A view from the top: Payment service providers today.

The past year has seen an explosion in online payment startups. Against the backdrop of all this activity, YapStone continues to hold a solid business model, as it has for the last 15 years and counting. We asked Michael Denbeau, SVP of Business Development about his thoughts on where YapStone stands in relation to the competition.

1. It seems there are daily announcements about new competitors, mergers, or purchases in the payments industry. Why is the online payments space so popular these days?
The transfer of money in exchange for goods and services has been at the heart of all industry since the dawn of mankind. Given the ubiquitous role payments play in our economy, companies that facilitate payments have always commanded the attention of investors. That said, I believe what has recently sparked a renewed interest in the payment industry is the idea that a payment is more than just the simple transactional act of moving money. Payment, in actuality, has evolved to become a deeply ingrained part of the overall customer experience. Payments allow companies to monetize existing business, as well as enhance their relationships with their customers by offering frictionless interactions that enable meaningful connections. This in turn results in the acquisition of more customers.

There has been a subtle shift from goods or services being the hook to acquire customers and payments being a simple process for getting paid to payments becoming central to acquiring customers in the first place and a driver of the overall customer experience. This has fuelled an explosion in payment processing innovation.

2. Since the space is so cluttered, what are the qualities that indicate whether a payments company has staying power and is worth recognizing?
The first iteration of online payments was mostly focused on the business side—simply turning the thing on for traditional brick-and-mortar retailers and getting it to work in a previously “card-present” world. PayPal took it a step further by successfully democratizing online payments for smaller businesses. The next iteration of online payments will be consumer-centric—harnessing the power of payments as a platform to delight the end consumer and scale up for mass consumer adoption. Ultimately, payment service providers that are focused on the customer experience will be successful in this next wave of innovation. Take for instance what Uber has done to revolutionize the taxi industry. The company has essentially embedded payments, in a seamless and brilliant way, into their overall consumer experience. You hit a button, a car comes to pick you up, and money is automatically deducted from your credit card account. Imagine how different the experience would be if you had to take out your wallet to pay or call in your credit card number. A simple, frictionless payment experience geared toward the consumer allows Uber to differentiate itself and greatly expand their business.

Similarly, look at what YapStone is doing with HomeAway, a company that connects sellers (vacation home owners) with buyers (travelers). Historically, vacation homeowners were paid through a labor-intensive and time-consuming process that relied on paper checks or costly wire transfers. Enabling credit or debit card payments processing was a huge hassle involving several weeks of paper shuffling and back-and-forth to open a merchant account. YapStone developed a decisioning engine to onboard small merchants in a frictionless and scalable way within minutes. Streamlining this painful aspect of payment processing for HomeAway customers has allowed the company to onboard tens of thousands of homeowners in little over a year.

3. YapStone received outside funding from Accel Partners, but so did other competitors in the payment industry. How does YapStone stand out from the other companies who received funding?
What makes YapStone unique is our strong focus on vertical markets. We want to go deep in industries that are predominately still taking payments the old fashioned way via cash and paper check. We bring strong technology and know-how to bear to drive electronic payments adoption. YapStone is the largest payment service provider in the apartment rental and HOA space. We are also the biggest in vacation home rentals. We are even the largest in processing donations for Catholic churches. What we don’t want to be is a generic me-too provider that’s easily commoditized.

Our vertical market specialization demands that we focus obsessively with laser precision on the needs of the customer. Fortunately, we have a strong development team that’s nimble and responsive to customer needs to pump out products and services accordingly. We also offer a full “Payment-as-a-Service” (PaaS) model that not only includes a payment gateway, but more importantly a YapStone merchant account that customers can leverage for payment processing.