How Pivoting Towards Platform Providers Transformed WePay's API Business

WePay APIWePay is a payment processing company for platform companies, crowdfunding, marketplaces, and business software. WePay has seen substantial growth in API usage over the past year, and has indicated that its revenue growth has nearly doubled in the past six months. In 2014, WePay grew its team by an additional 20 people, for a total of 60 staff across the API-as-product business.

Key Points

  • WePay´s revenue growth in 2014 increased 150% over previous annual revenue after it pivoted to focus on the API as the center of its payment processing company. This required tightening the customer segment focus.
  • A clear pricing strategy/business model is giving WePay´s API consumers/customers clarity and generating trust in using the API.
  • Key developer resources include sample code and step-by-step tutorials on building a business using the WePay API. This is helping drive developer adoption in 2014. WePay’s developer support subdomain also sees high monthly traffic.

The WePay Business Model

WePay API business model

(Source: http://www.slideshare.net/jmusser/j-musser-apibizmodels2013 and https://www.wepay.com/pricing)

Highlights of WePay's API Business Model

  • 2.9% + 30 cents per transaction

WePay´s business model is a fairly standard approach amongst payments-processing type services: API developer consumers (WePay’s customers) pay a percentage of each transaction amount, plus a small flat fee for every payment transaction that occurs. Other payment providers in the ProgrammableWeb API category of Payments — for example, PayPal and Stripe — also use a transaction-fee business model. Technically, the API consumer does pay for every transaction occurring using the WePay API, but these WePay customers pass this cost onto their users. (WePay is also not a traditional payments company, they act as a payment and fraud engine that facilitates payments between their customer’s platform users and is not a payments collection-based provider.)

Current customers have indicated that the business model has been a deciding factor in choosing to integrate with the WePay API. Jeff Noles, CEO of dental laboratories platform LabStar, said, “Ultimately it came down to the fact that [WePay was] completely transparent about fees. With WePay, our customers know exactly what they will pay.”

The WePay API Ecosystem

WePay API ecosystem

(Source: Map based on work by John Musser, with data from WePay´s blog and website)

Officially, WePay has one API that includes its fraud functionality (Veda) and a white-label option (Clear API). However, these are described as three separate functionalities in much of WePay’s online documentation, in order to better market the features to its customer base.

At the time ths study was published, 37 customers (covering platforms, marketplaces, SaaS products and crowdfunding sites) were listed on the WePay website, but WePay’s management team confirmed the company had about 1,200 platform customers at that time. In 2014, crowdfunding sites generated some of the biggest growth in WePay API usage. Five of the top 10 crowdfunding sites use WePay for payments processing, and, collectively, these sites are seeing almost 300% growth in levels of payments being transacted on their platforms.

In all, almost 2,000 developers have forked at least one of WePay´s SDKs on GitHub to their own repository, an indicator of the size of the active developer ecosystem. Although not an official developer engagement channel, WePay Vimeo content has been viewed over 5,000 times.

In addition, there are signs that the WePay ecosystem is generating an outer circle of ecosystem partners. While the primary ecosystem growth stems from developers using WePay´s API support tools (official SDKs, support pages, online and video tutorials, communication channels, and so on) to provide payments processing on their platforms, there are signs that the ecosystem is growing large enough to encourage a secondary layer of support services. This includes an open source SDK library created by a user for .NET developers (as WePay does not yet offer this tool). This option is being used by some of WePay´s customers, including Pay It Square. WePay also shares links to (but does not officially endorse) ecommerce and CMS platform plug-ins created by developers in its ecosystem.

Be sure to read the next API Strategy article: The Keys To Successful Real World API Strategies

 

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