A Crowdfunding Niche Posts $1.5 Million in Daily Volume for PSP WePay

By Kevin Woodward

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Crowdfunding organizations that work with payment service provider WePay Inc., and have integrated WePay’s application programming interface into their Web sites, are creating $1.5 million in daily payments for the Palo Alto, Calif.-based company. That is three times more than two years ago, WePay says.

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Crowdfunding organizations rely on individuals to pool their money online to support an online solicitation, such as buying school equipment or covering the costs of an expensive medical procedure. WePay’s API enables site owners to offer online payments, while letting WePay handle processing, fraud mitigation, and chargebacks. WePay’s API means merchants do not store customer payment, and settlement is made directly to a merchant’s bank account. As a payment service provider, WePay can sign up multiple merchants without boarding each as a separate merchant account.

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WePay, founded in 2008, works with more than 30 crowdfunding sites, such as online fundraising site GoFundMe.com and honeymoon registry Honeyfund.com, says Bill Clerico, WePay co-founder and chief executive. As WePay considered its strategy, Clerico says he and other executives decided it was easier to make WePay a payment services provider than to build a payment platform for each vertical it might be interested in.

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Adopting that strategy makes sense, says Todd Ablowitz, president of Littleton, Colo.-based Double Diamond Group. “One of the holy grails in starting a new payments company is to find a niche that is growing like crazy and becoming the best at it,” Ablowitz says. That can lead to tremendous growth in a high-margin business, he says. “Focusing on crowdfunding is their way to become very strong in a new and fast-growing market.”

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Providing an API gives WePay additional capabilities and flexibilities, Ablowitz says. “This business is no longer about just taking a credit card,” he says. “It’s about integrating payment acceptance into new companies, new business models, and new marketplaces.”

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WePay also offers an online payment service that e-commerce merchants can add to their Web sites. This provides them with different payment buttons, such as ones that say “Subscribe,” “Donate,” “Checkout,” or “Register.”

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WePay charges 2.9% plus 30 cents per transaction for credit card payments, or 1% plus 30 cents for bank- account payments. Web-site owners using WePay’s API also can collect a per-transaction fee from fund-raising groups.