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08.25.15

Innovators’ Spotlight: YapStone

The property payments pioneer takes aim at global marketplaces, new verticals

yapstone_logoBy Adam Perrotta, Assistant Editor

After working for more than a decade to end the dominance of paper checks in the property rental industry, payments specialist YapStone has set its sights on bringing its electronic payments platform to global online marketplaces and new verticals.

Founded by Tom Villante and Matt Golis, California-based YapStone was named after the circular stone disks used as a form of currency by the people of Yap, a small island in the western Pacific. Ranging up to 12 feet in diameter and weighing as much as 8,800 pounds the so-called “Yap stones” were difficult to move—so when a stone was transferred as payment, ownership was simply shifted from one person or family to another; the stone’s actual location didn’t change. The system made transactions much easier and more reliable—an idea YapStone applied to its mission of changing how the world pays by bringing electronic payments to large vertical markets.

Specialized Solutions

Initially focusing on the apartment rental market, Yapstone in 1999 launched RentPayment, an online solution that enables apartment property management firms and landlords to accept electronic payments. Today, renters can use a Website, mobile app or SMS to make rent payments via credit card, debit card or ACH transfer. YapStone initially targeted the apartment sector, but the company soon found its platform had broader appeal.

Getting to Know YapStone

Location: Walnut Creek and Santa Monica, Calif., and Drogheda, Ireland

Organized & open for business: 1999

Line of Business: Leading provider of web and mobile payment solutions powering payments for large vertical markets (multifamily, vacation rentals, HOA communities, bed & breakfast, self-storage facilities, faith-based donations) and global online marketplaces.

Secret Sauce: Powering online and mobile payments with a sophisticated platform, YapStone delivers a tailored payment solution supported by proprietary functionality, deep vertical expertise and high-touch customer service.

Founders: Thomas Villante and Matt Golis

Funding: $110 million outside capital ($60 million in 2015, $50 million in 2011).

Something You Might Not Expect: YapStone is named after the stones used as an early form of currency by the people of Yap Island in the western Pacific.

“We realized that there were a number of property management companies using RentPayment that weren’t apartment managers; they were vacation property managers,” notes Troy Scarlott, vice president, marketing, YapStone. “The vacation industry needed an onling solution to enable electronic payments as well.” To fill that demand, YapStone in 2005 launched VacationRentPayment, a solution tailored to the needs of the vacation rental sector. The YapStone platform now process rent payments for 3 million rental units and 300,000 vacation rental properties, and the company has since launched specialized solutions for other verticals, including European vacation rentals, homeowners associations, inns and bed-and-breakfasts, self-storage and non-profits.

In 2011, YapStone partnered with HomeAway to power electronic payments for the world’s largest vacation rental listing site, and its sister rental site, VRBO. The move into online marketplaces was a turning point for the company, Scarlott tells Paybefore. “We had already built a powerful solution for the vacation rental industry, so we were able to leverage that vertical expertise into powering payments for HomeAway,” he notes. YapStone plans to make further forays into online marketplaces, leveraging its expertise in customizing solutions for specific verticals to compete against online-focused payments processors like Stripe and Braintree, Scarlott says. In April, the company announced the appointment of new Chief Technology Officer Daniel Issen, who has spearheaded initiatives with some of the biggest names in global commerce, including Amazon and Google.

YapStone’s growth prospects have earned the firm accolades, such as inclusion in Forbes’ America’s Most Promising Companies list, which identified the Top 100 privately held, high-growth companies in the U.S. Last year, YapStone was named to the Deloitte 2014 Technology Fast 500, on the strength of 185 percent revenue growth over the previous five years. Investors have taken note, too. In 2011, soon after the HomeAway partnership, YapStone landed $50 million in venture funding from Accel Partners and Meritech Capital Partners and recently closed a $60 million debt financing deal with Bregal Sagemount and Comerica.

Millennial Favorite

By eliminating paper checks, YapStone’s PCI-compliant platform offers its clients increased processing efficiency, streamlined payment collection and more on-time payments in an environment that employs the highest security standards possible. Meanwhile, YapStone’s apartment rental solution, RentPayment, offers renters the convenience of paying rent via a choice of multiple electronic methods, instead of having to write and mail a check. This flexibility is especially important to younger renters—many of whom rarely, if ever, want to write a paper check, notes Scarlott.

The company also offers multiple payment channels, including a RentPayment mobile app redesigned in early 2015. “Millennials are changing rent payments, because they want to pay rent with a mobile app and credit or debit card. They want a convenient, easy payment option for rent, and we are enabling landlords of all sizes to meet those needs,” Scarlott says.

yapstone_interfaceThe company enhanced its value proposition for renters in July, when it announced it would offer credit reporting to TransUnion for on-time payments made through RentPayment, helping renters build or improve credit. (Only on-time payments are reported, so there’s no risk of lowering credit due to late payments.) The feature also benefits landlords by giving renters an incentive to make on-time payments and can serve as a differentiator to attract prospective renters, Scarlott observes.

Opportunities Ahead

After more than 15 years of steady growth, YapStone has solidified its status as a leader in the property payments space—but the company isn’t done seeking out new opportunities. One area of untapped potential lies in serving smaller property managers and landlords. “Rental property is a highly fragmented market,” says Scarlott. “There are 40 million rental units in the U.S. and more than 50 percent of those are in small properties with four or less units—and the majority of the these small landlords are still relying on paper checks.” Serving that segment will require an online offering that is cost-effective, delivers easy onboarding and is supported by hands-on customer service, he says. “Apartment rental is a half-trillion-dollar market and remains a significant growth opportunity for our company,” Scarlott notes. New functionalities on tap include platform integration with the latest mobile payment technologies, including Apple Pay and Android Pay.

And the company is looking beyond properties to other verticals its electronic payments platform could disrupt. “One particular area of focus for YapStone is in the ‘sharing’ economy and powering payments for global marketplaces, a market that we already serve today through our partnership with HomeAway,” Scarlott explains. “We certainly are interested in partnering with marketplaces as well as moving into new verticals, like health care, education and government, and feel that we are uniquely positioned to do so.”

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