Which is the best payment model for a services marketplace?

I am currently developing a services marketplace (for students/tutors). Which payment model would you suggest out of subscription, escrow or a direct services fee for the transaction?


There are several questions/pieces of information you would want to consider to know which avenue to go down (a few highlighted below):

- which platform are you going to be on-boarding and connecting students/tutors thoughts? web, mobile, hybrid or brick & mortar (includes actual phone calls etc)
- how often are disbursements of funds going to happen with a typical transaction period (say 1 month)?
- what is your service fee/cut for the work completed? are you working on a %/commission basis or are you generating funds from clients in another way?
- which party shoulders the service fee your charge? Is it just one party or both?
- is the transaction always intending to be a 1 to 1 relationship (i.e. would a group of students be able to hire a tutor for an exam review session and split the costs etc?)

those are just a few things that should be top of mind as you consider which ways and means you intend to collect/process payments for your service. I'd be happy to jump on a call and walk through these and other questions to help get you on the payment model/processor right for you.

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Answered 5 years ago

Because you're building a two-sided marketplace, your question would require validation of your hypothesis from your supply and demand base. Because there is a higher utility value and lower cost of customer acquisition with a subscription model, I would design around that payment model. So ask yourself (and your demand prospects) what subscription services would they value the most (create a list of top 5 to 10 services). Then, determine what just in time services would they value the most (again, creating a list of top 5 to 10). Build your supply based market around both subscription and just in time services. After you've done that, use an escrow payment model for JIT services.

Answered 5 years ago

I would definitely recommend escrowing the funds in order to offer the best user experience for both students and teachers. This is central for the success of your project. The model I'm thinking about is used by merchants providing similar services like task rabbit. An important question is where are you going to launch this platform ? Regulation is very different according to the place you're located. In Europe, third party payment is strictly controlled by authorities and require strict KYC data in order to be compliant with EU payment directives. In the U.S. I would recommend some solutions already tested and approved by the sharing economy ecosystems. All the best with your project. Bertrand

Answered 5 years ago

Escrow would be best because it would not only keep you in the center of the hype but also increase reliability of the service for the parties.

Answered 5 years ago

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