Described by some as an ‘anti-PayPal', WePay is another service attempting to tackle online payments. The firm focuses on small businesses and non-profit organisations, enabling them to process transactions online, manage invoices and set-up online storefronts, boasting that registration takes less than a minute. CEO Bill Clerico tells StrategyEye that there is room for multiple players in the space and warns that WePay's biggest competitor is the good old-fashioned cheque.
What differentiates WePay from other online payments platforms?
WePay is the easiest way for people to accept payments online. We make it really simple for anyone to come to our website, set up an account in less than a minute, and start processing credit cards. In addition to providing really simple payment functionality, we also provide different tools that make it easy to actually conduct business online. We have really simple invoicing and storefront tools. We have an event-registration tool, which enables you to raise money for events, and a donations tool that allows people to accept money for donations. The site can be accessed through a mobile device, but we are working on an app and a big mobile push at the moment.
[Anti-PayPal] is one way of thinking about us. If you Google PayPal, one of the top results is a site called ‘PayPalSucks.com. There is a large and fair backlash against PayPal; they haven't really innovated on the design side in five or 10 years. A big part of the backlash against PayPal is caused by the way they manage risk; when a new merchant signs up to PayPal they ask them a whole series of questions about their business, they typically ask for paper documentation, and that's a lot of friction for a first-time merchant that is trying to get set up online. In contrast, we make an automated decision about the merchant based on their online presence. We will mine their Facebook, LinkedIn and Yelp pages etc, and all that data we collect helps us make a decision about how safe the merchant and we can make the decision without asking them for tonnes of information.
What is your business model?
We charge a 3.5% fee from the funds that you collect as a merchant. There are no other fees; no set-up or monthly fees, just a simple per-transaction fee. We don't disclose exact revenue numbers, but we grew 10-fold last year and our growth trends are continuing to grow this year.
We are big believers that we want to become a long-term, profitable and sustainable brand, and part of doing that is building a business model that supports the company. We are certainly interested in revenue! We are not an Instagram or a massive social service where we can gather enough users and then sell it; we are trying to build a long-term sustainable company.
Who are your main competitors?
PayPal is definitely our closest competitor. The biggest competitor out there that we think about is cash and cheques. Our typical customer, for instance a piano teacher, they need to invoice their clients, and traditionally they would do that with a paper invoice and a cheque, that's what we compete with the most. We are trying to educate that piano teacher about the value of online payments, whether it's security, or getting paid faster, or appearing more professional, or spending less time doing accounting. Our biggest competitor is paper, then PayPal.
One of the reasons why players are emerging in payments is it is such a huge market; about USD1 trillion changes hands electronically every year in the US alone. That market is expected to triple by 2016, so there is a massive amount of money moving around. E-commerce is going to become more and more prevalent as it eats through the remaining paper cheques. Even PayPal, which a lot of people believe to be the gorilla in the space, probably has less than 10% of the online payments market. There is plenty of room for competition; the market is growing like crazy and the opportunity is not in taking market share from other payment companies, but in attracting new merchants that have never processed online before.
What's the biggest challenge you currently face?
Hiring. It's a really competitive talent market in Silicon Valley, and so any time you're trying to hire as many people are we are, as quickly as we are, finding and recruiting them, and making sure that you're keeping the bar high is what consumes most of my time now.
What do you think is the hottest trend in digital media?
Something we see that is pretty interesting is that a lot of our merchants are using social media to market and run their businesses. We have many local merchants that are trying to get customers through Facebook by posting on their wall. So we see a lot of our tools embedded through Facebook, and I think we will see the emergence of it as a commerce platform in the next six to 12 months.
Operating in such an increasingly-crowded space, competition is always going to be an issue for WePay, particularly positioned against one of the market's juggernauts, PayPal. However, while PayPal is taking the physical plug-in route for small businesses, marrying online and offline payments, WePay is tackling pure online payments in an attempt to bring more businesses to the internet. However, it needs to differentiate itself from its larger rivals in both image and functionality if it is going to prosper in the space.
Its storefront feature is one such aspect. The service makes sense when considering WePay's remit of bringing smaller businesses onto the internet; many will not have a web presence and will require a digital store as part of its migration online. WePay's 3.5% transaction rate is comparable to PayPal's, though the latter's rate drops to as low as 1.4% depending on the transaction size. WePay will have to show similar flexibility if and when its transaction volumes hit higher levels.
Though Clerico does not disclose volumes or figures, revenue growing 10-fold last year is positive, but he concedes that a successful venture into mobile payments will boost growth further. Though the mobile payments market is set to be just as crowded, a presence is crucial as mobile commerce continues to grow. Nearly a third of WePay's traffic already comes through mobile, and the lack of a comprehensive mobile solution is likely to be denying the firm significant revenue as others already offer solutions. WePay is scheduled to launch a mobile app this year. It needs to do so and tackle this space as soon as it can.