If 2020 was the year online sales evolved from life-enhancing convenience to critical necessity, then it’s fair to say that 2021 may see many e-commerce businesses focus on strengthening propositions and sharpening processes.
This is where e-marketplaces can really add value to their merchant partners — empowering them to thrive in the world of fast-paced digital retail through cash flow efficiencies, savings, and sales growth.
There are many tools that can help a seller achieve these aims. However, one that is now coming into its own is the seller card — a payment card that gives sellers faster access to the proceeds of their sales. From an e-marketplace perspective, the seller card is a powerful point of differentiation. It has the ability to make any virtual mall more appealing and is an opportunity to grow consistent additional income streams.
This is particularly attractive when considering that merchant sales on e-marketplaces are soaring. Take Amazon, for example. The global platform’s third-party vendors are now surpassing its own sales. Indeed, by Q3 this year, Amazon’s merchants accounted for 54% of units sold.
And while estimates for global sales on e-marketplaces vary, pundits agree that it’s a multitrillion dollar industry supporting countless jobs and unrivaled levels of tech innovation.
How does the seller card work in practice?
The beauty of the seller card is that it eases cost pressures on merchants by providing rapid (even immediate) access to funds from sales, rather than forcing them to wait up to a month for their income.
After all, consumers pay in real time and expect products to arrive within 24 hours. Why should the businesses delivering this service have to wait so much longer for their reward?
With a seller card, they don’t.
As far as merchants are concerned, the seller card provides cash flow throughout the month and gives them the power to quickly buy additional merchandise when inventory of a particular product runs low.
This benefits e-marketplaces as well, because inventory availability discourages consumers from surfing across to rival platforms.
Investing in e-marketplace ecosystems
Seller cards, when properly implemented, can offer something for every ecosystem player.
E-marketplaces that deploy and accept seller cards can lower their own payment processing costs when these cards are used to transact with other merchants within an e-marketplace ecosystem. On top of this, e-marketplaces earn incremental revenue in the form of interchange when seller cards are used to make purchases elsewhere.
Seller cards can also support e-marketplaces that seek to develop capital lending programs by providing a range of rich and useful data to use in determining credit risk. With the inability to secure financing often being the single biggest cause of small business failure, e-marketplace lending can provide sellers a vital lifeline. Even before the coronavirus pandemic shut down thousands of small businesses, the chance of a new business surviving past its first year was just around 20%.
Loan proceeds are easily disbursed to seller cards, which when used for this purpose are also referred to as capital cards. A capital card powered by a modern card issuing platform supports just-in-time funding so that borrowers only pay interest on the money they use, lowering a seller’s overall cost of credit.
Finally, the seller card can also incorporate flexible cashback rewards. By providing incentives to sellers to spend earnings with other e-marketplace merchants, e-marketplaces can fuel a virtuous cycle of ecosystem transactions.
There’s an obvious shared interest then for both e-marketplaces and sellers to adopt seller cards as a payment method. As the digital payments trends of 2021 begin to emerge, it’s looking very much like the seller card’s time has arrived.
Talk to Marqeta’s card program experts to launch your own seller card program.