Mobile and web payment is big news right now. SnapChat working with Square, PayPal with Pebble, Alibaba (reportedly) in talks with Apple Pay, etc. I spoke with YapStone VP of marketing Troy Scarlott about the implications and lessons for marketers.
Troy, thank you for speaking with me. YapStone is a major player in electronic payments. Your company processed over $8B in payments last year, was named to the San Francisco Business Times “Fast 100” and “Deloitte Technology Fast 500,” and was just named to the Forbes list "America's 100 Most Promising Companies." (See the end of the article for more information about YapStone.)
Q: Where does YapStone sit in the payments landscape?
A: YapStone was founded in 1999—almost 15 years ago and long before the world had heard of the electronic payment industry or companies such as Braintree, Stripe and Dwolla. Unlike our competitors (who focus mainly on e-commerce transactions), YapStone is focused on specific vertical markets, dominated by the paper check, that need a sophisticated electronic payment platform. For our partners, YapStone’s payment platform offers the ability to process high-ticket, complex transactions while mitigating the risk.
If you take into account a few trends:
- In 2012, U.S. consumers and businesses wrote 21 billion paper checks. It is estimated that 83 percent of these checks were for C2B payments for retail transactions and bill payments. (source: Fed Reserve Payments Study)
- Online and mobile payments will account for nearly half of all bills paid in the U.S. in 2013. (source: Aite Group)
- In 2015-2016, the “millennial” generation will account for 75M of the U.S. population. (source: U.S. census)
- Defined in the study as anyone between the ages of 18 and 34—millennials prefer to pay with debit cards over any other payment options. Although 47 percent of millennials surveyed own a checkbook, none said they prefer to pay by check. The millennial generation uses electronic and emerging payments more than any other demographic. (source: 2010 Study of Consumer Payment Preferences)
- 166M people in the U.S. own a smart phone. (source: comScore)
With this in mind we believe that our platform and ability to scale will give us the unique ability to deliver what U.S. consumers want: an online and mobile payment solution that reduces the hassle of the paper check and gives them the option they want—to pay bills with a debit or credit card.
Q: What is going to happen in the digital payments space over the next year, and where will things shake out?
A: We believe that payments is an incredibly exciting industry to be in at the moment. The electronic payment processing industry is one of the 5th fastest growing U.S. sectors with $15 billion in revenue in 2013, growing at 43% YoY (source: IBISWorld study). We (eg. Stripe, Braintree, WePay, Square) all have unique platforms and go-to market strategies. That being said, the U.S. and global markets are so large that many payment companies can be and will be successful. I will put my marketing hat on—the pressure is on us to put the consumers in the center, continue to innovate, and deliver what they need to truly solve their real world problems. We have to constantly be reminded that consumers are not looking to “make a payment”—they are really looking to buy a shirt, book a vacation, or pay a bill. The payment actually gets in the way of what they truly want to do so its our job to make it as easy and convenient as possible.
If you review the numbers, electronic and online payments are still a small percentage of day-to-day commerce, so we believe we are just getting a glimpse of the impact our industry will make on commerce. As far as payment companies, there will probably be more consolidation as PayPal rolls out of eBay and companies like Stripe look for ways to grow to meet their valuation. Innovation and product death will continue to meet. Just last week, Amazon announced that they were abandoning their digital wallet after a six month trial. Yet, ApplePay is seen as a game changer. And cool companies who are growing audience, like SnapChat, will eventually turn to electronic payments to monetize their product. In the years to come, the companies who build or integrate payments and solve real consumer problems are ultimately, going to be successful.
Q: Speaking to the marketers, what do they need to prepare for in mobile and web payments? What opportunities are they going to miss out on, or what traps might they fall into?
A: Generally speaking, one insight continues to ring true—the younger, digital savvy generation is not afraid of change and is reaching for their mobile device and a debit card. As I said before they are not looking to “make” a payment but if you make the transaction for your product or service difficult then they will have a negative experience. Uber is the easy example to illustrate this point—it’s such a great experience to get to your destination and get out of the car. No more sitting in the back of a taxi and struggling to pay with a credit card or cash through a tiny glass wall.
In my opinion, marketers should assume that the “low hanging fruit” has already been picked… by your competition. By embracing the insight that today’s consumer is not going to wait for what they want, they are going to go find it—marketers may be able to create a rewarding payment experience and stay one step ahead of their target audience, and their competition. As a final thought, I think marketers now have the unique opportunity to widen their influence on their company’s product roadmap and use of technology to integrate the payment experience into the overall brand experience.
Q: Thanks, Troy. To close, can you give us a little more background on YapStone?
A: YapStone powers a global web-based and mobile payments platform with a mission to change how the world pays. Processing over $10B in payments annually, our payment platform powers online marketplaces, including HomeAway™and VRBO™, and is increasingly being used by third parties looking for a turn-key transaction solution in specific markets.
Our payment platform also powers our own industry-focused payment solutions, including rentpayment.com (multi-family), vacationrentpayment.com (vacation rentals), holidayrentpayment.com (vacation rentals - Europe), parishpay.com (non-profit), duespayment.com (HOA assessments) and storagerentpayment.com (self storage).
YapStone was founded in 1999 by Tom Villante and Matt Golis. Today, we have offices in Walnut Creek, CA, Santa Monica, CA and Ireland. In 2011, Accel Partners and Meritech Capital Partners made a minority investment of $50 million in the company. In 2013 and in 2015, YapStone was named to Forbes’ List of America’s 100 Most Promising Companies. YapStone has also been named to the Inc. 5000 List of America’s Fastest Growing Private Companies for seven consecutive years.
With hyper-growth from 2011-2013, YapStone had a lot of momentum going into 2014. We had a great year—in recruiting, we added over 105 experts to the team and now have 270 employees; in operations, we moved into new offices in all three YapStone locations (Walnut Creek, Santa Monica and Ireland) to allow for continued growth; and by the numbers, we processed over $10B in electronic payments, and achieved year-over year revenue growth of 35%, surpassing $120M in revenue. And just last week, YapStone was again named to the 2015 Forbes list of America’s 100 Most Promising Companies.
We feel like we are just getting rolling. Our 2015 goals, product roadmap and growth plans are very exciting.
Q: What makes you unique?
A: Through the vision of two co-founders—Tom Villante and Matt Golis—Yapstone has built a payment processing platform focused on large vertical markets that are dominated by the paper check. Our value proposition and success can be found in our ability to deliver innovative payment technology, unmatched vertical industry expertise, and end-to-end (365 days a year) customer service and support. 15 years in the making, it is a model proven to be very difficult for competitors to replicate.
One successful case study of our unique model is found in our partnership with HomeAway™. In 2010, YapStone began a partnership one of the largest online marketplaces in the world, HomeAway™ and VRBO™. As one of the largest online vacation rental marketplaces in the world, the YapStone-HomeAway partnership has been amazingly successful. In 2013, just the 4th year of the partnership, the payment volume is growing exponentially.