Payments, particularly the technology side of the ecosystem, has many players who love visibility. Apple Pay’s was announced with a level of theatricality normally reserved for summer blockbusters, PayPal’s 2014 has been operatic, Alibaba exploded onto the NYSE, bitcoin has suffered three or four “doomsday” events and Amazon has announced a plan to expand into every vertical, every where. In short, 2014 has been the year of the payment tech lion tamers—all fighting for control of the center ring.
Yet not every innovator is a lion tamer; some are mouse-whisperers, looking for the small spaces where innovation is needed, welcomed and ready to explode. WePay is one such player and they are ready to power the next generation of ecommerce, CEO Bill Clerico told MPD CEO Karen Webster in a recent podcast interview.
WePay powers payments on platforms, controls the risk management element of the transaction and, from now one with the launch of WePay clear—does it all from the backend totally invisibly.
“If you look at these platform business, it’s the smallest segment of e-commerce but it’s the fastest growing by far.”
Pointing to the rapid expansion of services like Airbnb and Uber and the explosion Crowdfunding sites, Clerico told Webster that to WePay the focus on their platform partners is to their corporate mind the be way to stay intune with the shape of things to come in e-commerce.
"Instead of a traditional e-commerce retailer like Walmart.com that’s selling just a bunch of items online out of their warehouses, we saw this really big trend toward platforms that facilitate payments between buyers and sellers. So a marketplace is a great example of that, crowd-funding sites is a great example of that… And we noticed there was a really unique and exciting opportunity payments opportunity serving those platforms, it was just a traditional processing relationship."
WePay is not alone in the field of enabling payments on platforms—Webster noted that it shares the ground with some very big and established players like Alipay, Klarna and PayPal right now, and it is a field poised to become ever more crowded.
Clerico responded that WePay’s white label service and its unique approach to risk management is how it distinguishes itself. Traditional payments processor face chargebacks, as an ever present risk he explained, because they are so easily triggered.
They are not, however, hard to foresee, and WePay takes responsibility for stopping them before they occur.
That risk management system in the early days of the company was rather low-tech—Clerico personally assessed each transaction—a solution he said was “surprisingly effective, but not too scalable."
Since then they’ve built a lot of software developed a technological system that offers a “two-thumbs up” value proposition for platform clients—risk of fraud handled and a relatively painless user experience. In a field where companies must often pick a thumb when it comes to managing risk, this is a stand-out trait.
"We’re so good at underwriting the risk for the transactions, we can do much better than any company could on their own because ewe have such a broad look at the industry and such a tremendous amount of data and experience. We’re going to make better decisions every time than our partners will make on their own."
Apart from risk management that offers both seamlessness and security as features, WePay is also going invisible. Well Clerico would likely prefer to say that the company is going clear, since their new product, launching next week, is called WePay Clear.
WePay Clear is the service by which WePay will step fully behind the curtain—providing the payments function invisibly so as to allow their various partners to customize it and fully take center stage.
"What we’ve heard time and time again from our partners is they love having us in the middle of these transactions, they love how easy it is, they love how we take on all the risks of fraud and loss, but they really wanted to have their brand front and center and not have the WePay brand in the middle of those transactions."
It’s been a long road to the new service; Clerico told Webster and has been in development all year as the company has been mastering the art of managing risk at arms length while still delivering a strong user experience.
The product that has come out is white-labeled and first of its kind that offers the one-two punch of complete protection from regulatory compliance burdens and losses due to fraud.
With new opportunities, come opportunity costs.
To really compete in the market, WePay realized that it could not compete with the platforms it wanted to serve, and in early 2014 discontinued their consumer-facing brands (like their P2P payments platform). That was a tough choice for the company, and an expensive one as it initially entailed a 40 percent drop-off in revenue.
“Making that decision to get out of those competitive businesses to focus on our partners was a tough decision, but it was absolutely the right one.”
Clerico went on to explain that their chosen path as the payments power behind the platforms has given the company far more in terms of revenue and possibilities for growth than they ever could have reached with their own competing platforms.
"We really believe that just as in the last five years we’ve seen the transportation industry get revolutionized, the hotel industry get revolutionized and we think looking forward over the next ten years that’s going to happen to more and more industries. This is a really valuable and unique place to play in the market. “