We’ve reminded you here in this column before of one critical and forgotten truth when it comes to online supremacy: all empires crumble. As much as we list the Lycos’s and Compuserve’s of the online world, though, this truth can be hard to remember. That is because it can be hard to see how anyone can make inroads into a well-established internet semi-monopoly.
Oftentimes the reason this is the case is that whoever is #1 is there for a reason. Google offers the most extensive search results; Apache offers the most stable web hosting package, and so forth. Sometimes, though, #1 doesn’t try harder. In those cases, their top ranking is based on little more than momentum, meaning that it’s only a matter of time before a competitor sweeps in, finding that company’s weak spots, and seizes the day.
PayPal: a decadent king
PayPal has been ripe for this seizing for a long time. It is still easily the #1 payment processor online. For years, though, this has been a title rather grudgingly awarded. The complaints about the company have been piling up. Most of these have centered around customer service, which branch out into various subcategories, such as bad decision making on fraud determination and poor customer communication.
These complaints were highlighted by an incident in which PayPal froze the account of the Flux Foundation. The group was planning an historic exhibit at Burning Man, and though PayPal responded to the negative publicity by quickly granting them an exception, the story shined an embarrassing light on the company’s approach to their customer base.
It was from a far smaller incident, though, that a competitor to their services was birthed. In 2008, Rich Aberman, now 25, was attempting to raise money for his brother’s bachelor party. The hassle of trying to get the $ 4,200 from 14 different people presented the kind of headache that, in the right kind of mind, results in that very special realization otherwise known as, “There has to be a better way”. While PayPal provided, and still does, some small types of group fundraising, it didn’t have a lot of the functionality for this kind of purpose that he required.
WePay steps into the ring
Aberman soon found investors who agreed with both the general complaints about PayPal and the belief regarding that “better way”. They received $ 17,000 in seed money. That was 2008. Today, their investment capital has hit the 8-figure mark. That’s an amazing increase. What’s even more amazing is the list of people that this comes from, a list which includes PayPal founder Max Levchin. Big names are seeing reasons to bet big on WePay.
It’s not just venture capital that’s increasing. WePay’s revenue, transaction stream, and employee count are all shooting up with the kind of geometric growth that gets a company’s CEO’s grinning picture on the front page of financial magazines. So what is it that makes this company so hot?
The selling points
There are several things that WePay is doing right that could mean PayPal has a serious challenger to contend with here. Some of them are as follows:
- Customer service: Recognizing that this is one of PayPal’s primary weak points, WePay has been putting serious effort into making sure that their customers don’t feel brushed off. 24/7 support by phone, chat or email is available. One subtle sign that they take this seriously is that tech agents and customer service agents are located next to each other. Many in the tech community have experienced the phenomenon wherein a customer service agent wants to communicate an idea to the tech team, and feels like it has to cross a guarded moat to do so.
- WePay Stores: If there’s any idea left in E-Commerce that might make someone smack themselves in the head for not thinking of it first, this could be it. WePay Stores is an E-Commerce solution that handles both the setting up of the storefront and the processing of payments. It’s been so many years that this has been split between different companies that the whole of the internet seems to just have assumed that this must always be the case.
- Having fun: Let’s recognize that this is something that many startups have in the early years, only to lose it in the grumpiness of bloated corporate middle age. We’re interested in the now, though, and right now… well, how can you not at least chuckle a little bit at a company that trolls it’s competitor’s conference with a 600 pound block of ice embedded with money as a symbol of the accounts PayPal has wrongly “frozen”?
Not there yet
These advantages notwithstanding, it’s not all smooth sailing for WePay just yet. While so far they are appealing to a lot of the things that PayPal has dropped the ball on, their Goliath still has upwards of 80 million customers to call on. The daily worry over at WePay is that PayPal will decide to alter their services one day and offer the same group payment architecture that WePay is focused on.
There is also the economic consideration that WePay’s services come at a price. Their 3.5% transaction fee is high for the industry. Scanning the comments that we saw in some of the articles about this company, there are still a lot of customers who are willing to deal with PayPal’s corporate deficiencies if it means saving a few bucks. This is a hard line to walk, and with so much of WePay’s revenue coming from investments, one would not be irrational for being concerned that these guys are being a little too loose in rolling the dice.
As good a chance as any
Then again, when facing off against a behemoth like PayPal, does one have the luxury to not take any chances? While things are riding hard and fast over at WePay headquarters, so far there doesn’t seem any sign that it’s moving faster than they are capable of handling. PayPal is vulnerable, and Aberman and co-founder Bill Clerico just may have struck at the right time in the right way. We can’t predict the future, but we can say that so far from what we’ve seen, it’s possible that we could be in the beginning phases of the passing of a great torch in the world of online payments.