I've been asked to explain WePay's place in the market before and have been unable to - I'm not sure if their risk / chargeback protection is what puts them over the top, great BD people, I'm not sure. However, assuming their funding is a sign of progress, they're doing something right despite stiff, direct competition and that's awesome.
We keep a relatively low profile, since we focus primarily on marketplaces & platforms with >$10m in annual payment volume and take a pretty deep, enterprise approach with our customers vs focusing on a broadly available, self-service developer platform. One day we hope to get there too, but for now we like to go narrow and deep for the sake of focus and providing a killer customer experience.
As far as product differentiation, we focus on marketplace fraud & risk management above all else. It's a tough problem to solve - most fraud systems are built to protect retailers from bad buyers, but the most insidious fraud risk on marketplaces is from bad sellers. We guarantee our customers against this type of loss while still providing a great overall UX.
Happy to chat more! bill@wepay.com
This is a huge challenge in the space and I wonder what the real internal financials are of the other leaders like Square and Stripe. We just don't know yet, do we?
The easier it is to sign up to accept payments and the faster it's paid out, the easier it is for fraudulent sellers to exploit it. Example: A ticket seller conveniently accepts payment by credit card, using a hot new disruptive processor called Trapezoid that was super easy to sign up for using an email address and a stolen identity. Buyers all start charging their tickets because now they get consumer protections, convenience and cash back. The seller gets their money the next day thanks to Triangle's disruptive, cool business model.
Only it turns out the tickets were fake and a couple weeks later all those buyers file chargebacks with their credit card issuers. The seller has skipped town with the money and Trapezoid has to cover thousands of dollars in fraud. They only collect 2.9% to begin with and the majority of that goes back to banks[1], so this one fraud incident wipes out the profit on hundreds of other sellers. If they don't keep these fraud incidents to 0.X% their volume, they're out of business.
This is exactly why it's been a pain to sign up for payment processing in the past. Processors are ultimately responsible for any fraudulent merchants they connect to the network so they have to perform due diligence. It's also why fees are so much higher (2.75-3% for "easy" services vs. under 2% for traditional processors).
[1] Debit card interchange was regulated down to 0.05% + 22 cents a couple years back, a massive reduction. So far I have not seen a single online processor pass those savings on to sellers. They all still charge close to 3% and keep the difference. I theorize that debit is providing them the margin they need for this model to survive. Bill, I don't suppose you can comment on this?
So here's a question: so what do your customers use before they hit $10MM in ARR and get on your radar?
I interviewed at WePay about a month ago, and thoroughly enjoyed almost the entire process. I never got a response from the recruiter, which was extremely disrespectful given that I spent a day at your offices. Hopefully as you grow larger thinks like that will be straightened out.
Other than that, wish you great luck! I thought the office was really vibrant and had great conversations with everyone that interviewed me.
I've been asked to explain WePay's place in the market before and have been unable to
Because contrary to your first statement about WePay "differentiating" itself, it didn't. There has been little to zero differentiation among the companies who make money moving money around, skimming "2.9% +0.30" off the top every time.
What's happening here with this funding round says nothing about WePay being special or different... this is merely evidence of consolidation. If there's no true disruption, cartel entities that elect to cooperate tend to squeeze each other out on a LIFO basis -- "Last In First Out". The cartel gets bigger and stronger as it melds into an monopolistic oligopoly.
WePay just happened to be one of the first players, which is probably why it survived. Stripe and Balanced soon thereafter had an opportunity to strike out and differentiate (yes, on pricing; because when your product is money nothing else matters) they were both weak and chose to assimilate into the amoeba matching pricing, not challenging it.
HN is well aware that there's now one fewer player in the cartel with Balanced ... um, a sinking ship. Yeah, they threw me overboard (http://ink.hackeress.com/2015/01/why-im-boat-rocker.html), and I'm not surprised the LIFO model is playing out as expected. The Balanced engineers I worked with were all awesome, and we had the smarts and tech to compete. But in order for the trend to be away from oligopoly -> monopoly, companies _have_ to let price be the factor that drives competition. Offer more for less, and you will win market share. Take the momentum away from the amoeba, not into it.
But they didn't believe me.
There's still a huge opportunity for anybody with the guts to do it. Crowdfunding / do-gooder sites that tend to raise money. Indie freelancers.. there are more than enough people who care about price of moving money enough to go low-cost over big and shiny.
We Pay actually had a pretty clear response that jives with my understanding completely - they focus on BD to large companies and have built risk tools that they use as a selling point. They're win some and lose some in that model, but the wins are good wins and build credibility. So yes, consolidation is part of this, but it turns out variations in sales strategies and value prop can help you "differentiate". That's what I meant by that.
In Brazil we have a lot of companies trying to fix the money problem, but none seems to have the sophistication that you may find in Stripe or WePay.
If you are from Brazil and knows any companies like that, I would like to know!
> Long before I was hired to work at Epic Games, I emailed John Carmack and asked him what it took to get into the industry. His response consisted of a single sentence: "Talent will be rewarded."
So happy to see your talent is being rewarded!
And am I correct with assuming that WePay does money transfer using the bank account number instead of the Visa/Mastercard card number? Related [1]
