Marketplaces & small businesses

Want a takeaway? A great freelance graphic designer? A new tractor even? Whatever and whenever your fancy, you’re best placed to find it on a marketplace. And they are everywhere. It’s no secret that marketplaces are fast becoming the go-to place for people and businesses to find and buy goods and services.

The most successful marketplaces will be the ones that companies choose to use to run their business. It hasn’t taken long for them to become a hub for innovative technology, in a bid to be even better places for small businesses to trade.


Definition: Marketplaces connect many buyers and many sellers of goods / services on a single platform, each ‘side’ of the market being an ecosystem that joins to engage with the other


They already offer small businesses great opportunities to do business. They provide freedom from physical location, manual processes and high headcount, meaning a better fit and service for everyone. Customers, suppliers or teams can offer the most valuable interaction required, often cheaper and more efficiently.

We’ve seen over the last year how small businesses often live on a knife-edge. Recent research from global small business platform, Xero, shows that “late payment is one of the biggest issues facing small businesses today, with over half of invoices issued by Xero’s small business subscribers paid late.” [1]  And yet small and medium sized businesses are critical for the UK economy, accounting for 60% of employment and over 50% of turnover in the UK’s private sector [2].

Marketplaces offer valuable routes to market and efficiencies. To succeed, they must create exceptional experiences that build trust with both sellers and buyers. And the opportunity to do that is ever expanding. From seller onboarding to payments to logistics, start-ups are tackling and solving challenges to offer an exceptional, personalised online experience.

Movement towards a world of hyper-personalisation will “become an essential part of any successful strategy as technology-enabled customer data increases, customer expectations continue to evolve, and the marketplace becomes more competitive."[3] This in turn will create entirely new ecosystems for small businesses. Ecosystems that are enabled by data.

Start with payments

Payments are critical. It’s an experience where trust and engagement can be very easily lost forever, if it goes badly. Payments technology is all about friction. Winners are those who optimise speed, security and cost for marketplace providers. There are a few leaders that almost all of us will have come across already, with noteworthy companies in this space including PayPal, Stripe, etc.

The payments solution adopted by a marketplace is a significant factor for any small business. The cheaper the transaction fee the better. The same can be said for quicker access to monies from the transaction. As Sophie Zellmeyer, Global Payment Partnerships Director at Mirakl says, “If pay-out processes are not streamlined it can be a source of friction for small businesses that may lead them to leave the marketplace.”

“The value of a payment solution doesn’t end with frictionless payments (low cost, fast, secure)”, says Josh Mullally (Deloitte’s Alpha Bank Product Owner), “the value beyond reducing friction lies in the data created from the transaction and how, or where, it can be applied.” Traditional operating models are typically poor when it comes to capturing data, but we are moving to a new world where data is plentiful.


Payments = reduced friction (fast, cheap, safe)

Payments + data = value creation

Payments + data + ecosystem = disruptive potential


“The added value from the transformation of marketplaces is going to come through the availability and transparency of data throughout the marketplace ecosystem, and potentially lead to dramatic increases in efficiency,” says co-founder and MD of Storesome, Graham Broughton.

The upshot is that the data from payments will be used to create new ecosystems, which give access to services that entrepreneurs need to run their business, on their (digital) doorstep.

Say you’re a plumber looking for work. Logging into a digital marketplace gives you access to new customers, the simplicity of booking jobs, referrals, ratings, etc. A good payments solution means you pay a relatively low fee and money hits your account in a few days. All of which means growing sales.

You now have a few options to generate more value from the payments data generated through marketplace participation. Here are examples, open banking and accounting software.

Example 1: Open banking (tomato pay)

Open Banking as an approach to payments is maturing. Payment Initiation Services (PIS) enable providers to initiate payments and financial transactions by account to account payments. This results in lower costs and increased speed of the transfer of funds. Accounting Information Services (AIS) gives the user a consolidated view of their data and allows providers to know more about the business.

Open banking reduces friction in payments via PIS but it’s AIS that offers the valuable access to data. tomato pay [4] is an open banking provider that offers PIS and AIS. Using a solution like tomato pay gives marketplaces an opportunity to become a distinctive platform for businesses. As Anna Tsyupko, COO for tomato pay, says “PIS is the hook for AIS – once a business has understood the benefits of PIS, such as a fairer and more cost-effective solution, they are more likely to sign up for AIS.”

Once their sellers sign up for open banking, the marketplace has the data they need to be able to offer loans or tailored finance. Or they can direct the seller to other products when they know it might be needed, even if those products exist on other marketplaces. The marketplace that has access to such enriched data has the potential to become the seller’s marketplace of choice, the main player in an ecosystem of verticalised marketplaces.

So, as a plumber, when you sell on a marketplace using tomato pay, you can receive cashflow forecasts or access to working capital to purchase new equipment. Creating the new ecosystem for both getting and selling work.

Example 2: Accounting software (Xero)

The more mature option is through a business subscribing to a platform like Xero, a cloud-based accounting platform. Any sale the business makes on the marketplace is automatically captured by Xero through feeds from the bank account. Once on the platform, data is used to create insight around cash flow, number of customers, frequency of job, size of job, etc.

Whilst not a payment solution, Xero focus on generating value from the data that surrounds a payment. Apps available in Xero’s marketplace enable owners to run their business at the click of a button. Critical tasks like accessing financial services – loans, overdraft facilities, etc. – are all available.

This access to working capital means our plumber can buy the new van they need without going to the bank. Instead they get a loan from an app which bases the loan on a cash flow forecast using data in Xero. A new ecosystem is created when that van marketplace is instantly accessible via Xero.

This is a new ecosystem driven by an accounting platform. It’s one where the plumber can get all the services that they need via relatively few marketplaces.

The future is open tech

In both case studies we see the technology driving one of the most important emerging trends in platforms: personalisation. Whether the marketplace is using tomato pay to personalise a business's experience, or a business is personalising their own journey through accounting platforms such as Xero.

Let’s look back at our plumber, who now has data that they couldn’t access before. Whether through open banking APIs or their accounting platform the plumber can draw a more detailed and realistic understanding of their financial history. They can run business critical processes much more quickly, like applying for a bounce back loan or renting a van for their new employee. Our plumber can run their business more confidently, more proactively and more efficiently.

Payment technology is becoming far more than the transaction itself; the value is in data; the disruption is in the ecosystems that will emerge.

Through the adoption of technology, marketplaces are evolving into a better, more connected environment that will be a catalyst for small business growth. And small business growth means a far healthier economy.

[1] Xero Insight FinTech Magazine

[2] Department for Business, Energy & Industrial Strategy,

[3] Connecting with meaning, Deloitte report 

[4] For disclosure, Deloitte Ventures is an investor in tomato pay