COMMENTARY: Online Marketplaces: A Dynamic, Growing, and High-stakes Environment

As online marketplaces continue to reshape global commerce, the opportunities for these businesses—and their payment providers—are vast. Yet, as recent trends demonstrate, so are the risks.

Online marketplaces and their payment providers are increasingly at the center of a growing web of sophisticated fraud, regulatory scrutiny, and legal accountability. Challenges posed by threats such as counterfeit goods, illicit drug sales, sham storefronts, and fake reviews are not isolated problems. They represent significant risks to the entire e-commerce ecosystem.

Although the market is signaling a belief in digital commerce’s unparalleled growth potential, understanding and managing the delicate risk-reward equation is growing more complex. In this dynamic landscape, online marketplaces looking to capitalize on the major opportunities must do more to safeguard their businesses and consumers.

The factors that make online marketplaces so appealing—anonymity, convenience, and global reach—also make them attractive to bad actors. Fraudsters, counterfeiters, and illicit sellers are constantly finding new ways to exploit these platforms—yet it’s the platforms that often bear the consequences.

Tracking down and prosecuting sellers engaged in illegal activities, potentially operating anywhere in the world, presents significant challenges for the industry. As part of the regulatory focus on creating safer and more trustworthy digital environments, governments around the world are taking stronger action to hold online platforms accountable for the activity of their third-party sellers. New laws and regulations have been introduced, with the European Union’s Digital Services Act and the United States’ INFORM Consumers Act as two examples of legislation aimed at increasing accountability across the online ecosystem.

These regulations place a heightened responsibility on platforms and their payment providers to ensure that their systems are not used to facilitate the sale of counterfeit goods, illicit drugs, or other illegal products. Failure to comply with these regulations can result in severe penalties, including fines, legal action, and reputational damage. This means that the cost of doing business in online marketplaces is rising, and the margin for error is shrinking.

Platforms and payments providers must act now to address these escalating risks. The following are critical actions marketplaces should prioritize in 2025.

• Strengthen onboarding processes. Robust onboarding is the first line of defense for detecting violative third-party sellers. Online marketplaces should implement technologically advanced Know Your Customer (KYC) protocols to verify seller legitimacy before allowing sellers to use the platform. This includes leveraging real-time data and machine learning to identify red flags, such as mismatched or missing business credentials, hidden connections to known violative sellers, or red-flag transaction patterns.
  
  
• Conduct ongoing monitoring for high-risk behaviors. Even when sellers pass initial screenings, ongoing monitoring for risk is imperative. A seller can begin violative behavior at any time, whether it’s intentionally malicious or unintentional due to regulatory changes. To stay ahead, marketplaces and payment providers must engage in continuous monitoring that harnesses both the power of AI and the judgment and experience of risk analysts.
  
  
• Stay ahead of global regulatory requirements. The growing complexity of global regulations is a critical challenge for marketplaces. Compliance with new laws and emerging frameworks across regions demands new levels of rigor. Marketplaces and payment providers should establish a centralized compliance management system to track regulatory changes in high-risk areas, conduct regular audits, and ensure adherence across all operational territories.
  
  
• Adopt scalable technology. As online marketplaces grow, so does operational complexity. With soaring transaction volumes, marketplaces must be able to scale risk-management practices using unified systems that operate efficiently. These technologies should also provide the flexibility to adapt to evolving risk and regulatory requirements, ensuring platforms can respond to new threats without disrupting business continuity.

These actions aren’t mere recommendations in an era of rapid e-commerce growth and heightened scrutiny. They are now foundational to the sustainable success of online marketplaces and their payment providers.

The opportunities within digital commerce are immense, but realizing them requires more than innovation and market expansion—it demands a balanced approach to risk management. Effectively navigating the risk-reward equation is not just about addressing immediate challenges but also building a resilient foundation for long-term success. Through this careful and deliberate focus on mitigating risks, marketplaces will unlock the full potential of digital commerce—driving growth, innovation, and customer loyalty for years to come.

—Mary Claire Williams is the vice president of product management at G2 Risk Solutions.