A marketplace is a platform that allows buyers and sellers to transact with each other. It is similar to a regular online store in that it allows users to purchase products or services online, but it is different in that it typically hosts a wide variety of products or services from multiple sellers, rather than just offering products from a single store or brand.
Some key characteristics that distinguish a marketplace from a regular online store include:
- Multiple sellers: A marketplace typically has many sellers offering a wide range of products or services, rather than just one store or brand.
- Independent sellers: The sellers on a marketplace are typically independent businesses or individuals rather than being owned or operated by the platform itself.
- Variety of products: A marketplace offers a diverse selection of products or services, as it allows sellers to list and sell their own offerings.
- Comparison shopping: Many marketplaces allow buyers to compare prices and features from different sellers, making it easier to find the best deal.
Overall, the main advantage of a marketplace is that it offers a convenient way for buyers to access a wide variety of products or services from multiple sellers in one place, while also providing sellers with a platform to reach a larger audience.
A financial intermediary is a financial institution that acts as a middleman between two parties in a financial transaction. Suppose you own and operate a marketplace and are providing payment &/or payment processing services. In that case, there is a very high chance you are classified as a Financial intermediary between the Buyer and the Seller to facilitate transactions. Not only are you helping to match buyers and sellers, but you are also facilitating the financial transaction of that match.
In the banking world, there are various types of financial intermediaries that you are familiar with such as banks, credit unions, insurance companies, pension funds, and investment companies. In the non-banking world, money services businesses, money transfer operators, marketplace operators, payment processors, payment institutions, etc. are also classified as financial intermediaries.
These intermediaries play a crucial role in the financial system by channeling funds from one party to another, from lenders to borrowers, from a Buyer to a Seller, etc., and by providing a range of financial products and services to help individuals and businesses manage their financial affairs.
Financial intermediaries can provide a number of benefits, including:
- Reducing transaction costs: By acting as intermediaries, financial institutions can help to reduce the costs associated with borrowing and lending, or with buying and selling financial assets or services.
- Providing information and expertise: Financial intermediaries often have access to a wealth of information and expertise, which they can use to help clients make informed financial decisions.
- Diversifying risk: Financial intermediaries can help to diversify risk by pooling together funds from multiple investors and using them to finance a variety of projects or investments.
Overall, financial intermediaries play a vital role in the financial system by helping to facilitate the flow of funds between savers and borrowers and by providing a range of financial products and services to help individuals and businesses manage their financial affairs.
This page was last updated on June 7, 2023.