Online and mobile payments processor WePay's has seen the number of developers using its application programming interface (API) grow by 284% in the past year.

The number of transacting WePay API apps snowballed to 280, up from 72 a year ago and 10 in August 2011, the time of the API's launch. The company attributes its recent momentum to a model in which it does most of the heavy lifting, acting like the outsourced version of its client's internal payments division. 

"WePay is risk, ID verification, dispute resolution, all of those things that are uncomfortable," says  Rich Aberman, WePay's co-founder and chief operating officer. "We handle that stuff, allowing our partners to facilitate payments."

WePay's API users develop payment applications for their merchant clients—a relationship that has resulted in more than 250,000 businesses using WePay to accept mobile payments. WePay's most recent clients include Crowdrise, which provides payments and other services for charities; Soldsie, which helps sellers monetize their Facebook pages; and CustomMade, a marketplace for crafted products such as furniture and jewelry.

Through these developers, "we get access to all of these really small merchants that would be hard for us to get on our own," Aberman says.

CustomMade launched its WePay-powered payments service about a week ago, giving its network of 12,000 artisans an alternative to the process of requiring buyers and sellers to handle payments on their own, says Matt Zisow, CustomMade's chief operating officer.

"Rather than writing a check, your money is going through a highly secure site and is being held while the project is underway," Zisow says. "And for the maker, they don't like to deal with the invoices, they like to make their product."

More recently, WePay began using developers' unstructured data to enhance risk management by combining it with more traditional structured information that comes through credit reports or transaction histories.  The company's new risk tool, Veda, which uses Facebook as part of the onboarding process, has also improved WePay's risk management, Aberman says.

For CustomMade, the advanced risk management allows it to vet buyers and sellers in a complex environment, where payments are often split between an advance and a final payment.

"And our transactions sizes are very large, averaging in the $800 dollar range," Zisow says. "We make a lot of underwriting decisions, and WePay has helped us refine the way we do risk underwriting and how we vet mangers and manage the flow of funds."

WePay, which supports payments for small merchants through online invoicing and card-not-present payments processing, competes in the payments software development market with companies like Stripe, Dwolla and Braintree.

As more small merchants turn to third-party developers, the use of alternative data sourcing will increase, says Arkady Fridman, a senior analyst at Aite Group.

With competition in the acquiring space on the rise, especially for mobile payments, non-traditional information provides relevant insights about the strength and long-term sustainability of the business, he says.

"Payments companies can use this publicly available information to make better informed decisions," Fridman says. 

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