E-commerce carries the promise of transactions without borders or brick and mortar, but it's still a challenge to enter a new market, according to WePay CEO Bill Clerico.
"There's a complexity in expanding a payment platform," he said, noting that local licenses are required, as well as a distinct risk management strategy. "It's not just opening an office. It's a huge undertaking."
WePay is opening two offices to support its white label payments services that operate out of the United Kingdom. One office in Providence, R.I., will manage customer support during U.K. business hours, while an office in London will focus on business development.
The company hopes to reach North American and U.K.-based crowdfunding and business software platforms that want to operate in the U.K. By laying some of the groundwork — including work with local U.K. regulators, Mastercard and Visa to ensure compliance with local laws and standards — WePay hopes to provide an easier transition for clients entering the new market. E-commerce companies often struggle to reach international markets, due to issues such as compliance and routing; WePay's work with the card networks in the U.K. is designed to address those issues head-on.
WePay's clients generally support payments for much smaller users, such as artisans or fundraisers. Having a foothold in the U.K. would better position it for clients that wish to serve customers from a base inside the U.K. WePay's clients in the U.S. include GoFundMe, FreshBooks and Constant Contact, and its test clients in the U.K. include Infusionsoft, a Chandler, Ariz.-based business software company that wanted a local source to manage its clients in the U.K.
The shared language and business practice make the U.K. the obvious overseas target for North American platforms that are looking to extend their geographic reach. The U.K. also has a large e-commerce market with high per capita online spending. "It's a similar market to the U.S. in terms of the use and penetration of online marketplaces," Clerico said.
Merchant platforms increasingly operate internationally while processing transactions in a base country. WePay has made international expansion a part of its strategy, and its investors include Rakuten, Japan's largest e-commerce company and one of the world's largest online marketplaces. WePay is evaluating the possibility of opening offices in additional countries.
WePay is not alone in targeting cross border e-commerce, which has become a popular market for payments technology companies.
"The commerce platform is booming as organizations best equipped to provide digital marketing and technology services are aggregating volume for the benefit of those that are most able to deliver the products and services," said Rick Oglesby, president of AZ Payments Group, who says companies such as Uber, eBay, Apple, Google and Amazon aggregate volume for smaller parties such as drivers or digital content. "Amazon Marketplace and eBay do it for physical merchandise. There’s also a slew of other providers that are looking to offer a similar model for a variety of market niches."
Processors such as Vantiv are expanding services to cross-border e-commerce companies, while mobile technology company Loviit and cross-border payments company Payoneer have recently added merchant services for e-commerce companies looking to enter new markets.
"Enabling this sort of commerce requires an extremely easy-to-use and efficient payment processing solution that is also globally scalable," Oglesby said. "It’s an emerging and dynamic area that requires robust payment processing solutions. Not many can combine the required robustness with the required nimbleness and global coverage, so it’s a big area of payment processing opportunity."