Payments company WePay (YC S09) raises $40M to go global

So here's a question: so what do your customers use before they hit $10MM in ARR and get on your radar?

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?

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.

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.