I had the pleasure of being the guest speaker at BayPay Forum’s Speakers Series here in San Francisco last month, and many attendees asked me why I had chosen to go into cross-border payments.
BayPay’s Managing Director Daniel Chatelain asked during the fireside chat, “You took not an easy part of payments, which is cross border payments. How did you come to this idea of identifying the friction and starting the journey?”
My answer to Daniel’s question was, “I like complicated business. I like situations that are complex, and problems that are hard to solve for.”
The way that cross-border payments are being processed today is inefficient, and it’s a complex problem to tackle. Companies are sending payments through wire transfers that are based on old fashioned, outdated technology that has seen zero innovation since its introduction.
To put it into perspective, I shared this analogy with Daniel and the BayPay Speakers Series attendees: Imagine you’re a business owner here in the U.S. and you have to pay someone in China. Think of the steps you have to take to send a payment through a wire transfer. First, you have to gather information about the receiver including name, address, bank’s name and address, account number, etc. When you’ve finally finished setting up the payment logistics with the bank, fees for wire initiation and foreign exchange are the first charges to be incurred. But when the money is actually sent, therein lies the problem: There is a period of time where you don’t know where your money is. The sender and receiver’s banks, as well as those institutions’ correspondent banks, do not allow you to track the payment, even while they’re busy charging you a fee for “transporting” your money. They won’t even notify you when the money reaches the receiver. You’re basically on your own, and the receiver has to let you know when they have received the payment.
We are living in 2016, when you can track a FedEx shipment every step of the journey; locate your phone if it’s misplaced or stolen; and even track the status of an airplane throughout its flight. But you still cannot track your hard-earned money as it moves from point A to point B, nor easily understand how many fees are taken out during transit. Payments are one of largest industries on earth, and not being able to track them in this day and age is both shocking and ridiculous.
It’s troublesome to know that small business owners even have to think, “Why do I not know where my money is and when it’s been received,” or “Why was the payment I received smaller than what was agreed on?” In this day and age, SMBs should be able to send international payments quickly and efficiently, and monitor its location every step of the way.
At the end of the BayPay fireside chat, the audience understood what I envision when I first got into global B2B payments for SMBs. They also had insight into the problems Align is addressing with our platform that leverages the multitude of payment rails, including the Web-based blockchain and distributed ledger infrastructure used for Bitcoin, and other digital currencies to lower the cost of cross-border payments for small businesses. By using the blockchain, we offer transparency and transactions at half the price and half the time of wire transfers. We are upfront about what the foreign exchange spread is the day of the transaction and how much a business owner will be paying.
The businesses that use Align Commerce have told us that they are love the experience of using our platform to send money, and it’s a radically new experience from using bank wires.