5 Easy Steps for Automating Vendor Payouts with Stripe Connect in Your Multi-Vendor Marketplace

The challenges and costs of manual payouts

Payout management is a critical task for any online marketplace, but it can also be one of the most challenging. Manually handling payouts for multiple vendors can be a tedious and time-consuming process, leading to errors, delayed payments, and dissatisfied vendors. In addition, the costs associated with this manual process can be astronomical, especially for smaller marketplaces with limited budgets.

Before proceeding any further, if you require additional help or more detailed information, please feel free to ask in the comments section of this article. I review comments regularly and update the article accordingly.

Solving the #1 Problem of Marketplaces

Managing payouts to vendors in a marketplace can be complex, but Selldone Business OS simplifies this task by offering robust features and integrations. With Selldone, marketplace owners can easily onboard vendors, manage transactions, and automate payouts through Stripe Connect. Additionally, Selldone provides real-time balance updates and access to payment details for both the marketplace owner and vendors. By following Selldone's simple steps and utilizing its powerful features, marketplace owners can streamline their payout management and ensure secure and efficient vendor transactions.

1- Create a marketplace

To streamline vendor onboarding and automate payouts, get an enterprise license for Selldone Business OS without requiring additional services or plugins. Experience complete native vendor, product, sales channel, and payout management in a 100% plugin-free environment.

 2- Add Stripe Connect

Imagine receiving a $100 order fulfilled by two vendors, Vendor A, and Vendor B. You wish to pay $50 to Vendor A and 20% to Vendor B, retaining $30 as your fee. With Selldone, there's no need to worry, as it automatically creates distinct fulfillments for each Vendor and performs all necessary calculations behind the scenes.

IMPORTANT: The screenshots provided are taken in debug mode. Therefore, ensure that you complete all steps in live mode. While Selldone supports debug mode, failure to switch to live mode means you'll need to repeat the entire process.

All you need is a payment service that offers a payout option. Currently, Stripe is the top choice for effortlessly managing high-volume marketplaces. Simply follow these straightforward steps:

Navigate to Shop > Accounting > Gateway and add your Stripe account. Be sure to input your Secret and Public keys manually, and avoid using the AUTO CONNECT feature. You should utilize Stripe Connect in your Shop rather than a standard Stripe account.

Locate your keys at the following location:

Next, click on the Gateway and choose the Edit tab.

It's necessary to enable Stripe Connect.

Stripe Config 🤔 Step 1 | Add OAuth Redirect

You need to activate the OAuth login in the Stripe Connect Settings. We utilize this URL to onboard your vendors.

Stripe Config 🥳 Step 2 | Set Client ID

Please enter your Client ID in the designated field. You can locate it at the top of the Stripe > Settings > Connect Settings page after scrolling down.

Stripe Config 🥰 Step 3 | Check Keys

You're all set if you have already activated Stripe Connect during the "Add Stripe Gateways" step. Next, input both the Public and Private keys for Stripe Connect. These keys can be located in your Stripe account under Developers > API keys.

Important! Remember that you cannot use Connect with an account managed by other services, including Selldone. As a result, it's necessary to create a new account within your Stripe dashboard.

Important! If your Shop supports multiple currencies and you have other Stripe gateways, make sure to enable "Connect Mode" and enter the same "Client ID" for each gateway.

Stripe Config 🤑 Payout | Set Manual

To manage payouts to vendors, changing the payout option in Stripe to manual mode is necessary. This allows you to hold funds and gain greater control over vendor payouts. To configure the payout as manual (instead of automatic), navigate to Stripe > Settings > External payout accounts and scheduling.

3- Onboard vendors

To onboard vendors, ask them to sign up through your white-labeled vendor panel, which can be found at a URL similar to: https://my-shop...domain/vendors. Next, vendors will complete a "Become a Vendor" request, and you will receive these requests under the Shop > Marketplace > Request tab. Upon confirmation, they will officially become vendors in your marketplace.

Once connected, you will have access to the Vendor's "Account ID" in Stripe. With this information, you can now process payouts and transfer funds to the Vendor Stripe Account.

4- Knowing the process of accounting in the marketplaces

In managing funds within marketplaces, there are two essential terms to understand:

1. Transaction: Each time a customer pays for an order, the respective amount due to the Vendor is added to the Vendor's virtual wallet within your marketplace. These wallets help keep track of your obligations to pay vendors.
2. Payout: This refers to the actual money you pay to your vendors. Every time you transfer money to a vendor's bank account, you should record it as a payout. The funds will be deducted from the Vendor's virtual wallet following the payout. If you have Stripe Connect and the Vendor has connected their account to Stripe, you will have an additional option to pay the Vendor via Stripe Connect.

This outlines the flow of transactions and payouts for each Vendor in your marketplace:

Transaction

After the customer successfully pays an order, the system always executes transactions with a positive amount (Deposit to a wallet), so you cannot manually deposit into the Vendor's virtual wallet.

Transactions with negative amounts are referred to as "Refund Orders". You can only process a full or partial refund order from the Order page.

Payout

Manual payout

You can transfer funds to a vendor's account (either directly to their bank or their connected Stripe account) by navigating to Shop > Marketplace > Payments tab.

You always have the option to make payouts via direct transfer, such as transferring funds to a vendor's bank account. However, having a Stripe account enables automatic payouts for your business.

Choose Stripe to transfer funds:

The top image shows that Selldone offers real-time balance updates for your Stripe account. This feature allows you to quickly determine the amount of money available in your Stripe account and make transfers to vendors as needed.

Auto payout

If you have Stripe Connect and the Vendor has connected their account to Stripe, the system will automatically transfer the payout to the Vendor's connected Stripe account after each successful customer order payment.

How to refund funds from a vendor's account?

Occasionally, you may need to reverse transferred funds from a vendor's account. You can initiate a refund transfer directly within your Selldone dashboard to accomplish this.

Following a reversal transfer, the system withdraws funds from the Vendor's Stripe account and deposits them into your Stripe account.

IMPORTANT: To ensure automated accounting and reduce the risk of errors, please perform these actions exclusively within the Order page.

5- Manage received orders

When a customer pays for an order, a primary order with one or more fulfillments will be generated. Each fulfillment is associated with a specific vendor. As the marketplace owner, you will be able to view the following:

As the marketplace owner, you have access to all payment details, including transaction and payout information for each Vendor associated with the selected order.

The Vendor will be able to view the following:

Vendors can view payment information specific to their fulfillment but cannot access the main order details. This feature ensures that working within your vendor panel is easy and secure.

Extra Stripe options

I highly recommend installing the Selldone Stripe app to securely and quickly access order information within your Stripe account. You can find the app at the following link: https://marketplace.stripe.com/apps/selldone-business-os

Stripe app features:

• Manage multiple stores per account and sell various product types
• View shop performance and access them directly
• Receive notifications about new orders in your Stripe Dashboard
• Gain 360° insight into your customers, including segments, CLVs, and last online/in-person orders
• Sell physical items, virtual items, files, services, and subscriptions
• Unlock the full potential of Stripe for your business

 Why Use Stripe Connect for My Marketplace?

Running a marketplace means managing a lot of moving parts—especially when it comes to payments. If you’re using Stripe, you already have access to powerful features for handling payouts and revenue sharing with vendors. Stripe Connect, in particular, makes it easy to split payments, automate vendor payouts, and handle the complexities of different revenue models. It’s a top-notch solution for managing financial operations in a marketplace setting.

But there’s more to it! Integrating these payment features into your marketplace platform can feel like a huge task. That’s where Selldone comes in. Selldone's Business OS is built to simplify every aspect of running a marketplace, including vendor payouts and split payments. Here’s how:

1. Seamless Stripe Integration: Selldone directly connects with Stripe, giving you all the benefits of Stripe Connect without the technical headaches. You can set up automatic revenue sharing between you and your vendors, whether you want to apply a flat rate, a percentage, or custom commission rates.

2. Automated Payouts: With Selldone, you can automate the entire payout process. You decide when and how often vendors get paid, and Selldone takes care of the rest. Vendors are happy because they know they’ll get paid reliably and on time, and you get more time to focus on growing your business instead of managing payments.

3. Transparent Reporting: Managing vendors also means providing clear, accessible reports. Selldone gives vendors their own dashboard to track sales, payouts, and commissions, so everyone’s on the same page. It’s a built-in trust-builder, and it helps you stand out as a marketplace that’s transparent and reliable.

4. Flexible Payment Models: Whether you’re running a multi-vendor marketplace, a subscription-based service, or a mix of both, Selldone has you covered. Stripe’s flexibility combined with Selldone’s intuitive controls means you can tailor your marketplace to whatever revenue model works best for your vendors.

5. No Coding Required: This is the big one for many marketplace owners! With Selldone, you don’t need to be a developer or have a tech team to set up and manage these features. Selldone’s no-code platform makes it easy to get started and stay in control of your marketplace finances.

In short, Stripe Connect is a powerful tool for vendor payouts and split payments—and Selldone makes it even better by making these features accessible, manageable, and totally customizable for your marketplace. So whether you’re just getting started or looking to scale, Selldone has your back, helping you keep both vendors and customers happy, all while simplifying the complexities of marketplace finances.