Businesses use invoices to pay for many of their primary expenses, including anything from supplies to contract services. According to most companies, cross-border payments, which generally take 2-5 days to complete and constitute a $130 trillion worldwide industry, are still handled mainly by solutions built on top of bank transfers or credit cards.
Paysail, an enterprise payments startup, has acquired initial investment to develop a tool that, according to the business, would reduce the time it takes to make a cross-border payment to less than five seconds. To implement its solution, it makes use of stablecoins, which it defines as “cryptocurrencies meant to have a stable price because they are tethered to a commodity or a currency.”
According to Paysail, using stablecoins to pay bills also helps companies save money on transaction costs by eliminating the need for third-party intermediaries. Paysail cofounder Nicole Alonso told TechCrunch in an interview that other startups in the space that use traditional banking infrastructure to make payments more efficient have reached a limit on how fast and cheaply they can offer prices because of fees charged by these intermediaries, particularly between countries that don’t transact as frequently as the United States and the United Kingdom.
“There have been major advancements in making payments between, for example, the United States and Canada substantially cheaper and faster. However, if you’re transferring payment from the United States to [a nation in] Africa, it may be quite difficult and expensive,” Alonso added.
The cost of making a cross-border payment utilizing older systems such as Bill.com often includes a transaction fee levied by the third-party middleman, as well as a currency conversion fee charged by the receiving country. A transfer made with Paysail, on the other hand, is merely charged a “gas fee,” which is the amount of time it takes for the transaction to be confirmed on the blockchain and is presently less than one-tenth of a penny.
Paysail is presently using Celo’s CUSD stablecoin, which monitors the price of the United States dollar, to facilitate payments, with ambitions to extend to additional stablecoins backed by various nations’ fiat currencies as the company expands and becomes more established. For revenue generation, it is also looking at a transaction fee of around 0.9%, which Alonso said may be structured as a tiered offering depending on each company’s transaction volume. It would ideally “far outperform any current rivals in the non-crypto area” on pricing.
Today, the startup announced that it had raised $4 million in a seed round headed by Uncork Capital, with Tribe Capital, Pear Ventures, and Mischief Capital. Nik Milanovic, director of business development and strategy at Google Pay, and Juan Manuel Fernández Lobato, founder, and CEO of Ebury, were also among the investors in the round, which raised a total of $1 million.
Paysail’s existing customers are a “small cohort” of businesses, the majority of which are already dealing in bitcoin or are acquainted with the industry, according to Alonso co-founder Liam Brennan-Burke, who spoke to TechCrunch about the company. Adding to this, Brennan-Burke said that the business intends to fine-tune its product for crypto-native clients before offering it to customers who have no previous crypto knowledge.
Both Alonso and Brennan-Burke met as students at Claremont McKenna College last year and decided to start Paysail together. They are the company’s sole full-time workers at this moment. A full-time technical staff, the legal counsel, and ultimately a sales team are among the goals they have set for themselves with their new investment.
The Paysail team is developing technology that will enable users who do not already have a cryptocurrency wallet to begin transacting on the platform by creating a noncustodial wallet on the customers’ behalf via a third-party wallet provider on their behalf. Brennan-Burke said that the company hopes to bring this functionality in-house someday and include additional features into the Paysail wallet, such as the ability for customers to earn a yield on their stablecoin holdings. For example, in countries such as Nigeria, where the devaluation of the local fiat currency is a danger, businesses may opt to retain their capital in stablecoins tied to less volatile currencies and move it into local fiat on their schedule, according to the expert.
“The ultimate objective with the platform is to continue to make cryptocurrency payments edible and simple to use, and not so intimidating for those organizations and people who have no previous exposure with it,” Brennan-Burke said.