When a customer buys from a marketplace, the money does not go straight to the vendor. The platform collects it, takes its commission and then pays the vendor their share. Getting this flow right protects buyers, keeps vendors happy and keeps your books clean.
The basic payout flow
- The customer pays the marketplace at checkout.
- The platform records the order and splits the amount: vendor share, marketplace commission and any fees or taxes.
- The vendor's share is added to their balance, usually as "pending".
- When the order is delivered or the return window closes, the balance becomes available.
- The vendor requests a payout, or the platform pays on a schedule.
Three ways to route the money
- Collect, then disburse: the platform receives the full payment, then pays each vendor later. You control the timing, but vendor money passes through your account, which can carry legal and accounting duties.
- Split at checkout: a payment provider that supports marketplaces divides the payment when the customer pays, sending the vendor's share and your fee to separate places.
- Direct vendor payments: the customer pays each vendor directly and you invoice the commission separately.
Most marketplaces pay vendors on a schedule rather than per order, which gives them more control. Which routing you can use depends on your country and gateway, as explained in payment gateways for marketplaces in Pakistan and the UAE.
How the split is calculated
For each order line, the platform takes a commission, usually a percentage, and the rest belongs to the vendor. For example, on a $100 order with a 10% commission, the marketplace keeps $10 and the vendor is owed $90, minus any fees you charge. See marketplace commission models explained for how to choose the rate.
Why payouts are held until delivery
Holding funds until an order is delivered, or until a short return window ends, protects customers from non-delivery and lets you handle refunds without clawing money back from vendors. Many marketplaces release funds a few days after delivery. Choose a rule that is fast enough to keep vendors happy but long enough to cover returns.
Payout methods
- Bank transfer: common and simple, but manual unless automated.
- Wallet balance: vendors keep earnings in the platform and withdraw when they choose.
- Payment provider payouts: some providers offer marketplace tools that split and pay out automatically.
Cash on delivery
If riders collect cash, the money sits with the rider, not the platform. You need a way to record what each rider holds, collect it back, and then credit vendors. The delivery rider app records cash collected so the books balance.
Worked example: a ledger for one order
Take a $50 order with a 10% commission and cash on delivery. A clear ledger records each step:
- Order placed: $50.00 owed by the customer.
- Rider collects $50.00 in cash: the rider now holds $50.00.
- Commission recorded: marketplace $5.00, vendor $45.00 (pending).
- Rider hands the cash to you: the rider's balance returns to $0.
- Delivery confirmed: the vendor's $45.00 moves from pending to available.
- Payout: the vendor withdraws $45.00 and the available balance returns to $0.
If the customer later gets a $10 refund, the ledger reverses the matching share: $9.00 from the vendor and $1.00 of your commission. Keeping every movement as its own line makes disputes and audits easy.
What vendors need to see
- Pending and available balances
- Commission taken per order
- A payout history they can download
- Clear dates for when money is released
The vendor panel for marketplaces shows earnings and a wallet, and the multi-vendor admin panel is where you review and approve payouts.
Refunds and disputes
Decide in advance who bears the cost of a refund: the vendor, the marketplace or both. Reverse the vendor's share for refunded orders, and keep a record of every change so disputes are easy to resolve.
This is one part of running a marketplace. For the full picture, read the complete guide to multi-vendor marketplace scripts. Tax rules differ by country, so check your local requirements with an accountant.
