Coping with Growth

In September 2009, I wrote about our new US office and management team and how we were looking forward to growth in the US market. On October 29, we opened up the floodgates, it would appear, by allowing the smallest sellers on ebay.com to sign up with Paymate.

In November 2009, our payment volumes in the USA quadrupled over the previous month. Overall, including our AU and NZ markets, our volumes increased by 50% over October. While the lead up to Christmas is the seasonal high for all online shopping, this will be our biggest period by far. Australian and Kiwi shoppers appear to be shopping even without the stimulus of last year, so I wonder if this is an indicator of good tidings for 2010?

While rapid growth is the problem we all say we would like to have, being in the thick of it is a challenge! The Paymate team - in both our Sydney and Woodside, Ca. offices - is working overtime to meet our payment processing deadlines. Given the unfamiliarity of our US clients with Paymate, we have a lot of questions coming in, so we are running behind on responses - we request patience from our clients during this period.

Over 1Q2010 we will invest in shoring up our systems and capacity to support the expanded business and to surpass client expectations, while continuing to expand into new markets.

What is heartening is that small businesses and eBay sellers in the USA, Australia and New Zealand are taking up Paymate's services in larger numbers than ever. We compete with global giants who dwarf many large banks. We have never competed on price, but on value; on superior risk management to protect both buyers and sellers; on more personalised client service. All these are appealing to our new clients in the USA and once we get back to normal service levels they will be delighted by our responsive service as well.

On behalf of Paymate I would like to wish our clients, partners and other stakeholders the very best for the festive season and a happy and prosperous 2010!

New CEO and Global HQ in USA

We welcome Garrett Gafke as our CEO, based in our new offices in Woodside, CA - right in the heart of Silicon Valley. As our business develops globally we hope to expand our resources in all our key markets. The Sydney offices continue to deliver our core services so current clients will notice no difference in service levels.

See the media release here.

This is a milestone in the Paymate journey as we grow from our Aussie/Kiwi roots into a global payments provider. Quite exciting for the management team and me personally, since we founded the company in July 2000. This posting explores the rationale for our restructuring and benefits to our clients worldwide.

Back in 2000 we established Paymate right after the Dotcom Crash, would you believe, so we're used to adversity. Making the move to the US market in early 2009, right after the Global Financial Crisis brought back nostalgic memories of those tough times! Clearly we thrive on large amounts of adrenalin (and very small amounts of cash), like many startups.

Being invited by eBay to integrate into their Checkout process on www.ebay.com as one of only three new approved providers was a feather in our cap and has given us global credentials. Pity that eBay Australia remains recalcitrant (as Mr Keating might have said:) and we are not a payment option here. The ACCC continues to monitor the 800-pound gorilla that will remain nameless, but eBay remains a closed market for alternative payment providers in Australia.

So what does a global presence and global management bring to Paymate's clients?

1. Lower prices: Payments are a scale business - if we can increase our transaction volumes, we can reduce prices, so that will be the first benefit and hopefully we can offer a single price structure across all our markets in 2010.

2. New Markets: Just as we introduced many NZ sellers to Australia and vice versa, as we enter new geographies Paymate sellers will gain access to new markets and Paymate buyers can trade with our reliable merchants. For example, sellers in Australia can now use Paymate to sell on the US$25 billion ebay.com marketplace, enabling US buyers to pay in USD while you receive payments in Australian dollars. As the trusted intermediary, Paymate will continue to manage risk for our clients so you can trade safely around the world. Sellers in the USA can now offer a trusted payment brand to Australians and New Zealanders.

4. New Services: Entering new markets enables us to develop new services. Paymate continues to be the only payment service available in Australia to receive payments from the People's Republic of China, via our partnership with Alipay - China's largest payment service with over 150m clients. Check out our China Payment Service.

5. Increased Trust & Safety: As we expand the reach of our services to more buyers and sellers, we deepen the pool of trusted trading partners we can connect to each other. Knowing more about buyers and sellers allows us to manage risk more effectively and more efficiently.

6. Management Strength: Paymate can now draw upon a more experienced team with a track record in global management. E.g. Garrett Gafke has experience in taking small companies public, working with payment company leaders like CyberSource, Trintech and Verifone. We will be able to draw upon much deeper industry resources to strengthen the Paymate team and exceed our clients' expectations.

While 'global' can become a grandiose statement, at Paymate we remain firmly grounded in our focus on satisfying individual clients - buyers and sellers - who rely on us to complete their transactions. We know we have to win your business every single day, with every single payment!

Serving multiple markets raises the bar for our service and we are now better organised to deliver it.

If you have feedback on these thoughts, do comment here or email feedback@paymate.com.

Paymate Sentinel - Managing Risk Behind the Scenes

When we talk to online merchants about their credit card fraud risk we usually get responses in two categories:

• The 'what, me worry?' response (to borrow from Mad magazine of old!) from those who have never experienced a chargeback or are so new to 'card not present' sales they have no idea they are liable; and


• The 'sheesh, we lose money every month but we have good months and bad months' from the more experienced, who may have a few staff trying to validate payments using a variety of home-grown and commercial fraud detection tools.

Neither category of response is ideal, of course. At Paymate we have always invested heavily in online risk management, to manage the risk of both buyer fraud and seller non-delivery, so this is a risk we understand and manage diligently to reduce losses. The Paymate Express payment service has a risk assessment service built-in for all our small sellers on websites and ebay.com.

We have been approached from time to time by much larger merchants who have their own credit card merchant accounts, gateways and have invested in tailored websites or ecommerce portals. They have wanted us to just focus on risk management, working behind their website so that they could completely control the user experience for the buyer.

With third-party payment services like Paymate (and a slightly larger company that shall remain nameless), the buyer is linked to our secure page for capture of credit card details so that we take over the payment responsibility. Some large merchants don't want to lose the buyer in this process.

So now we have Paymate Sentinel, a brand-new service that offers our proven risk assessment service to large merchants, but plugged in BEHIND their custom website so buyers stay on their site as always. Rather than simply flagging 'potentially risky' payments for the merchant to approve or deny, Paymate makes the decision based on our systems and deep experience of the space. We then submit risk-approved payments for bank authorisation (and subsequent settlement) via our own gateway using the merchant's account details.

You can learn more about Paymate Sentinel here.

For Paymate the big change in approach is in letting the merchant manage the front-end buyer experience and capture all the information we need, while we take a 'back seat' as a specialist service provider to actively reduce the risk of fraud losses. In fact, it leads us to the role of an outsourced 'payments back office' provider, since we can also handle chargeback inquiries and liaise with the merchant's bank with our knowledge of their transactions.

See how we go - watch this space!

Comments to feedback@paymate.com welcome!

Creating Trust Online

As a payments company we like to say we manage 'risky business online'. (Always gets me a strange look at events when I introduce myself and Paymate :)

Everyday we assess payment transactions and have to decide whether to approve or deny them in real-time or challenge them for a manual decision. This includes the assessment of both buyer-side risk (fraudulent usage of credit cards) and seller-side risk (delivery of goods as described). In general, we encounter more buyer fraud than seller fraud or non-delivery.

So one key value we deliver to sellers is reducing the risk of chargebacks when a credit card is used fraudulently to buy goods online. Our performance metric is the value of losses as a percentage of total value of payments processed - currently 0.1% (or 10c in every $100).

But when buyers are making decisions about a purchase, they need to know they can confidently make the payment with confidence the seller will deliver. So online sellers have a real need to build this trust and confidence as a key enabler of ecommerce.

So what can you do to build this trust online?

A Stanford study some years ago came up with ten guidelines for boosting a website's credibility:

1. Make it easy to verify the accuracy of the information on your site.


2. Show that there's a real organization behind your site.


3. Highlight the expertise in your organization and in the content and services you provide.


4. Show that honest and trustworthy people stand behind your site.


5. Make it easy to contact you.


6. Design your site so it looks professional (or is appropriate for your purpose).


7. Make your site easy to use - and useful.


8. Update your site's content often (at least show it's been reviewed recently).


9. Use restraint with any promotional content (e.g. ads, offers).


10. Avoid errors of all types, no matter how small they seem.

For more details on this research, see: http://credibility.stanford.edu/guidelines/index.html.

Unfortunately, most scammers appear to have read this research as well, so their sites are often the slickest!

Having trusted third party accreditation is another guideline we would therefore suggest. These may include:

• A Verisign/Thawte/Comodo identification for your site.


• Better Business Bureau or other commercial accreditations.


• Marketplace credentials, e.g. feedback ratings on eBay or Amazon.


• Payment provider credentials, e.g. on PayPal or Paymate's TrustMark Program.

Educating buyers to CLICK on the online credentials to verify they are legitimate remains a challenge - we have seen some websites sporting logos that do not click through at all.

Being credibly assessed on 'what you do' versus 'who you are' is more important, which is why we award the Paymate TrustMark to sellers with a demonstrated track record.

Ultimately, having a large number of buyers who have had happy experiences with you and will not only buy again but refer their friends to you is the best way to build a reputation - whether online or offline! And this is all in the fulfilment - after you get that order and payment.

Let us know what you think about this topic and what more a service provider like Paymate could do to enhance trust and safety online.

Would a TrustMark for buyers be a novel but useful idea, we wonder?

Paymate Blog - News & Views

Hi! This is our first real blog so it's perhaps best to start with why we are doing it.

Paymate is an online payments company and while our origins are in Australia and New Zealand, in March 2009 we launched a service for sellers in the USA as well. Of course, we accept buyers in 57 countries, so we have been serving clients around the world since our launch in October 2001.

We hope to use this blog to communicate more effectively with our clients and prospective clients, about what we are up to at Paymate and about topics you may find useful. We also hope you will use it to tell us your views on your needs so we can help make it easy for you to trade with the world.

While we are serving some of the world's most demanding online markets, we hope to distinguish ourselves by reliable and superior service, including world-class risk management to enable safe transactions across borders.

Since we cannot respond to specific client inquiries here, for any assistance do contact us: clientservices@paymate.com.

Best wishes,

Dilip Rao
Managing Director, Paymate.