During the height of the Internet boom in 1999, former database technology consultant Alan Homewood aspired to start his own web-based business, but struggled to develop a specific plan. After extensive research and brainstorming, Homewood identified one of the biggest challenges for online businesses: performing safe, secure and easy financial transactions over the Internet.
“In 1999, online payment processing was a huge problem,” Homewood says. “The fees were high for web-based companies, and every service provider in the market was offering expensive solutions just to get started. My goal was to simplify the back-end functionality for smaller businesses at a lower price, so aspiring entrepreneurs had a legitimate solution they could afford, was reliable and that they could actually operate themselves.”
Homewood recognized a niche in the market to serve smaller start-ups with affordable payment processing services. For a $50 entry fee, clients would then pay 5.5 percent per product sold through 2Checkout.com and no other fees. “Our system and its all-inclusive pricing model was designed to empower clients to focus less time and energy on payments management and integration and more time on growing their business by selling more products,” he says. “At the time, there were so many aspiring small business owners in the marketplace that were one step away from living their dream as an independent entrepreneur that simply needed a different entry point in the market, so we provided them a workable solution and continue to serve them today.”
The company co-brands its payment pages with clients to ensure customers recognize the transition from the merchant’s site to 2Checkout.com. “We leverage our brand name and reputation for convenience, and safe and secure online transactions to help complete the purchase cycle,” the company states. The company’s ability to accept currencies from all over the world, along with its payment methods and frequent testing enable it to provide a safe, secure online transaction to complete the purchase process.
Although Homewood was the sole employee during 2Checkout.com’s first year in business, by the end of the second, the company had grown tenfold. By the end of year three, 2Checkout was more than 30 employees strong.
Today, the Columbus, Ohio-based company supports about 80,000 clients selling online.
Even though 2Checkout.com was founded in the midst of the dot-com boom when many web-based businesses experienced steep rises in stock prices – oftentimes without generating any profit – Homewood took a different approach with his own business.
“At the time, there were outrageous valuations for companies that would burn through a ton of money based on a simple idea,” he says. “I don’t think anyone would have given me venture capital at the time, but with my business background and maybe my Midwestern sensibilities, I felt that if I had a good business idea it would make money and fuel itself.”
And Homewood’s vision proved to be true. Ever since its inception, 2Checkout.com has always been profitable, and remains debt-free.
Although today’s slow economy has slightly dampened the company’s growth, Homewood is confident in the company and the market. “Past recessions have been nothing but a blip on the radar for 2Checkout.com,” he says.
“We blew right through the recession of 2001,” he says. “The recent economic downturn has been a bit more impactful, but we are insulated because of the diversity of our clients and the rate ecommerce is growing. We serve a wide variety of businesses both domestically and internationally, so where one business sector may suffer, another will pick up and buffer us during down times.”
Always On Call
With more than 80,000 merchants relying on 2Checkout.com’s systems, the company strives to handle all back-end functionality, from handling payment processing to fraud alerts and customer service support. The company also offers currency conversion services that allow customers to sell their products around the world.
“Our overall focus is to empower clients to manage their sales, without worrying about payment, billing and security issues,” Homewood says. “We have automated all of these functions so clients can avoid the necessity of investing in one or more additional fulltime employees to simply manage these tasks for the business.
“We have the expertise to efficiently manage these back-office tasks and that functional consolidation has saved small businesses millions of dollars in annual labor costs, which have more than likely been reinvested and reallocated into the continued growth of the businesses they love,” Homewood adds.
Many of the company’s larger competitors adhere to credit scores and judge a client based on their personal past, but 2Checkout.com has found success by simply monitoring the business in the future based on product quality and customer satisfaction.
“We have a different way of looking at our clients,” Homewood says, adding that the company receives a great deal of new business from client referrals. “We stay close to our customers, take a hands on approach and are always here to assist them with questions or problems. We feel it is part of our secret sauce and we work hard to always receive rave reviews from clients.”
‘Software as a Service’
In the fast-changing world of technology, keeping up-to-speed with market innovations is imperative to a company’s success, but today’s global economy makes this even more of a challenge than ever for 2Checkout.com. Homewood says the company is working hard to keep up with technology.
“The cycles in this industry change so fast, but our strategy is just to stay close with our clients and make sure we deliver on whatever their needs are because that is most important,” Homewood says. “One of our core values is we need our clients more than they need us, I believe that is true of every business.”
The simple act of listening to the needs of clients has been the primary driver for the company’s success in recent years.
“We’ve always seen software as a service, not just a generic term,” Homewood says. “Today, we’re just focused on increasing our software to become a hub and a platform for our clients to help them grow their sales.”
‘In the Vault’
2Checkout.com holds security at the forefront of its operations, and has become one of the few Payment Card Industry (PCI) Data Security Standard level 1 compliant service providers of its kind. The PCI program was developed to protect consumers and their data regardless of where they shop. Level 1 is the highest level of certification possible, allowing consumers to feel comfortable and confident about shopping online.
According to Visa, the majority of online merchants process credit card payment volumes requiring Level 4 certification. Maintaining certification can be an expensive, cumbersome process. “The easier solution for clients is to use hosted payment pages from an Internet payment service provider like us,” 2Checkout.com states. “We retain all credit card account data in our system so the data is secure and just as importantly our clients are protected. With a merchant account, clients must do all this work themselves or be subject to reputational risk and card association fines.”
As a result, the company has developed loyal clients. In addition to using popular management tool Net Promoter to rank its customer loyalty, the company goes above and beyond by personally consulting with clients to gain their feedback. “We track how happy our clients are by using Net Promoter Score, but we also routinely ask them how we’re doing to make sure we’re providing the best customer service possible,” Homewood says.
Employee retention rates at 2Checkout.com are high, and many workers enjoy the ability to grow abilities and skills. With a management team committed to empowering people to take control of their own careers, many employees enjoy opportunities for promotion from within.
“My strategy has always been to build a strong, effective team and give employees the tools and opportunities to be the best people they can be,” Homewood says.
“In the ever-changing world of technology, hiring the right people is key,” Homewood adds. “We’re a good mix of internal talent and key people who have been brought in from the outside,” he says.
The company recently started a new leadership development program, where key employees spend three full days in training. “I’m of the belief that you can’t have too many leaders,” Homewood says. “Every six weeks, we spend three full days together to make sure we’re learning and on the same page.”
An external facilitator manages these courses and distributes homework and exercises to improve participants’ management skills overall. “People are extremely excited about this program, and we expect it will help people grow personally and professionally,” he says. “We’ve only had one session so far, but it’s been extremely powerful already.”
A strong leadership team will be more important than ever in the coming years to manage the high growth prospects Homewood anticipates. The company has grown 20 percent this year, and he predicts a 25 percent growth rate in 2012.
“I believe we’ll be a step ahead of wherever we need to be in terms of employees to manage this growth,” Homewood says.
“I founded this company with the intent that is should be a fun place to work, no one should spend 40 to 50 hours a week doing something they don’t enjoy,” he continues. “We have fun and it is baked in into our culture as one of our three core values. I want this always to be a great place to work.”