Webpay’s Click&Buy Maps Strategy for Major U.S. Expansion

An Internet-based payments network that originated in Europe is targeting the increasingly competitive U.S. micropayments market, seeking major-brand U.S. merchants and looking for licensees here for its software. Webpay Inc., a unit of Switzerland-based Webpay International, set up shop in Manhattan 11 months ago and so far has recruited 30 U.S. merchants for its product, Click&Buy, which it markets directly and through licensees. These include Walt Disney Co.'s ABC network and publisher Kiplinger Washington Editors Inc. It has also signed up 50,000 registered Click&Buy users. Now it is enabling payments for podcasts and getting ready to roll out a service that will allow users to charge transactions to their phone bills. “We think the U.S. is the market for micropayments,” says Fabian G. Siegel, president and chief executive of Webpay Inc. Siegel's U.S. strategy is to go after big-name vendors of digital content first to build trust and credibility with consumers. The 5-year-old company boasts 3,800 merchants and 5 million users, mostly in Europe (where the service is marketed as Firstgate), but 80% of its revenue comes from 5% of its merchants, according to Siegel. “It's crucial to get those strong brand names,” he says. “That's the only way the consumer will trust your brand name. Then it makes sense for a no-name merchant to use Click&Buy.” Siegel's goal over the next 12 months is to expand his roster of merchants to between 120 and 150 and to reach the 1-million mark in users. “My goal for the next 12 months is to get 20% of [Webpay International's] new customers in the U.S.,” he says. To do that, he is seeking deals to license the Click&Buy software. So far, telecommunications companies have proved receptive in overseas markets. Webpay has licensing deals in place with British Telecom and Swisscom in Europe and Mexicio's Telmex network. The company is also rolling out a new service on Click&Buy that enables users to pay for podcasts with a one-click download. This could open up the burgeoning song-download market for Webpay. Apple Computer Inc.'s iTunes music store uses Click&Buy in Europe but not in the U.S. And, to expand payment options, Siegel says Webpay will have in place by the end of September the capability for users to charge payments to their phone bills. Currently, U.S. transactions flow through the bank card and automated clearing house networks, with transactions aggregated throughout a 30-day billing cycle before settlement. Webpay is forming a joint venture with Billing Concepts Inc., a San Antonio, Texas-based billing clearinghouse for telecom carriers, to handle the phone-bill charges. Merchants pay Webpay a percentage-based fee per transaction, on a sliding scale based on face value. Payments up to $1, for example, carry a 25% fee. The fee drops to 5% by the time a transaction hits $20. There are no fixed fees. The pricing covers transaction processing, billing, phone-based customer service, and content management. Merchants like ABC, which is using Click&Buy to sell a game derived from its “Alias” TV show, can use the software to set up and manage subscriptions, discounts, promotional offers, and the like. Webpay faces increasing competition. Other companies have established similar services in recent months. At least one, Valista Ltd., has rolled out a payments engine that includes campaign-management capability (Digital Transactions News, Nov. 15, 2004), and a number of startups have sprung up to exploit a growing opportunity in micropayments processing for digital content.