Author: Michael Gramz, YapStone
The global sharing economy continues to transform the online payments landscape, as we know it. In a time when virtually anyone can sell goods or services on the internet, real-time merchant onboarding and risk and fraud monitoring capabilities have become imperative.
At YapStone, we know this very keenly because the bulk of our users are not simply selling products to strangers they will never meet – they are inviting consumers into their homes.
Twenty years ago, we couldn’t have imagined we’d be comfortable inviting complete strangers to stay in our home for extra income, but thanks to vacation rental marketplaces like HomeAway and Kigo, “living like a local” has become the preferred way to travel. As a result of this undeniable trend, YapStone now processes about $18 billion (and growing) in electronic peer-to-peer transactions every year.
Further challenges to marketplaces are emerging with the rise of Alternative Payment Methods (APMs). Consumers in different countries or regions have their APMs of choice, using them to pay securely with their local currency. As the payment partner, we have to ensure that these customers can securely pay using their preferred payment methods in their local currency and that sellers can receive the funds seamlessly in their local currency.
YapStone has been able to capitalize on the growth of apartment and vacation rentals, where the average ticket size is large and risk high, by developing proprietary technology focused on reducing the risk of fraud and loss to our marketplace partners. YapStone’s trust and safety solutions are highly flexible and designed to service all marketplace types, allowing us to diversify our portfolio and grow our business beyond apartment and vacation rental marketplaces.
YapStone is unique in that we offer a full service, end-to-end payments acceptance, customer service, and risk management solution, including instant and advanced payments, to our marketplace partners. Therefore, it is a necessity for YapStone to verify the traveler and authorize their payment method, as well as verify the vacation property’s existence and ownership, as well. Our goal is to deliver trust and safety to our marketplace partners, allowing them to spend more time focused on growing their business, while leaving risk management to the expert team at YapStone.
YapStone uses a layered, risk-based approach focused on the persona of any particular client interaction. Within the persona, we are continuously monitoring the purchaser of the good or service, the payment instrument being presented, and the asset or property they are renting. To accomplish this, YapStone utilizes proprietary data science and predictive analytics augmented with 3rd party data to achieve the most accurate risk scoring.
Given our scale, and the risk associated with high average tickets and the speed at which fraud can happen, it was critical for us to choose a tool that allows a risk analyst to react quickly to an escalating threat.
In 2017, we selected Provenir as a key strategic partner in the development of YapStone’s next generation risk management platform. The tool provides the ability to house our proprietary underwriting and fraud models, serve as the hub for our 3rd party risk vendor integrations delivering powerful adapters to augment our proprietary risk methodologies and data, and conduct A/B and regression testing for new or proposed model changes, all delivered through a simplified user interface that doesn’t require a PhD in computer science to use.
We maintain a highly competitive edge over other payment facilitators because of the way we mitigate risk for our marketplace partners and assume the liability for each transaction. Using our proprietary technology in partnership with Provenir, YapStone is able to provide marketplaces high levels of automation for merchant onboarding and risk management aimed at improving speed to revenue and reducing losses for our clients.
We have a very exciting future ahead of us, made particularly bright by having partners like Provenir who help us deliver innovative solutions to our customers. As we expand into new territories, the demand for innovation in risk decisioning will be high. The team at YapStone looks forward to staying on the forefront of this new wave of marketplace payments.