A Palo Alto, California payment start-up thinks it has
found an unexplored part of the P2P market – and the whole thing
began with a bachelor party. WePay, whose service allows consumers
to create free FDIC-insured accounts, has PayPal in its sights, as
Charles Davis reports.
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WePay has introduced an online
person-to-person payment service that enables groups and
individuals to collect, manage and spend money easily, all fueled
by electronic payments. WePay allows users to create free
FDIC-insured accounts, and ‘share’ them with others to maintain
transparency.
From these accounts, users can send
electronic bills (which can be paid with bank accounts or credit
cards) and spend funds with a WePay prepaid card, paper cheques, or
electronic transfers. WePay users can create accounts at its
partner bank, Bancorp Bank, a subsidiary of Bancorp in Wilmington,
Delaware.
WePay co-founder Rich Aberman said
that WePay’s service will compete with eBay’s PayPal subsidiary by
making it simpler to collect money from groups of consumers, a
wrinkle left unexplored by the market to date.
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By GlobalData‘Nightmare’
Aberman learned that first-hand
when he and his co-founder, Bill Clerico, began to organise that
bachelor party. A budding law student, Aberman was tasked with
collecting what eventually became $4,000 in cash and cheques from
his brother’s mates.
“My co-founder and I met in college
and first we were managing money for student groups, and it was
such a hassle to do it transparently and efficiently – it was a
nightmare,” Aberman said.
“So we kept thinking about it, then
I was planning my brother’s bachelor party for 15 people, and it
was all PayPal, cash and cheques. I am handling the money, sending
out reminders to folks who had not paid up, then once I had the
money, there was no logical place to put it. I have $4,000 in my
hands and I did not want it bundled with my personal accounts.”
It was then, Aberman said, that the
light went on.
“We go to buy food and drinks,
keeping track of where the money went, and we realised that this
was small-scale compared to what we could do, and so I dropped out
of law school and we hit the ground running.”
In August 2008, the college pals
founded WePay and a year later they were accepted into Y
Combinator, a start-up accelerator launched by Viaweb founder Paul
Graham. In December 2009, WePay raised $1.65m from August Capital
and others.
WePay recently released a public
beta of its group payment product, and is set for a major round of
expansion, Aberman said, from roommates collecting rent and
utilities to large clubs and organisations collecting membership
dues or soliciting donations.
Kara Casey, a recent college
graduate, uses WePay to manage collecting and paying fees for her
15-player softball team.
“WePay has made the collection and
payment process stress-free for everyone involved,” said Casey in a
WePay release.
“I am able to quickly send ‘bills’
to my teammates and I am notified when they submit payment. My
favourite part is that WePay sends reminders directly to teammates
with a balance due. This eliminates the discomfort of having to
remind friends that they owe me money.”
The site eliminates the hassle of
collecting and managing group finances, while also helping to
promote transparency and accountability.
Clubs, organisations, and
associations of all sizes can use WePay to send bills and collect
money, solicit donations, send reimbursements, and spend money
transparently.
“WePay is a lot easier to use than
PayPal, especially when you are trying to collect money from a lot
of different people,” Aberman said. “But the real difference
between WePay and PayPal is that WePay allows users to create
separate accounts for different things- like an account for your
roommates and a totally separate one for a group vacation.”
He added that, unlike PayPal, WePay
makes it easy to keep funds separate and to avoid mixing group
finances with personal ones.
“We wanted the product to be more
consumer-to-consumer focused, because that is where we have the
greatest opportunity to carve out our own space,” Aberman said.
“The big payment companies focus on consumer-to-merchant
relationships.”
The service grows virally, Aberman
said. Accountholders can ‘share’ their accounts with other group or
organisation members so those individuals always can verify where
their money is going, and WePay recently added a social networking
tool that enables users to share the service through Facebook and
Twitter.
Group or organisation members can
track where their funds go and view what the group or organisation
is using them for by looking up the organisation’s transaction
history and account balances. However, only the account creator,
for any account, may use the account to make and receive
payments.
Electronic-bill
function
To receive payments from group
members, the account creator can send bills electronically to
members who then pay off the bills using a bank account or credit
card. Because of the electronic-bill function, groups members do
not have to set up their own WePay account.
Consumers or members pay nothing to
make payments, but WePay charges clubs, groups or organisations as
little as 50 cents per payment they receive.
“We always felt like if we are
going to make this work, we had to start with figuring out where
the pain point is the highest,” Aberman said. “There are lot of
sites out there doing person-to-person, but collecting money from a
large group of individuals – from roommates to the company softball
team, gives you a multiplier effect with each group you sign
up.”
In the near future, WePay wants to
enlarge its share of the class reunion business – “a huge
opportunity with a huge pain point,” Aberman said. Fraternities and
sororities, group vacations, bachelor parties, fantasy sports,
fishing trips and recreational sports teams all are the subject of
WePay’s viral marketing efforts, he said.
“Fantasy sports alone presents us
with 22m players in the US, each in a league with one person in
charge of taking in the money,” Aberman said.
“Every one of these leagues is a potential WePay account.”
