Voice of the Industry

How payments can be used to retain buyers and sellers

Wednesday 15 May 2019 08:42 CET | Voice of the industry

Anna Tsyupko, Paybase CEO and co-founder, explains how platform businesses can use payments as a means to retain buyers and sellers

Platform businesses, such as online marketplaces and gig/sharing economy platforms, face a somewhat unique challenge. As opposed to creating a product or service and selling it to customers, platforms must appeal to both buyers and sellers. Without both, the platform cannot function. Considering the increasing saturation of the market, retaining buyers and sellers is becoming one of the primary concerns of platforms.

When tackling this issue of buyer and seller retention, payments may not be the most immediate thought business founders have. However, advancements in payments go far further than quicker settlement timelines, lower costs, and smoother transactions. When leveraged correctly, payments can now be used to enhance the entire offering of a platform business, making it easier for them to differentiate from competitors and retain their buyers and sellers.

The problem

Studies have shown that there are various reasons for disengagement with platform businesses from both buyers and sellers. Looking at buyers specifically, many quote high prices as a key reason for leaving a platform, with poor UX being another notable example. As for sellers, platform fees and lack of ability to differentiate are given as main reasons for platform disengagement. Disintermediation, the process of buyers and sellers using the platform to connect but transact outside of it, of course affects both groups*

What’s more, as any of these issues affect either buyers or sellers, they in turn affect the other group. For example, if sellers begin to disengage due to high fees, soon buyers will begin to disengage as there are not enough sellers to buy from. The remaining sellers will then begin to disengage themselves as there are not enough buyers to sell to. This is known as negative network effects and it can quickly erode the user base of platform businesses.


Whilst these issues may seem troubling to platform businesses, advancements in payments technology are allowing them to take tighter control of their buyer and seller retention.


There are various innovative ways to keep buyers purchasing on a platform. A platform may wish to introduce a loyalty programme that offers buyers cashback on every 5th purchase.

Perhaps as buyers reach new spending ‘milestones’ (GBP 50, GBP 100, GBP 200), they are given increasing amounts of credit to spend on the platform. This is a perfect way to combat the issue of high prices, which cause many buyers to become disaffected with platforms. Alternatively, platforms may wish to directly reengage buyers that have made no purchases in the past 3 months, offering them 10% off their next purchase. Historically, features such as these would have required a lot of manual work from the platform. Due to advancements in payments, innovative payments providers can integrate these features quickly and easily.

Another way in which platforms can retain buyers (as well as attracting new ones) is to create a referral campaign. A platform may wish to offer credit to spend on a future purchase for both referrer and referee. This type of technique, used so well by the likes of Uber and Deliveroo, not only achieves high levels of brand awareness, but encourages the initial transactions that make users familiarise themselves with the platform. Once they are more accustomed to the platform and its UX (poor UX being a core issue for buyers), they are more likely to continue using it. Again, features such as this are now not only possible, but can be introduced, paused or halted very quickly, allowing platforms to experiment.


For retaining sellers, a flexible payment solution may also be the best option. Considering platform fees can be a core reason for seller disengagement, platforms may wish to create a tiered fee structure to reward their best performing sellers. For example, those earning GBP 1000 paying a 5% fee, and those earning less than GBP 1000 paying more. This incentivises sellers to make more sales as they know they will be financially rewarded for doing so.

Additionally, loyalty can work for sellers in the exact same way it works for buyers. Commission fees could be dropped with every 5th sale (as an example), or sellers could receive credit to be spent on the platform for making regular sales. Alternatively, fees could be paused on the week of a seller’s birthday. Features such as these make it far less likely for a seller to switch to a different platform, as they will be sacrificing their potential to pay lower fees.

Buyers and sellers

Certain features can be introduced that are equally beneficial to both buyers and sellers. A platform may wish to introduce an escrow service, allowing for payments to be held between parties until an action is agreed upon. This offers users the peace of mind that their money is safe should the other party not perform their part of the transaction.

In the same vein of user protection, strong financial crime prevention can be the best way to retain buyers and sellers. Partnering with a payments provider that has configurable, responsive transaction monitoring will minimise instances of financial crime and position a platform as trustworthy.


Whilst platform businesses do encounter challenges that other businesses do not, improved functionality within payments is allowing them to meet these challenges and enhance their products and services. Paybase offers all the functionality listed above in a single API, raising the bar of what payments can and should do.

*Solis. B, The State (and Future) of Digital Marketplaces, Kahuna, 2017.

About Anna Tsyupko

Anna Tsyupko is the CEO and co-founder of Paybase. She has a passion for payments and the opportunities that e-money infrastructure can offer businesses that require more than a simple payment gateway. Her goal is to ensure all businesses have the freedom to build what they want to build by offering a truly flexible payment solution. Anna is a 2018 winner of the Emerging Payments Association’s Outstanding Women in Payments award, and has previously been shortlisted by PayExpo Europe as one of the Payments Power 10’.

About Paybase

Paybase is the most flexible payments solution for platforms, fintechs, and cryptocurrency businesses. Through its structured flexibility, Paybase can accommodate a vast array of use cases without the need for expensive, custom development work. Paybase is enabling more businesses to not only reach market, but enhance their offering and build better products.

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Keywords: Paybase, Anna Tsyupko, payments , seller, buyer, platform business, marketplace, UX, fintech, customer retention, API, Uber, Deliveroo
Countries: World