Marketplaces: collecting for third parties and safeguarding funds. 6 chapters and a final quiz.

Chapter 1. Safeguarding: other people’s money is regulated.

A marketplace connects buyers with third-party sellers, collects the buyer’s payment in one go, keeps its commission, and pays the balance out to the sellers. The setup looks harmless but carries heavy legal consequences. The money flowing through does not belong to the platform. Holding funds meant for a third party, even for a few days, means providing a payment service under PSD2, an activity reserved for licensed institutions.

The “commercial agent” exemption, a dead end

Before PSD2, many platforms relied on the so-called commercial agent exemption: an intermediary authorized to negotiate or conclude a sale could collect funds without a license. PSD2 (2018) closed that door. The exemption now applies only if the agent acts on behalf of only one of the two parties, the payer or the payee, whereas a typical marketplace by design serves both. In France, the ACPR had already set out that principle in its position 2013-P-01 on collecting funds on behalf of third parties. By the late 2010s, Europe’s large platforms therefore had to get licensed or work through a licensed institution.

• Obtain your own license as a payment institution (PI; initial capital of €125,000 for acquiring) or an e-money institution (EMI; €350,000) from your national regulator (the ACPR in France): full control, but a 12- to 18-month process, prudential requirements, and ongoing AML/CFT and reporting obligations. Only for very high volumes.
• Become an agent of a licensed institution: the platform acts in the name and under the responsibility of its principal, and is listed in the national register of agents (Regafi in France). An intermediate, regulated status.
• Delegate to a “for platforms” PSP (Mangopay, Lemonway, Stripe Connect, Adyen for Platforms, and others): the route the vast majority take. The partner handles the license, safeguarding, and much of the KYC.

Safeguarding: the safety net for users

Safeguarding requires the institution to keep its users’ funds separate from its own. By the business day after receipt, the funds must be deposited in a dedicated safeguarding account at a credit institution, or covered by an equivalent guarantee or insurance policy. Under French law, fund protection falls under Article L. 522-17 of the Monetary and Financial Code for payment institutions and Article L. 526-32 for e-money institutions. If the institution, or the marketplace, goes bankrupt, the safeguarded funds are out of creditors’ reach and the sellers get their money back.

Chapter 2. Seller KYC: knowing who you pay.

The institution that safeguards the funds is subject to anti-money laundering and counter-terrorist financing rules (AML/CFT), which require it to identify and verify every seller it credits. In practice, KYC is run jointly with the marketplace, which collects the documents during its sign-up flow. Badly designed KYC kills seller conversion; lax KYC exposes the platform to sanctions and to being used to launder illicit funds.

• Ongoing screening: sanctions and asset-freeze lists (EU, OFAC), politically exposed persons (PEPs), adverse media, at onboarding and continuously after that.
• IBAN verification: the destination account must belong to the identified seller. This is the first defense against payout hijacking and seller account takeover (ATO).
• Document verification: automated checks on ID documents (OCR, forgery detection, face matching when in doubt), with human review as a second line.
• Beneficial owners: for a legal entity, trace ownership back to the individuals holding more than 25%, a requirement of the EU anti-money laundering directives.
• Risk-based approach: a sneaker seller doing €50,000 a month is not someone clearing out their attic; due diligence scales with risk.

KYC is also a product issue, because every unnecessary field at the wrong moment drives sellers away. Mature platforms run progressive KYC, asking for an ID document only when the seller wants to withdraw earnings. They track completion rates step by step, prefill data from company registries, and automatically chase incomplete applications. At the leading platforms, more than 90% of applications go through with no human intervention, and manual review focuses on ambiguous cases.

Chapter 3. Splits, commissions, and escrow: how the money flows.

The operational core of a marketplace is allocation. A single charge on the buyer’s side must be broken down into n seller credits, one or more commissions, shipping fees, and sometimes a collected tax. That allocation is called the payment split, and it happens in the books of the institution that safeguards the funds, where each seller has a wallet (a payment account or an e-money account).

POST /v1/payins/pi_7f2a91/splits
{
  "currency": "EUR",
  "total": 10000,
  "splits": [
    { "wallet": "w_seller_alice", "amount": 6500, "fees": 975 },
    { "wallet": "w_seller_bruno", "amount": 2500, "fees": 375 },
    { "wallet": "w_platform",     "amount": 1000, "label": "shipping" }
  ],
  "escrow": { "release_on": "delivery_confirmed", "timeout_days": 14 }
}

Commission models

• Flat percentage of the amount (5% to 20% depending on the vertical), sometimes varying by product category.
• Fixed fee plus percentage: covers the per-transaction payment cost on small carts.
• Buyer fee: “buyer protection” charged to the buyer (the Vinted model), which funds escrow, customer support, and guarantees.
• Seller subscription: a monthly flat fee, often combined with a lower commission.
• Watch out: the commission is an invoice from the platform to the seller. It requires a self-billing mandate and its own VAT treatment, separate from the payment flow.

Escrow: the money waits for delivery

In most setups, funds credited to the seller’s wallet are held until a trust event: the buyer confirms receipt, a set period after delivery expires (typically 48 hours in C2C), the cooling-off period ends, or a contractual milestone is reached in B2B. This hold, loosely called escrow, protects the buyer (an easy refund if the parcel never arrives) and the platform (funds to offset against in a dispute). Its length is a trade-off. Too short, and it releases funds before the buyer can spot a delivery problem; too long, and it starves sellers of cash and becomes a selling point for competitors.

Chapter 4. Payouts and reconciliation: getting the money out.

The payout is when the money leaves its safeguarded cocoon for the seller’s bank account. The channel is almost always a SEPA credit transfer (SCT), sometimes SCT Inst for paid instant withdrawals. Policies vary, from on-demand withdrawal (C2C) to automatic daily or weekly payouts (B2C), with a minimum amount to spread fixed costs. Every setting (frequency, timing, threshold) is both a cash-flow lever and a selling point for sellers.

What can go wrong

• Wrong IBAN or closed account: the transfer is rejected and the returned funds must be credited back to the wallet, which is why the account holder is verified up front.
• Negative balance: a refund or chargeback arrives after the seller has withdrawn everything; the wallet goes negative and the money must be recovered (offset against future sales, direct debit, formal demand letter).
• Rolling reserve: for high-risk sellers, a portion of funds (5% to 10%) is held back for a few weeks as a rolling reserve to absorb future disputes and reversals.
• Dormant funds: abandoned wallets with a balance. You need reminder procedures, and then the rules for unclaimed assets apply.
• Payout hijacking: a compromised seller account changes the IBAN just before a payout. The fix: re-verification and a security hold after any IBAN change.

Three-way reconciliation

A marketplace’s books must reconcile three worlds at all times: orders (what the platform says), payments (what the PSP says: pay-ins, refunds, disputes, fees), and fund movements (splits, wallets, payouts, returns). The control equation is simple to state and hard to maintain: sum of wallet balances = safeguarding account balance. Any unexplained gap is a serious anomaly, whether it is a split error, double counting, or worse. These gaps go through suspense accounts that must be cleared within a strict SLA. Seller reporting (wallet statements, commission invoices) must be flawless, since it effectively keeps the books for thousands of third parties.

Chapter 5. The providers: Mangopay, Lemonway, Stripe Connect, Adyen.

Four providers dominate the conversation when a European platform chooses its payment infrastructure: two marketplace-native specialists (Mangopay, Lemonway) and two payment giants that have built a platform offering (Stripe Connect, Adyen for Platforms).

Payment infrastructure for platformsMangopayLELemonwayStripe ConnectAdyen for PlatformsPayPal

A few selection criteria really matter. Geographic coverage and local payment methods: iDEAL, Bancontact, instant credit transfers, wallets. Seller profile: C2C consumers or B2B businesses, which changes everything about KYC. Then the granularity of splits and escrow, all-in pricing (collection + wallet + payout + per-check KYC), and the quality of the compliance tooling. Finally, portability. Migrating tens of thousands of seller wallets, with their balances and KYC records, is a project that takes several quarters. The initial choice is a long-term commitment.

Chapter 6. Multi-seller disputes, the Vinted and Leboncoin model, and DAC7.

One chargeback, three sellers hit

A card dispute covers the payment as a whole, not the sub-orders. If the buyer of a €100 cart split among three sellers disputes the transaction, the chargeback pulls back the full €100 at once. It is up to the platform and its PSP to allocate the loss: debit the wallets of the sellers involved pro rata, and offset against their future sales if the wallets are empty. As a last resort, the loss falls on the platform if the seller has disappeared. Escrow, rolling reserves, and per-seller exposure caps exist precisely to cover this risk.

• Prevent rather than absorb: an in-house resolution center (complaints, returns, partial refunds) settles the disagreement before it becomes a chargeback, which is cheaper and invisible to scheme ratios.
• Evidence pack per sub-order: every seller must be able to provide tracking, proof of delivery, and message history; the platform compiles it all for representment.
• Written risk-sharing rules: the seller terms spell out who bears what (fraud dispute vs. commercial dispute, lost parcel vs. item not as described).
• Per-seller monitoring: dispute rate for each seller, with alerts, downgrades, longer escrow periods, and then removal. One toxic seller drags down the ratios for the entire platform.

The Vinted and Leboncoin C2C model

French C2C platforms have industrialized what is now a standard model. Online payment is mandatory, funds are held until receipt is confirmed (or 48 hours after recorded delivery), and a shipping label is built in. On top of that comes buyer protection charged to the buyer, around 5% plus a fixed fee at Vinted, which funds escrow, support, and guarantees. KYC is triggered by thresholds: the first three sweaters sell without paperwork, and the ID document comes with volume or at withdrawal. On the infrastructure side, Vinted relied on Mangopay before bringing payments in-house with its own Lithuanian EMI license. Leboncoin built its secure payment service on Adyen for Platforms.

DAC7: the platform becomes a tax reporter

The EU’s DAC7 directive (2021/514), applicable since January 1, 2023, turns platforms into agents of the tax authorities. Every year, they collect and send the authorities the identity, tax identification number (TIN), IBAN, number of transactions, and amounts received of their sellers and hosts. In France, reports go to the French tax authority (DGFiP) under Article 1649 ter A et seq. of the General Tax Code; the first reports were filed in January 2024, covering 2023. The scope covers sales of goods, personal services, property rentals, and transport rentals. Occasional sellers of goods are excluded under a two-part threshold: fewer than 30 transactions AND €2,000 or less in the year. When a seller refuses to provide the information, the platform must send reminders and, at the end of the process, close the account or block payouts. The regime has teeth.