Marketplace payments look like ordinary checkout until you ask where the money lands. On a $100 order with a 10% platform commission, the processor must split the payment between seller and platform — and the fee lands on someone. Which someone depends on a single architectural choice most founders make without pricing it: direct charges versus destination charges.
Direct vs destination charges: who pays the fee
| Direct charges | Destination charges | |
|---|---|---|
| Payment lives on | The seller's connected account | The platform's account |
| Customer sees | The seller's business name | The platform's name |
| Stripe fee paid by | The seller (from their share) | The platform (from its share) |
| Platform's cut | Taken as an application fee | Kept before transferring the seller's share |
| Refund complexity | Simpler — from the connected account | Must unwind the platform fee and the transfer |
Stripe Connect runs fully in Canada with CAD settlement, automated seller onboarding and KYC, and all three account types (Standard, Express, Custom) across roughly 46 supported countries.
Worked math: a $100 order at 10% commission, three ways
Destination charges (platform is merchant of record): platform pays 2.90% + $0.30 = $3.20 on the $100. Commission $10 − $3.20 = $6.80 net per order — the fee eats 32% of the commission.
Direct charges (seller is merchant of record): seller pays the $3.20 from their $90; platform keeps the full $10 application fee. Platform net: $10.00. The trade-off: the customer sees the seller's name, and the platform has less control over the checkout experience.
With a dispute: add the $15 non-refundable dispute fee — on destination charges it comes from the platform, turning a $6.80 order into an $8.20 loss. At a 1% dispute rate on 1,000 orders/month, that's $150/month in dispute fees alone.
The charge-model decision is worth ~$3.20 per order to the platform — at 1,000 orders a month, $3,200. Make it deliberately.
Canadian compliance: FINTRAC and tax reporting
A marketplace that holds seller funds before payout can trip Canadian money-services-business obligations — FINTRAC registration and reporting, plus tax-reporting duties on seller earnings. This is the least-covered part of every marketplace guide and the most expensive to discover late: get the MSB determination before the first payout, not after the first audit letter. Seller onboarding (KYC/identity verification) is part of the same obligation, and it's one reason platforms use Connect's Express or Custom accounts rather than hand-rolling verification.
Refunds and disputes on split payouts
Refunds follow the split in reverse — the platform's commission comes back too, and the original processing fee generally doesn't. On destination charges, unwinding means reversing both the platform fee and the seller transfer; on direct charges the refund comes from the connected account. Either way, budget the dispute fee ($15) and the lost processing fee as a cost of the marketplace model, and watch the dispute rate the way you'd watch churn.
Stripe Connect vs the alternatives
- Stripe Connect: the default for Canadian marketplaces — CAD settlement, mature onboarding/KYC, and the direct/destination choice above. Watch the fee-bearing decision; it's the whole game.
- Adyen (marketplaces): enterprise-grade split payments; pricing is custom-quoted, which suits funded platforms and excludes early ones.
- PayPal marketplace tools: split payouts with strong buyer recognition among Canadians; fee stack needs the same who-pays analysis.
- WooCommerce route: plugins like Split Pay automate percentage/fixed splits via the Transfers API (minimum transfer $1), keeping small marketplaces on WordPress without custom code.
What platform operators say: real reviews
On G2, Stripe Connect holds 4.3/5 from 249 reviews — reviewers frequently flag high or hard-to-track fees as the drawback, even while praising ease of use (g2.com/compare/ebizcharge-vs-stripe-connect). For contrast, B2B-focused EBizCharge sits at 4.8/5 from 105 reviews, with reviewers citing cost savings and better rates versus previous processors and praising ERP integration — a useful benchmark for what "good fee satisfaction" looks like on G2.
A note on steps: this is an architecture-and-cost guide, not a repair procedure — the numbered comparison above is the actionable part.
FAQ
Does Stripe Connect work in Canada?
Yes — full operation with CAD settlement, automated seller onboarding, KYC verification, and split-payment logic, available in ~46 countries including Canada.
Who pays the Stripe fee on a marketplace order?
Your charge model decides: on direct charges the seller pays it; on destination charges the platform pays it out of its commission. A $100 order at 2.9% + 30¢ costs whoever bears it $3.20.
Do Canadian marketplaces need FINTRAC registration?
Possibly — holding seller funds before payout can trigger money-services-business obligations. Get a determination before launch; this is legal-compliance territory, not a setting to toggle later.