WePay, a Y Combinator backed startup that aims to take the hassle out of group paying, has raised $7.5 million in Series B funding led by Highland Capital Partners with existing investor August Capital participating in the round. The startup previously raised funding last December from an all-star roster of angel investors including Max Levchin, Ron Conway, Dave McClure, and Steve Chen.
As we wrote in our initial coverage of the payments platform, WePay is an easy way to collect, manage and spend money for groups. WePay’s platform based around a prepaid debit card system, which makes its accounts easy to set up as well as more flexible when it comes to setting up group paying.
WePay, which launched to the public earlier this year, of course faces competition from online payments giant PayPal. But there is a slight difference between the two platforms. With PayPal, your account is tied to your name, without any way to separate the payments associated with a group. On WePay, you can create a unique, FDIC insured account for each group. While the account is still associated with your name, but you can keep each group account totally separate from your personal transactions. Group money can essentially be kept separate from any individual accounts you may have. You can also designate specific individuals to have control over accounts.
From accounts on WePay, users can send emails with electronic bills (which can be paid with bank accounts or credit cards) and spend funds with a WePay VISA prepaid card, paper checks, or electronically. If group members don’t pay soon, the site will automatically remind them a few days later. WePay makes money by charging a 3.5% transaction fee (there’s also a different plan that charges 50 cents per transaction and limits you on the methods of payment you can accept).
And WePay is gaining traction in the group payments space. Payment volume grew 80 percent in the month of July, with WePay adding over 1000 groups in the month. Groups that have participated in WePay range from fantasy football leagues to group vacations to girl scout groups.
WePay’s co-founder Rich Aberman says that the new funding will be put towards marketing efforts and to hire additional staff. And Aberman says that the next step is to start encouraging other startups to incorporate WePay’s API into their services.