The big hairy goal behind WingCash is to introduce cash to the web.
While working for a local non-profit organization, WingCash founder and CEO Bradley Wilkes was tasked with finding a new way to process payments online. Wilkes told us that processing payments using credit and debit cards presented too much of a risk for this particular non-profit, so he was forced to come up with a better solution. Thus, to little fanfare (well, one can only assume) and with the odds of success significantly slimmer than even a typical startup, WingCash was born.
The online payment processing space is littered with the corpses of startups that had once hoped to completely revolutionize the way transactions take place online. One advantage Wilkes brings to this fight is he’s been in the payment processing business for more than 20 years. Prior to WingCash, he founded ProPay, a Lehi-based credit card processing company. Although the credit card business has been good to him, Wilkes believes he’s stumbled upon a unique way to bring cash to the internet.
“The big hairy goal behind WingCash is to introduce cash to the web,” Wilkes said. “We’re all familiar with how payment cards work. I can peel the number off my credit card and plug it into a website and make a purchase. And I can take my debit card and make my purchase; I can take the routing number and account number off my check and make a purchase; and I can go online and I can transfer money from one bank account to another. But what I haven’t been able to do is pay with cash.”
After noticing how social networks like Twitter, Facebook, and LinkedIn attribute a unique url to each of their users, Wilkes had what most renowned scholars refer to as an “Aha! moment.” Because every dollar bill is serialized, Wilkes says he realized he could create a representation of a dollar bill online and get it to circulate electronically. The idea was to bring to the digital world what we’ve already been doing in the real-life world for quite some time — making it rain with cold hard cash.
Wilkes believes cash is still relevant and useful simply because it allows people to exchange money without having to pay transaction fees or utilize the services of some pesky middleman looking for a cut.
“We wanted to mimic the same functionality of someone handing another person a $10 bill,” Wilkes said. “We create a webpage. I have possession of the webpage. I transfer possession of it to you, and you get the whole $10 page. It’s an immediate file transaction, it’s done. That’s the simplest form of transaction on our network.”
To make WingCash work, Wilkes says he has to get a lot of cash in circulation online. To do so, WingCash has implemented a freemium revenue model where they offer a basic service to everyone for free, and then a premium service to businesses in order to turn a profit.
“We realized that because cash is so abundant — there’s a trillion dollars of currency and coin in circulation — we felt like we could have a freemium revenue model where we have a free component and premium services,” Wilkes said.
A Challenge to Crytocurrency?
While WingCash is more of a competitor to companies like PayPal and Stripe, the American Fork-based company is also taking on — at least in terms of philosophy and purpose — Bitcoin and other cryptocurrencies.
Bitcoin was created to decentralize and bring anonymity to digital currency, whereas WingCash does the exact opposite. By acting exactly like a U.S. dollar (as explained in the video above, WingCash can be deposited into any United States financial institution at whatever dollar value it represents), WingCash becomes a centralized, representative currency. In fact, the entire ownership history of a WingCash “Note” can be viewed online by anyone. Here’s an example: https://wingcash.com/usd/w002-53bd-a7ef-f3d5
In our interview at WingCash’s headquarters in American Fork, we asked Wilkes about Bitcoin and whether he saw cryptocurrencies as a competitor. It was an interesting exchange, which is why I’m including that portion of our interview below:
Bradley Wilkes: So there are some things that I love and hate about cryptocurrency, right? The things that I love about it: It’s absolutely validated the fact that people are interested in having a form of cash online. And it’s validated it in a huge way. The things that — I don’t necessarily hate this about it — it’s distinguishing from our platform. We’re based on the U.S. Dollar. There are cryptocurrencies based on their own… Bitcoin which is not a government-backed value at all, so whenever…
Beehive Startups: Well, that’s kind of an advantage and disadvantage though, right? ’Cause they’re unregulated. And they don’t have to worry about all this crap that you have to worry about. At the same time, though, being unregulated presents a lot of unique problems on its own.
Bradley Wilkes: Yeah, so they thought they were unregulated. Originally they came out and they said, “Hey, we’re not a government-backed currency, we’ll just exchange in and out of U.S. Dollars.”
Which was true. They are not a government-backed, but they were also anonymous and they came out and said, “We’re anonymous and we can do all this stuff, whatever we want with our cryptocurrency. And it’s all private.”
There has been some kickback, or backlash from that. You have seen some people that were transacting, doing some conversions from Silk Road. Did you follow the Silk Road thing?
Beehive Startups: Of course. Silk Road and MtGox.
Bradley Wilkes: Yeah, MtGox was bad. And so as a result of some of that bad stuff governments are stepping in to say, “Hey, we’re gonna regulate this.”
And they’re looking at, you know, “Is this a security?” Because of the way it fluctuates, people treat this as an investment instrument, so is it regulated by the Securities and Exchange Commission or is it represented by Fin-Syn which is the financial crimes enforcement network, which regulates all the other cash-based businesses and banks. So it was unregulated in the sense that it was new and it didn’t fit into the current box. But it’s starting to fit and everybody’s saying that unless it fits, it’s never gonna be sustainable. But I don’t know. Who knows?
Beehive Startups: Do you see cryptocurrencies as a competitor to WingCash, or not really?
Bradley Wilkes: So, not a direct competitor. Obviously we’re in the same ministry because we’re trying to transact in a secure… we don’t have any transaction fees. We also don’t have any charge-back exposure because that’s gone, right? All of our transactions like theirs are push-based so when it’s done it’s done. The recipient has the money and the sender sent the money and it’s a concluded transaction, right? That’s nice. That doesn’t happen in a Visa and MasterCard transaction or electronic checks or debit cards. It’s a nice value proposition that they have. So there are some very close similarities between what we’re doing and what they’re doing. Which is nice. I love that. Because it means the space is validated. We’re tied to the U.S. dollar so all the things that the U.S. has learned about currency and managing the fluctuations of currency over the last 300 years, 200 years, right? We get the benefit of all that. The downside of that is we get regulated. So it depends on what position you’re in. Do you want your currency fluctuating up and down so that when you go to bed at night you have $100 in your wallet but when you wake up in the morning it’s worth $50? Or do you want stability in your wallet so that when you go to bed at night you go to bed with $100 and when you wake up you have $100. It just depends on what you’re more comfortable with.
We actually work with the regulators. We’ve already been examined by the regulators, we’re… Transparency is as important in our platform as privacy is. So, Bitcoin came out and said, “We’re highly anonymous. And there’s no transparency. There’s no way to… You know if I send you Bitcoin, you might not even know who I am. You don’t even know.” That’s not transparency, right? In our platform we try to balance transparency and privacy. We think transparency is important for trust. We think privacy is important for trust. So we try to put both of those components in the platform. And it’s based on U.S. dollars.
Gift Cash
While it’s surely going to take some time and a lot of effort to get a significant amount of WingCash notes circulating online, the company believes its platform can also help businesses generate more revenue by replacing gift cards with online gift cash. According to a study by CardHub, there is $44 billion in unredeemed gift cards that has accumulated just since 2008. WingCash believes its come up with a solution to that problem. In fact, WingCash is currently being used more frequently to redeem gift cash than actual cash.
WingCash stores all of its users gift cards in one place, and also ensures that the gift cash never expires. When a user pays with WingCash, the company’s recently released iPhone app (Android is coming soon) instinctively spends whatever gift cash a person has accumulated for a specific merchant before spending real cash. Just like WingCash Notes, a user can also transfer gift cash to their friends and family without having to pay a transaction fee.
WingCash believes its gift cash feature will help businesses with their marketing and branding, as well as providing them with the opportunity to generate more customers.
“For branding it’s actually more powerful. For the consumer it’s actually more powerful,” Wilkes said. “If I sent you $25 U.S. dollars through WingCash you might go, ‘You know what, I don’t get it.’ If I send you $25 Subway cash you go, ‘Subway Cash! I spend it at Subway. I know exactly what to do with this.’“
The Future of WingCash
Wilkes is confident in WingCash’s ability to succeed where so many online payment platforms have failed.
“I think we scale the same way that we’re doing it here in the local community,” Wilkes said. “I think we scale the way a mall scales. When a Smith’s builds a shopping center or a mall, what do they do? They get a anchor tenant and they get a bunch of other people to come in around it. And that’s the same way we’ll scale. It may be around universities. It will probably be associated with a retailer that’s a flagship retailer. You know, if you think about it how hard would it be, how difficult would it be for me to scale this if Walmart was giving away $5.”
Startups are constantly trying to transform online payments because the space is practically begging for someone to figure out a better way. Only time will tell if WingCash has come up with the solution, but Wilkes believes the future is bright.
“I think it’s a five year run,” Wilkes said. “In five years WingCash will be ubiquitous.”
Published 7/7/2014
