Hi, I'm Peter Janes and I am the founder of peer-peer payments platform Shieldpay. In early 2016 the following post appeared in my Facebook feed. This post did a number of things. It shocked, angered, but also intrigued me. It made no sense that with the payment and security options available to all of us, people were still getting ripped off.
How did these thieves circumvent the system? Was the car owner simply too trusting when trying to make the sale? I wanted to know… so I called the poor guy and the answers he gave started me on the journey to build Shieldpay.
Essentially, when transacting with strangers the options are limited and wide open to malicious activity.
Lets look at the options that were available to Scott:
Bank Transfer: If you were the seller, would you give out your bank details to a stranger? As the buyer, at what point would you send the money? When the car keys are in your hand? If the item being sold needs to be posted, would you send a bank transfer to a stranger upfront and hope he/she does what they say they will…. neither would.
PayPal/Western Union/Barclays Pingit: OK, so you don’t have to provide your bank details to the other party which is good, and these methods are simple and quick when sending money to friends and family (i.e. people you trust). However, the same issues arise when making payments to strangers. As the buyer, would you send a PayPal payment to someone before the goods had arrived? As the seller would you send the item to a stranger before you had sight of payment?
Payments via these methods cause a show-down between buyer and seller, with neither preparing to facilitate their side of the transaction until the other has…. Added to this PayPal has a $10,000 limit which obviously limits the purchase type and size, leaving you with only bank transfer as the other option. Again, the same bank transfer issues arise as above.
Cash: So let’s leave out the issue of having to declare cash purchases to the tax man for a second. Would you be comfortable carrying around $10,000 when off to meet a stranger? As the seller, do you have the time or ability to check each bill is real? When does this cash get handed over? As the seller you’ve just been handed a load of cash, do you run home and stick it under the mattress? Cash transfer also has to be done in person which eliminates any type of long distance or international transaction.
These were the only options Steve was aware of and he got burned. What was even more surprising were the responses to his post.
'Same thing happened to me’,
‘I tried to sell my bike but just don’t trust people enough,'
This is not an uncommon problem, in-fact its huge! A McAfee study estimates that cyber theft is as much as $98bil USD a year.
The same study suggests these figures are very conservative, as over 80% of such crimes go unreported. A separate global UN study found that digital theft has affected up to 17% of us… It seems clear that there is a fundamental problem with peer-to- peer payments and that problem is a lack of trust and security.
As an entrepreneur, the first things ask yourself before starting anything new is, is this really a problem? How big is this problem? What would the demand be for a solution? As we know from the statistics above, issues with traditional peer-peer payments are huge. And these issues are getting worse as more and more of us go online and move away from cash. So with a big tick in that box, how do you then go about creating a payment solution that protects both buyer and seller in a transaction, adds high levels of security and trust but also remains simple and easy to use? This wasn’t easy…. The answer was that there was actually a 4th option available to the car owner and that is what is known as an ‘escrow’ payment.
Don’t feel bad if you don’t know what that is, as 99.9% of us have never been involved in one and they are not easily available to you via your bank. They are used most often by solicitors for the transfer of large sums when companies or other assets are purchased. For you or I to create one we need to request the option from our bank. It is expensive and takes around 5–7 working days to be created. The buyer adds money into the newly created escrow account, the seller is informed that the money is there and then starts the process of the sale by transferring the assets (normally via their solicitor). When everything is signed and sealed, the solicitors request that the money is released to the selling party.
At Shieldpay, we've adapted and updated the traditional escrow model to enable anyone, anywhere to create a secure payment in less than 10 seconds. Our patent pending technology protects both buyer and seller, as money is secured from the buyer and only ever released to the seller when both sides are happy. This process is controlled manually by the users, enabling speed, visibility and a very high level of security to both sides of any payment. Our patented process creates a hugely valuable environment of trust and security that every other peer- peer payment system lacks. We want to enable everyone, everywhere to transact with each other in total confidence. We want to eliminate situations like Scott's stolen car which started it all. We have a massive job to do, and your support in helping us solve this problem is hugely appreciated. Please follow us for updates and we'd love your feedback!
If you'd like to know more, get in touch.
Pete & the Shieldpay team