choose to pay their vendors on a schedule and off the marketplace as this gives them far greater control over the business

Payment Gateways for Customers

There are over 100 payment gateways available for WooCommerce and this list gets longer every day. You can use any payment gateway available for WooCommerce with WC Vendors. This will allow you to take payments for your orders from anywhere in the world. This does not take paying out your vendors into account. Payment gateways for WordPress that support both payments from customers and payouts to vendors are listed below.

Some of the available WooCommerce payment gateways include

• Stripe
• PayPal
• eWay

Payout Solutions for Vendors

If you choose to pay your vendors on your marketplace then you have the following solutions available.

WC Vendors Stripe Connect

Take credit card payments from your customers and pay your vendors all at the same time. Using Stripe’s Connect platform makes this quick and easy. This option is only available to those that have Stripe and Stripe Connect in their country. At the moment that is just 32 countries available.

Payouts for WC Vendors

Since the depreciation of PayPal Adaptive payments there has been no easy solution available for paying your vendors via PayPal. Now, this new extension from The Plugin Pros is a Commission only marketplace 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 peace 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.

Mollie Connect for WC Vendors

Mollie Connect for WC Vendors allows your vendors to use their Mollie account to sell products/services on your WooCommerce marketplace. Mollie is the most popular payment gateway in West Europe and trusted and used by more than 40.000 WooCommerce store owners.

Square Payment for WC Vendors

This plugin integrates Square Payment Gateway with WCVendors allowing admin to connect a Square account and Authorize a Vendor through OAuth functionality in a Square application. 

PayPal Multi-Account for WooCommerce

This plugin allows you to have payments go directly to your vendors’ PayPal accounts. This allows you to configure multiple PayPal accounts within WooCommerce which are paid based on rules that you create.