The ubiquitousness of the Internet has transformed various industries, providing consumers with the means to purchase goods or services through mobile apps and desktop platforms. Likewise, innovation has driven a dramatic shift in the way individuals and consumers make those payments. The gradual decline in cash and check payments is being met with increased usage of credit cards and payment apps.
It is estimated that cash-based transactions will decrease in the U.S. from $1.4 trillion in 2014 to $1.34 trillion in 2018. As an early developer of online payments, PayPal paved the way and revolutionized the industry. Apple (AAPL) and Google (GOOG) are also gaining traction in the payments space with their Apple Pay and Google Wallet platforms, which control 1.7 percent and 4 percent of all mobile payments respectively. Apple Pay allows iOS users to make mobile payments in stores while Google Wallet offers similar services for Gmail and Android users.
In addition to those two giants, smaller companies such as Stripe and WePay are making headway in the online payments industry. WePay provides marketplaces, crowdfunding sites, and small platform-oriented businesses with software to seamlessly facilitate payments and processing. Operating in stiff competition with PayPal and Stripe, WePay has grown over the last six years to processing $1 billion in payments. In the ever changing economy, WePay’s business model has provided a means for growth and expansion.
Simplifying the Payment Process
Upon its founding in 2008, WePay was established to process payments amongst peer-to-peer groups such as friends, family, and sports teams. WePay has since pivoted, focusing on e-commerce platforms with the rise of online marketplaces and crowdfunding websites. The company differentiates its business model from the way other payment accounts operate. Traditional payment models tie an individual name to one account; however, WePay allows users to separate payments between multiple groups and even personal transactions. Accounts are still tied to an individual name, but transaction history is separated by different accounts.
WePay serves as the back office for payment processing of several e-commerce websites. The fall in cash and check payments and the popular utilization of electronic payments has resulted in WePay’s rapid growth and expansion.
Launched in 2014, WePay Clear allows merchants to directly accept and process payments through customizable applications on their websites. Traditionally, small businesses have directed online payments through outside sources such as PayPal. With WePay Clear, websites no longer share user information with payment providers, limiting their exposure to outside sources of payment problems. While competitor Stripe offers a similar service, WePay Clear differentiates itself from the competition with comprehensive fraud and chargeback protection. Furthermore, as a white label solution, WePay withholds its brand from customers’ business websites.
Sources of Revenue
WePay’s rapid financial growth has come largely from operating in ecommerce for small businesses and crowdfunding platforms. The company generates revenue through transaction fees on credit card and ACH payments. WePay charges 2.9 percent plus 30 cents for each credit card transaction and 1 percent plus 30 cents in fees for every bank (ACH) payment.
The Bottom Line
As the online payments industry continues to mature, the volume of electronic payments will also increase. Although an infant in the industry, WePay offers robust APIs for customizable and fully integrated software geared towards online marketplaces and crowdfunding platforms. Unlike similar services, WePay’s risk API provides full protection with no risk of loss for clients. Additionally, WePay’s new service WePay Clear offers clients a seamless onboard checkout service within the company’s website.
As consumers move away from cash and checks in favor of electronic payments, providers such as WePay must continue to develop the means to protect clients from hackers, fraud, and money laundering to be successful.