Dec 27, 2023

What is delayed payout in marketplaces?

This article will describe the meaning of delayed payout in the context of online marketplaces and two-sided platforms. It will give a definition and some examples where possible.

Definition of delayed payout

Delayed payouts mean that the funds are held and not released to the seller before agreed-upon conditions are met. These conditions can be a predetermined date or the completion of an order. Delayed payments resemble escrow, which is a legal, contractual arrangement for holding funds. Delaying payouts is heavily regulated, and not all payment service providers offer delayed payouts or escrow. At the same time, being able to delay payouts is important for a marketplace because it helps build trust between customers and providers.

In a transaction flow with delayed payouts, the customer initiates a payment, and the funds are held by the marketplace's payment service provider. The seller does not receive the money outright. When the conditions for a payout are realized, the payout is made, and the seller receives the payment.

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