It's a classic David and Goliath story: WePay, a 3-year-old company with an online consumer payment platform is getting ready to go mano a mano with eBay's PayPal in handling merchant payments. The 30-person company entered the storefront scrum July 20, when it announced the addition of WePay Stores to its offerings. Is there a storefront smackdown brewing?
WePay, based in Palo Alto, Calif., and backed by August Capital, Highland Capital Partners and YCombinator, started out with the more modest aspiration of providing simple, intuitive tools for people who wanted to collect money online. Rich Aberman and Bill Clerico, WePay's founders, had been active in organizations at Boston College, where they met. They found that collecting money for causes and events was cumbersome and started WePay to "scratch our own itch," Aberman said
"The original idea was to help social groups of people collect money online," Aberman told BusinessNewsDaily. "WePay is like the social PayPal."
Collecting money online, he said, is a pretty big problem.
"It's one that PayPal solved for merchants," Aberman said.
The difference between the two is that WePay's original focus was on the consumer. The notion was to enable people to collect money from friends, accept donations for charitable or fraternal organizations and sell tickets to events.
WePay rolled out in 2008 promising a no-muss, no-fuss approach to collecting money. You didn't need to go through the hassle of creating a merchant account to accept credit card payments. It provided easy-to-use tools to sell items, bill people, sell tickets and accept donations.
Accounts were free, with no set-up costs. WePay made its money on payments, collecting a straight 3.5 percent on any transaction, with a minimum charge of 50 cents. That was it. No add-ons or last-minute charges.
It takes less than a minute to set up an account. Account holders receive funds by direct deposit to their bank or prepaid Visa card. Payments can be made using MasterCard, Visa or Discover credit cards or eChecks from soon-to-be arch-rival PayPal .
"It's just like paying any online merchant," Aberman said. "We've managed to build an incredible onsite experience. WePay magically works from the time you sign in."
Until this summer, WePay largely stayed within the bounds of the consumer sandbox.
"The majority of our users are soccer moms, small fraternities and people selling online for the first time," Aberman said. "We have tens of thousands of users each week. We have real revenue."
But Aberman and Clerico know there are larger — and more lucrative — fish to fry.
On July 20 WePay let the genie out of the bottle and launched a full frontal assault on PayPal's merchant hegemony by launching WePay Stores, a tool that allows merchants to start selling items online in less than a minute. No merchant account is needed and there are no set-up fees, contracts or monthly fees.
Merchants can create a simple store on WePay or sell items from their own websites, without any technical ability or programming experience.
"We only make money if you make money," Clerico said. "The set-up process and payment integration are simple. We strip out friction and the headache. One line of code and you can embed WePay on your site. We're empowering people to start online businesses ."
StartupTees is one of them. Founded by three Pennsylvania State University students who bailed on the Keystone State to seek their fortunes on the West Coast, the company sells T-shirts that pay homage to startup companies such as Dropbox, Reddit and Twilio.
StartupTees built an online store on WePay as a beta test in advance of the official launch of the service. The founders are pleased with the results.
"We wanted to make a site for our T-shirt store, but we didn’t want to spend hours wrestling with PayPal and trying to integrate it with our products and website," said Zach Johnston, one of the founders. "So we decided to use WePay to accept payments and manage inventory. It literally took us a few minutes to build a store on WePay and drop it into our site – and it brought in a few hundred dollars of revenue within the first few hours."
Now that David has invaded Goliath's turf, what's next?
"Our goal is to keep growing as fast as possible and build a big company," said Aberman.
"Our goal is to take down PayPal," said Clerico. "If they have a hundred million customers, we want to have a hundred million and one. We have a beachhead. It's classic land-and-expand."
Reach BusinessNewsDaily senior writer Ned Smith at firstname.lastname@example.org. Follow him on Twitter @nedbsmith.