GoDaddy Seeks to Trim Merchant Churn Through Payments Technology

GoDaddy Operating Co. Llc has made a series of payments technology deals that are designed to give merchants an incentive to remain with the online domain name registrar.

The Scottsdale, Ariz.-based company's strategy, which includes partnerships that offer mobile or online payment acceptance options tailored to small businesses, places GoDaddy in competition with small business service companies like Square and Intuit.

While Square has aggressively added consumer and business management tools,  GoDaddy is venturing into the payments space to enable merchants to stick with GoDaddy  when setting up online shopping carts, instead of using other companies.

"GoDaddy is looking more at the online space, and Square is looking more at the physical world for payments, but both are trying to find value for small merchants to differentiate themselves," said Thad Peterson, senior analyst with Boston-based Aite Group.

The challenge for both companies is the barriers keeping merchants from changing service providers is quite minimal, Peterson said. "They really need to find ways to connect with their retailers to hold them there."

GoDaddy is addressing this issue through the expansion of its partnership with online payments provider Stripe to establish a faster approval process for small businesses looking to add payment card acceptance to their online stores.

Also, in late June, GoDaddy announced its creation of Get Paid, an online and mobile payment service made possible through technology from PayPal, Dwolla and Stripe. The system allows GoDaddy's merchant clients to accept credit and debit cards, PayPal transfers, and eChecks through the Automated Clearing House. It also opened the door for GoDaddy merchants such as landscapers and repairmen to accept payments on site through PayPal's mobile card reader.

Payments acceptance was a category in which GoDaddy felt it could help "change the game for small businesses," said Sandeep Grover, head of product at GoDaddy.

It became apparent that small business merchants did not have the time or expertise to research and make a decision about which payment methods to add to their e-commerce sites, Grover said.

"They don't always understand what establishing a merchant account means or how to handle a chargeback, so we want to simplify that process for them," Grover added.

The arrangement with Stripe to help businesses get through the credit card acceptance approval process is part of a broader GoDaddy Online Store project the company will unveil in a couple of months.

"We will offer an online store in a box, and we will do all of the heavy lifting," Grover said. "And setting up payments will be part of that."

In the same way that Square has continually added new services to help business owners manage their operation and provide value to customers, GoDaddy plans to keep its momentum in that direction as well.

"We don't like to compare GoDaddy to anyone else," Grover said. "But what we are actually trying to do is help the economy by helping small business owners be successful in starting their business."

To that end, GoDaddy will keep an open mind about future partnerships as it gathers feedback about the problems facing small businesses.

"The world is changing in terms of how we transact and pay for things now," Grover said. "We want to offer our merchants the right payment method for their buyer, and we will do whatever it takes to help them."

GoDaddy's recent actions illustrate an open mind about new partners and new products, Peterson said, adding it has put the company in a good position for setting up payments acceptance for merchants.

"It's GoDaddy, and they play online and have a deal with Stripe in place," Peterson added. "It seems to me they have an easy way to enact payments, and they are set in that area."