Meet Paysail, the startup that uses cryptocurrency to accelerate B2B payments
Meet Paysail, the startup that uses cryptocurrency to accelerate B2B payments
Invoices are used by businesses to pay for a variety of their major expenses, from materials to contract work. The majority of businesses continue to rely on solutions built on top of bank transfers or credit cards to complete cross-border payments, which typically take two to five days and represent a $130 trillion global market.
Paysail, an enterprise payments startup, recently raised seed funding to develop a tool that, the company claims, reduces the time required to make a cross-border payment to less than five seconds. Its solution is based on stablecoins, which it defines as "cryptocurrencies with a fixed price linked to a commodity or currency."
Use of tablecoins to pay invoices reduces transaction fees
According to Paysail, using stablecoins to pay invoices also reduces transaction fees for businesses by removing third-party intermediaries. Other startups in the space that leverage traditional banking infrastructure to improve payment efficiency have reached a point where they can no longer offer fast and cheap payments due to the fees charged by these intermediaries, particularly between countries that do not transact as frequently, Paysail cofounder Nicole Alonso told TechCrunch in an interview.
"Great strides have been made in making payments between, say, the United States and Canada, significantly cheaper and faster. However, if you're sending a payment from the United States to [a country in] Africa, it may still be extremely difficult and expensive," Alonso explained.
The cost of sending a cross-border payment via legacy systems such as Bill.com typically includes both the transaction fee charged by the third-party intermediary and the currency exchange fee. In comparison, a transfer made through Paysail costs only the "gas fee" required to validate the transaction on the blockchain, which is currently less than a tenth of a cent, Alonso said.
Paysail is currently using Celo's CUSD stablecoin to facilitate payments, with plans to expand to other stablecoins backed by various countries' fiat currencies as the company grows. Additionally, it is evaluating a transaction fee of approximately 0.9 percent to generate revenue for the business, which Alonso said could be structured as a tiered offering based on each company's transaction volume and will ideally "significantly undercut any existing competitors in the non-crypto space" on price.
Today, the company announced the close of a $4 million seed round led by Uncork Capital, with participation from Tribe Capital, Pear Venture Capital, and Mischief Capital. Nik Milanovi, Google Pay's head of business development and strategy, and Juan Manuel Fernández Lobato, founder and CEO of Ebury, also participated in the round as angel investors.
Paysail's current users are a "select group" of businesses, the majority of which are already transacting in cryptocurrency or are familiar with the space, according to Alonso co-founder Liam Brennan-Burke. Brennan-Burke added that the company wants to fine-tune its solution for crypto-native customers before expanding to those without prior crypto experience.
Alonso and Brennan-Burke, who founded Paysail last year after meeting as Claremont McKenna College students, are the company's only full-time employees. Their funding will be used to hire a full-time engineering team, as well as legal counsel and, eventually, a sales team.
In summary
Paysail is developing its technology to enable users without an existing cryptocurrency wallet to begin transacting on its platform by generating a noncustodial wallet on their behalf via a third-party wallet provider. It intends to eventually internalize this functionality and expand the Paysail wallet's functionality, such as allowing users to earn interest on their stablecoin holdings, Brennan-Burke said. In countries such as Nigeria, where depreciation of the local fiat currency is a significant risk, businesses may prefer to hold their wealth in stablecoins pegged to less volatile currencies and then convert it to local fiat on their terms, he added.
"Ultimately, the platform's goal is to continue making cryptocurrency payments digestible and simple to use for businesses and individuals with no prior experience," Brennan-Burke said.
