Exclusive Q&A with Ashe Pay: A New Seller-Centric Payment Network

Ashe Pay is the brainchild of two kids at Yale. They’re creating a new payment network that brings value, speed, and security to online transactions. Payment Week spoke with Teddy Shim, CEO and founder of Ashe Pay, and Mark Pham, co-founder and CMO. They break down their proposition to buyers and sellers, and the thinking that went into making the Ashe Pay network.

Kevin Xu: What are you basing your payment network on? Are you working with any partners currently?

Teddy Shim: We’re constructing our own network, but we do have a network of partnerships to use the ACH network (TD Bank). It was pretty difficult, to be honest. Because it’s not a concept that’s kind of common in the payment space because everything goes on those four major networks (Visa, MasterCard, Discover, American Express). And so one of the first times we broached the topic, the first thing they assumed was that we were a processor. And so he started talking to me about you know… what kind of fees, do we have a processing fee on top of the interchange. So we had to explain to them very concretely, that we were actually building another network itself. And so, of course, its uncommon for a bank to hear that so there were a lot of questions raised like, you know, for example, ‘then what exactly are you guys, are you guys a processor, are you guys a bank’… So it was a huge learning experience for all of us.

Would you liken yourselves to, lets say, something like Dwolla?

Teddy Shim: Yeah. I would say Dwolla would be someone very similar to us.

And the whole ‘no chargeback’ thing, how do you guys accomplish that?

Teddy Shim: Yeah so actually, from what I understand, we are one of the only payment networks in the United States that have no chargebacks. The way it basically works is, when you load money into Dwolla, it performs an ACH pull. And so you authorize the bank, or the Dwolla account to pull money from your account, using the ACH network. And that way of loading in money is open to charge backs. Because it makes sense right? If I get your account number and your routing number, I shouldn’t be able to pull money from your account with no chargebacks. And because the way you load money into Dwolla, is chargeback-able, then the whole network itself is chargeback-able. And so instead of us pulling money from people’s accounts, instead, people push money into their Ashe Pay accounts. It’s kind of a different way of looking at loading in money. And so instead of the customer authorizing us to pull money from their account, the customer logs in to their bank and pushes the money to us.

So it’s kind of like a prepaid debit card?

Mark Pham: Yes. It’s almost like a prepaid debit card except completely online. Run through a separate network.

You’ve signed on TD Bank to partner with you guys. What did they see in your business model that attracted this interest?

Mark Pham: So one of our big dilemmas actually was, at first we were going to be completely free, raise money, and then kind of go the traditional Twitter kind of model where you monetize along the way. And the reason we actually changed that approach is that we actually talked to a lot of the buyers and sellers directly and said is this something you guys want? And what they overwhelmingly responded with was that they actually wanted us to have a very clear and visible business model, so that they feel comfortable using our network knowing that in the future we wont pop some random fee along the way. And so we changed our revenue model into a kind of a subscription model. So you pay a monthly fee to be part of the Ashe Pay network. And in exchange you get value with no swipe fees and no chargebacks.

Now that you’ve got it down, what’s your business model?

Mark Pham: The subscription is $10 a month for merchants that would be sellers and $1 a month for buyers. And the reason we decided to charge buyers is that our service has very clear value propositions for buyers. Because we like to extoll the virtues of our seller biased approach to payment because it’s very different from the other traditional networks. By being really nice to sellers, with the no swipe fees and no chargebacks, it does actually create some value propositions for the buyers as well.

And what’s that value for buyers?

Teddy Shim: So what we realized is that when you pay for something online, it kind of sucks to be honest because what the payment networks did is they took the physical payments, the cards with the numbers on top, and tried to replicate it in the online space. You basically have to take out your credit card, type in the numbers, sometimes you type in your address, you type in your security code and pray to God it works? And that’s actually truly unsecure. Like recent data breaches at Target, eBay, and Home Depot. So instead, there’s two ways of paying someone. Number one you can pay someone by logging in to your Ash Pay account and typing in the seller’s email. It’s just much more convenient for small time sellers.

But also we provided for some large sellers or people who have their own gateway, they can integrate this Ashe Pay API into their site, and the way a buyer buys something, is that instead of typing in some kind of credit card code, all they have to do is log in to Ashe Pay, on the front page, there’s a random serial key that they can generate (called an AsheTag). And all they have to do is copy and paste that one serial key in. And so it tokenizes their information, and the serial key dies after five minutes, or ten minutes. And so the thinking behind that is… Okay let’s say someone uses Ashe Pay to buy something, and they provide the serial key and so the merchant decides to store these key numbers. In real life what happens is that they get breached and you get a million credit card numbers that have been leaked because they stored all this data. But the way our serial key system works is that it dies. And so unless you get hacked within the next five minutes and someone uses that code to buy something in the next five minutes, if they get hacked and all the sensitive information is lost, its useless.

Mhmm. Smart, smart.

Teddy Shim: And this is sometimes actually used in the physical space, places like Singapore, very popular actually. But we realized, especially in America there really isn’t anything like this in the online space. And so, one of our key value propositions to our users is security. Because number one, unlike other payment methods like PayPal or Dwolla, you don’t pull in money, and so if someone hacks your Ashe Pay account they cant exactly pull money from your bank account. Because, the way the money moves, it’s just not like that. And also when you make the payment, the only information that you would ever have to send, is either through an email, or through the Ashe Pay system which cloaks your information so that it masks your financial information.

Okay. So tokenization is your MO here, for security.

Teddy Shim: Security is one of them, I mean, security to our buyer but that’s not the only one. Two other things that we have, a lot of sellers online, in the digital currency space and even in the auction space, have been burned pretty heavily by fraud. And so what happens is that sometimes, they only accept payments, in a way that’s actually more costly to the buyer. So for example, digital currency. No one uses PayPal for digital currency because if I buy bitcoins from a seller and then I charge it back, I’ve received free bitcoins. And so, the way the market has gotten around this is that very established sellers or very famous sellers are the only ones who can sell these bitcoins, and they will only accept payments from very highly respected buyers. And so a lot of people are shut out of the market because they are not able to build a reputation. Because once funds are delivered Ashe always guarantees them. And then the third value proposition is that the sellers that are starting to get on board with us are offering discounts, rewards and their own incentives to get buyers to use Ashe because it is seller biased.

It seems like you’re bringing some of the benefits of digital currencies to the mainstream payment network that you’re building right now, especially the whole ‘no chargeback’ thing.

Mark Pham: We’ve actually embraced the digital currency system, because any other method right now, if you use your credit card, even if you use a debit card and an ACH, you know, its not really built for digital currency. It’s hard to buy digital currency today especially in the local marketplaces. It’s hard to accept a credit card when you can get chargebacks. A lot of the major payment networks have rejected it. We do embrace the digital currency space. And we would love to work with them.

You’re currently operating in the U.S. but do you have plans to expand internationally?

Mark Pham: Yeah definitely. I mean, our goal is to make moving money easy. And so, I know that was PayPal’s original goal in payments and to make it easier. It’s definitely part of our plan to go international.

About Ashe Pay
Ashe Pay is a new way to pay online. Ashe Pay connects businesses, non-profits and personal users through an online payment network that carries unique benefits and compelling value propositions for each party involved. The two distinguishing characteristics of Ashe Pay are 1) there are no fees-per-transaction (no interchange/swipe fee) and 2) there is a no-chargeback policy. This seller-biased approach to payment incentivizes businesses to offer incentives and rewards to customers who pay with Ashe Pay and eliminates the possibility of friendly-fraud. Also, because of the no-chargeback policy, Ashe Pay is uniquely suited for the purchase of online goods and virtual currency.

Teddy Shim
Hailing from Green Bay, Wisconsin, Teddy Shim is a sophomore at Yale University. He is currently studying Economics and Philosophy. Teddy is the founder and CEO of Ashe Pay.

Mark Pham
Mark Pham is a junior majoring in Political Science at Yale University. He cofounded and is the CMO of Ashe Pay.