Multi-Layer Contracting: Payments for Platforms

In the platform economy, few things are truly “single vendor.” Whether it’s a global marketplace like Airbnb or a payment giant like Stripe, modern digital infrastructure relies on multi-layer contracting — an interconnected stack of vendors and sub-vendors managing everything from KYC to cross-border payouts.

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🧱 What is Multi-Layer Contracting?

Multi-layer contracting refers to when a company:

• Contracts a primary vendor for a service (e.g., payments, identity verification),
• Who then subcontracts additional specialist providers (e.g., fraudFraud fraud Criminal deception involving unauthorized payments or use of financial credentials. tools, payout partners),
• Sometimes forming three or more layers of operational and legal relationships.

These contracts are common in:

• Online marketplaces like Booking.com, Amazon,
• Payment Service Providers (PSPs) like Adyen, Checkout.com,
• Vertical platforms such as food delivery (Delivery Hero), ride-sharing (Uber), and eCommerceeCommerce ecommerce Commercial transactions conducted electronically on the internet. Includes digital payments, shopping carts, and fraud prevention. (Snapdeal).

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🧾 Contracting & Payment Structure: Industry Insights

With over 20 years of experience across global payment platforms and marketplaces—including Adyen, iPayLinks, and merchantMerchant merchant An individual or business that accepts payments in exchange for goods or services.-facing roles at Delivery Hero and Snapdeal across five countries—I’ve seen multi-layer contracting as a common structural approach. Typically, the primary contracting party (e.g., an online marketplace) engages a PSP or aggregator to manage end-to-end payments, who in turn subcontracts specialized services such as KYC, fraud screening, or regional payouts. The main legal and financial relationship remains with the PSP, while downstream vendor obligations are governed through flow-down clauses, SLAs, and regulatory compliance frameworks.

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💳 Typical Payment Flows in Multi-Layer Architectures

Entity	Role	Action
Customer	Makes payment	Uses card, wallet, or bank transfer
Marketplace	Facilitates transaction	Collects and routes payment
PSP	Processes payment	Handles tokenization, fraud checks, settlementSettlement settlement The process of transferring funds from the issuer to the acquirer.
Subcontractor	Payout or verification partner	Local bank transfer, FX, KYC, etc.

Example: On Airbnb, Stripe Connect collects payment, holds it in escrowEscrow escrow A financial arrangement where funds are held by a third party until a transaction's terms are met., and disburses it after guest check-in. In Brazil, the final leg may be handled by a regional partner like Ebury.

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🧾 Sub-Vendor Onboarding & Verification

Based on my experience leading fintechFintech fintech Short for financial technology, refers to tech-enabled innovation in financial services. and payments partnerships across platforms like Adyen, iPayLinks, Delivery Hero, and Snapdeal, the onboarding of downstream entities is typically handled by the primary PSP or designated compliance vendors. Subcontractors are onboarded via API-based workflows that include KYB/KYC checks, sanction and PEP screenings, and document verification—often conducted by regtechRegTech regtech Regulatory technology solutions that help financial companies comply with laws and regulations. partners like Jumio, Onfido, or ComplyAdvantage. The platform or PSP retains compliance oversight, while verification responsibilities are delegated with strict audit trails and SLA-backed agreements.

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🛡️ Risk-Based Approaches for Partial Data

Yes, risk-based approaches are commonly used when full data on downstream entities isn’t available—especially in tiered marketplace or gig-economy models I’ve supported at Delivery Hero, Snapdeal, and iPayLinks. PSPs often apply progressive verification: collecting minimal data at onboarding (e.g., email, bank account) and triggering full KYC/KYB only when transactional thresholds, geographic risk, or behavioral flags are met. This staged approach aligns with global AML/CTF frameworks and balances compliance with user experience, particularly in emerging markets.

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🔐 Data Sharing and Compliance

Actor	Data Accessed	Protection Measures
Platform	Full customer profile	EncryptionEncryption encryption The process of encoding data to protect it from unauthorized access during transmission. Essential for payment security., access control
PSP	Card details (tokenized), fraud signals	PCI-DSS, 3DS2
Sub-vendor	Partial PII, device data, payout info	Tokenization, DPAs

Marketplaces must comply with frameworks such as GDPR, CCPA, and APRA CPS 234, with measures including:

• Data Processing Agreements (DPAs)
• Privacy impact assessments
• Granular access control by role and jurisdiction

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⚖️ Liability, Legal Oversight & Vendor Risk

Multi-layer contracting introduces questions of accountability and oversight. When a sub-vendor mishandles payouts, fails in fraud checks, or violates compliance norms, the responsibility ultimately loops back to the primary vendor or platform. Risk is mitigated through:

• Flow-down clauses in contracts
• Vendor audits
• Business continuity plans
• Insurance & indemnities

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🔮 The Future of Multi-Layer Contracting

As fintech infrastructure continues to modularize:

• Platforms will adopt pre-integrated vendor networks (e.g., Stripe Atlas, Rapyd Collect)
• Payment orchestration layers will enable dynamic vendor switching based on risk, performance, or location
• Compliance will move toward AI-led verification models with real-time transaction monitoring

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📌 Summary

Multi-layer contracting is the backbone of scalable, cross-border, and compliant payments infrastructure. Platforms and PSPs that master the orchestration of vendors, data flows, and regulatory layers can deliver faster, safer, and more adaptive financial experiences. With experience across five countries and platforms from both the merchant and PSP sides, I’ve seen firsthand how critical this design pattern is to modern fintech success.