U.K.'s Shieldpay eyes U.S. market through high-end auto sales

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Low-value transactions on classified ads aren't generally considered high-risk, and most any payment method would suffice. However, a sense of security and the ability to establish a digital escrow account become critical for high-value sales to consumers and businesses.

London-based Shieldpay has been providing that type of service in the U.K. and parts of Europe for several years, and it will expand its reach in the U.S. this year through a partnership with AutoClassics.com.

In seeking to raise the risk appetite for classified ad shoppers, Shieldpay secures larger payments between users that it has verified.

“Taking Shieldpay to the U.S. was the next logical step," Tom Clementson, director of consumer and small businesses at Shieldpay, said in a statement to PaymentsSource. "The size and scale of online marketplaces, globally, is over $1 trillion — and that figure even excludes classifieds sites that don’t yet accept payments."

Shieldpay provides technology that allows classified sites to compete with the likes of Facebook Marketplace. Shieldpay started selling to clients in the U.S. last year and is preparing to launch with other auto sales sites in the coming months. The current version of the Shieldpay app can be used in the U.K. and European Union countries, while the U.S. version will go live this month.

In addition to AutoClassics.com, Shieldpay provides the digital escrow accounts and security for payments on AxisStars, a members-only high-value marketplace for sports stars.

Being able to provide a digital escrow account is "an interesting proposition that enables transactions between parties that don't know each other," said Zil Bareisis, a London-based senior analyst for research firm Celent.

Shieldpay isn't entering a crowded landscape, but it does have competition.

Escrow.com has been operating for more than a decade in the U.S., while payments providers that support platforms and marketplaces have also been looking to add escrow capabilities to their offerings, Bareisis said.

Payoneer and UPS Capital, a unit of United Parcel Service, last year partnered to deliver a B2B platform that enabled online transactions licensed by escrow in a matter of minutes.

Much like Shieldpay, these companies tout the ability to deliver an escrow account in minutes and eliminate the need to establish a letter of credit or other methods that take weeks to put together.

As such, classified sites with high-value products see a major benefit in allowing transactions to take place without leaving their platforms.

“We’re proud to partner with Shieldpay as an innovative payments solution that has allowed us to become transactional for the first time," Geoff Love, CEO of AutoClassics, said in an e-mail to PaymentsSource.

In addition, Shieldpay provides the Driveway Checkout system in which both parties can negotiate the price of a car and authorize the payment in-app to complete the sale.

Classifieds sites and marketplaces can leverage Shieldpay's API to create their own user interface on a site, or use of the company's prepared user interface.

Funds for an agreed-upon transaction are held in the Shieldpay vault and released only when both parties agree through the site that the deal is completed.

In addition to classifieds and marketplaces, Shieldpay says its platform works for real estate transactions and business mergers and acquisitions across the globe.

Shieldpay works with partners Mastercard, Barclays and TechStars, while being compliant with the Payment Card Industry security standards.

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Risk management Online payments U.S. U.K.