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.
the most insidious fraud risk on marketplaces is from bad sellers
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?
Having run a marketplace, the scammers are just ridiculous. The one I remember most is that some group stole the credit card numbers of a church group to "buy" PS3s from fake sellers. Thankfully, they were really naive about it, so we reversed all the transactions before they hit, but that's just the tip of the iceburg.
So here's a question: so what do your customers use before they hit $10MM in ARR and get on your radar?
It's a smattering of options: PayPal, Authorize.net, Stripe & Braintree are all good ones. We have folks that start with us from day 1, but typically fraud isn't too much of a concern until you start to really scale, and so our value proposition isn't as strong. We're working on ways to change that!
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.
Comments
Thanks for the kind words. (Bill from WePay here)
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?
Having run a marketplace, the scammers are just ridiculous. The one I remember most is that some group stole the credit card numbers of a church group to "buy" PS3s from fake sellers. Thankfully, they were really naive about it, so we reversed all the transactions before they hit, but that's just the tip of the iceburg.
So here's a question: so what do your customers use before they hit $10MM in ARR and get on your radar?
It's a smattering of options: PayPal, Authorize.net, Stripe & Braintree are all good ones. We have folks that start with us from day 1, but typically fraud isn't too much of a concern until you start to really scale, and so our value proposition isn't as strong. We're working on ways to change that!
Congratulations!
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 am really sorry to hear that - that is unacceptable. Would you mind sending me an email so I can make sure we improve? bill@wepay.com
That makes a ton of sense! I may indeed reach out for some more thoughts, thanks for that.
I hate to say this, but "bill" @ "*pay" looks like you're the billing department.