Shieldpay: Making online payments more secure for everyone
Serial entrepreneur Peter Janes was inspired to found Shieldpay - his third start-up - after reading on Facebook that a friend had been a victim of fraud. His friend, who was trying to sell his car on the UK’s best-known site for classified ads, met with the buyer who promptly drove off with it without paying.
Without any protection or even the details of the so-called ‘interested buyer’, his friend had no way of tracking the thief down and received little support from the police. This triggered Peter to start looking into how people pay strangers and he quickly realised that a risky bank transfer or cash were the only options. It was the combination of his friend’s unfortunate experience and a bit of research which inspired Shieldpay – so you can pay anyone, anywhere with total confidence.
Identifying a problem…and solving it
If you’ve just met someone online, how do you know they’re trustworthy? How do you know you can allow them to test drive your car, or that you will get the service you paid for? The short answer is you don’t – and that is the problem that Peter Janes of Shieldpay set out to solve.
Shieldpay is an instant digital escrow facility, which can be setup in seconds to transfer funds between any buyer and seller. Peter and his team of 42 (at the time of publication) have created a transparent payment solution which mitigates the risk of fraud by verifying the identity of all parties whilst holding the funds securely - only releasing those funds when all sides agree they’re happy.
“Our mission is to eliminate payments fraud so that everyone, everywhere, can transact with each other with total confidence.”
In a world where digital communities often bring buyers and sellers together - but offer few protections - Peter was confident that he landed on an idea that would have numerous applications.
Turning a concept into reality
As someone who had started businesses before Peter knew the significant task that lay ahead even after he had identified a clear problem and a solution to solve it. He had to turn his good idea into a good business. But even with his experience, the road ahead was far from smooth and he is open in admitting the challenge of creating a start-up in a highly regulated market.
“We became very focused very quickly and set ourselves the technical challenge – how do you create an escrow function in ten seconds without the need of a solicitor? Technically we worked out how to do that pretty quickly, but it then took two years to create a service that is fully compliant with regulation and build to a standard that the FCA or any banking partner would approve”.
Unlike most start-ups that are staffed by a small, core group that take on multiple roles, Shieldpay had to be more specialised even in its infancy. As Janes explains: “We had two internal lawyers in the first ten hires - that’s what the FCA wanted to see and without their approval we simply didn’t have a business.”
Now fully regulated and authorised by the UK’s Financial Conduct Authority, Shieldpay has evolved and adapted around its core model to take on even bigger challenges.
Choosing the right growth opportunities
As with any other fast-growing business, Shieldpay physically can’t tackle all the opportunities at once. For Peter, identifying the biggest opportunities with the best long-term prospects is the strategic conundrum.
Now, in full compliance with regulation, Shieldpay has shifted its focus to also include larger value transactions. As Janes explains: “People are relatively insensitive to losing under £200, it’s the higher transactions that they’re more likely to realise and report.”
In June 2018, Shieldpay’s digital escrow facility utilised the UK’s first digital real estate transaction and is now applying the technology across a wide range of verticals, from transforming classified ad sites into fully transaction e-commerce marketplaces, to third-party client money accounts for the legal industry, as well as high value corporate payments and the M&A market.
The benefits of partnerships
When Shieldpay gained approval, they went through an established accelerator scheme attached to a UK high-street bank which provided valuable insight into how banks operate and prepared Peter and the team for business development conversations further down the road. It also provided a stamp of authority to the start-up and opened doors for further conversations with other established players, including Visa. As part of the partnership, Shieldpay works with Visa’s CyberSource platform to enable access to new markets where secure P2P payments have been “tough in the past” as well as allowing Shieldpay’s partners to make use of the Visa Direct push payments service.
“You don’t gain trust overnight, you have to build legitimacy of the technology and the partners around it. Having the buy-in and ‘borrowed trust’ from major brands is invaluable.”
In addition to building brand credibility, partnering has led to commercial success and growth for Shieldpay - most notably as the exclusive partner for Rated People, an online business which connects people looking for a plumber, electrician or builder.
Intercepting risks
The home improvements industry is notorious for dishonesty and huge leaps of faith on both sides of the transaction. The customer will naturally be concerned over who they are letting into their home, and how to manage the issue of not getting what they’ve paid for, while the tradesperson may have little power over when (or even if) they get paid. Rated People’s CEO Celia Francis explains how Shieldpay’s process helps intercept these risks before they even become an issue, allowing the job at hand to be the sole focus. Alongside the identity checks the holding vault system acts as a powerful ‘intent signaller’ for both sides. Celia explains:
“The customer knows their money is safe until they are happy with the work that’s been done, while the tradesperson can see and be assured by payment in waiting. It also helps demonstrate to the homeowner that they are professional and really care about the customer and the job rather than just receiving money and payment.”
Where next?
“Our next big step is to establish ourselves in the U.S. It’s a huge challenge and a great opportunity – we’ve already made a strong start there. Our next big step is launching in Asia later in the year and building the team there.”
In Peter’s opinion, websites that connect buyers and sellers of cars which cannot yet facilitate high value transactions is a segment of the market which offers the most attractive growth vertical for Shieldpay. Peer to peer automotive transactions through these websites are increasing in number but don’t yet offer consumer protection. Cornering this market will help Peter and the team in their ambition to grow Shieldpay into one of the largest payment processor by volume in Europe in three years’ time.
Start-up advice:
- Choose the right opportunities - Don’t chase every opportunity; chase the right ones
- Know your target audience - Invest in marketing, branding and research from the outset, particularly if you are in the business of looking after people’s money
- Realise the benefits of partnerships - Borrow legitimacy where you can from established brands to take your company to the next level
Visa entered into a partnership with Shieldpay in December 2018.
All brand names, logos and/or trademarks are the property of their respective owners, are used for identification purposes only, and do not necessarily imply product endorsement or affiliation with Visa.
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